![]() ![]() The increases in revenue outweigh the increases in spending in the near term. That's partly due to an increase in the cost of governing - via higher inflation, wages and interest rates - as well as additional spending across various areas of social policy, particularly the National Disability Insurance Scheme. Some of that windfall has been spent, with spending expected to be $126.1 billion higher over the next four years. Relative to the official forecasts released in March 2022, the stronger-than-predicted economic backdrop has tipped an additional $164.1 billion of revenue into the Federal Government’s pockets over the next four years. Net debt is expected to be equivalent to 28.5% of the economy in 2025-26, compared to 33.1% expected in March. However, the Government’s fiscal position has worsened thereafter, with underlying cash deficits now almost $11 billion larger across 2024-26. The deficit is now also expected to be lower in 2023-24. The underlying cash deficit is forecast to be $36.9 billion in 2022-23, some $41.1 billion better than forecast in the Federal Budget March 2022. ![]() That leaves a healthier bottom line in the next two years. Economic parameters and other variations – most notably inflation – are adding $98.5 billion to spending between now and 2025-26, while policy decisions are adding $27.2 billion over the same period. Expenses are now expected to be $126.1 billion higher over the next four years compared to the Federal Budget March 2022, less than the forecast increase in revenue but enough to keep total spending well ahead of total revenue. Most of the gain in revenue has come via company tax collections – including an additional $50.2 billion in company tax revenue over the next two years. Snapshot Higher-than-expected commodity prices have helped to tip an additional $164.1 billion of revenue into the Federal Government’s pockets over the next four years, a big improvement on the official forecasts released just six months ago. In this year's report, we highlight some of the Government's key initiatives, which include: Budget bottom line to improve now, but worsen later tough decisions still to come No change to legislated Stage 3 tax cuts for individuals Changes to business tax measures principally target interest and royalties Budget papers silent on fate of patent box and Digital Games Tax Offset Health and aged care drives government spending with no commitment to real reform Australian immigration program set for review to tackle skills shortages and productivity challenges Childcare support and paid parental leave to advance equity at home, work and society Investments in high value skills and future industries to begin the transition to a modern workforce Government reprioritises infrastructure investment pipeline to reflect new priorities Work on flagship $15 billion National Reconstruction Fund is underway focused on making revenue-generating investments Emissions reduction and disaster readiness focus enhances energy transition and builds resilience Treasury releases consultation on wellbeing measures for future budgets. ![]()
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