The Department of Finance released the February monthly financial statements on March 24, just prior to the Easter holiday period. This note examines the latest data…
In the twelve months to February 2016, the budget deficit stood at $36.1 billion (around 2.2 per cent of GDP), down from $44.7 billion in the year to January and the lowest rolling annual deficit in almost two years (since April 2014)…
The Department of Finance says the underlying deficit for February was $743 million lower than the ‘profile’ forecast and “primarily relates to lower than expected cash payments and net future fund earnings, partially offset by lower than expected cash receipts”…
Revenue remains hard to come by with annual growth rates hovering around 2 per cent…
Meanwhile growth of expenses or spending is well contained, with expenses barely growing over the year. The Government was projecting a budget deficit near $37 billion and that expectation remains on target…
Looking ahead, if nominal annual growth of the economy continues to hold around 2-3 per cent, then the current Government – and the next Government later this year – will find it increasingly difficult to keep spending static and thus chip away at the budget deficit. Aussies want spending maintained on schools, hospitals, defence and public services but at the same time aren’t keen to pay any more in tax. Same for all levels of Government. The hard decisions on tax will become increasingly more difficult the longer that the major parties put off reaching some form of agreement…
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness.
Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.
