Savings and revenue

Budget Review 2012–13 Index

Les Nielson

In the 2012–13 Budget the surplus has been achieved by a number of methods:

  • not proceeding with previously announced, but not yet implemented, measures

–      for example, the previously announced company tax reductions that are now not going ahead[1]

  • revenue increases and increased savings from existing programs

–      for example, the increase in the final withholding tax rate on distributions from managed investments paid to overseas residents from 7.5 to 15 per cent[2]

  • ceasing programs and redirecting the funds elsewhere

–      for example, the cessation of the National Health and Hospitals Network – Aged care – expanded access to multi-purpose services program[3]

  • deferring measures to another time

–      for example, deferring the starting date for the increased concessional superannuation contribution limits from 1 July 2012 to 1 July 2014[4]

  • reducing funding of existing programs

–      for example, the redirection of funding from the Australian Intelligence Community to other national intelligence priorities,[5] and

  • improving compliance with existing programs and policies

–      for example, the fraud prevention and compliance initiative across several departments.[6]

The following table, based on the Parliamentary Library’s analysis of the measures in Budget Measures: Budget Paper No. 2: 2012–13, shows the contribution each of the above methods makes to the total of savings and revenue. That is, the increases in revenue were added to the reductions in expenses and classified according to the above methods. The percentage of savings and revenue increases is shown for each method for each year, including the forward estimates period. The complete list of revenue, expense and capital measures are in Budget Paper no. 2.[7]

Table 1: Summary of savings and revenue - percentage of annual totals

Source

2011–12

2012–13

2013–14

2014–15

2015–16

Do not proceed

18

7

22

33

40

Revenue increases/savings

17

39

49

46

42

Programs ceased

29

32

6

6

6

Deferred programs

2

17

16

4

2

Reduced funding

33

3

2

2

2

Compliance

0

2

4

10

8

Annual totals as % of 5 year total

1

17

22

27

32

Source: Parliamentary Library analysis of Budget Paper No. 2

Several points can be drawn from the above table:

  • over the forward estimates, the bulk of the program savings arise from measures not proceeded with and revenue increases/increased savings from existing programs. Over the five year period the latter category is the largest source of savings
  • the overall savings increase in the out-years. So the full effect of this particular budget on savings and increased revenue will not be fully realised until 2015–16
  • savings from compliance are significant and increase as a proportion of the overall totals towards the end of the period. While this is normal (it takes time for increased compliance to show results) it should be borne in mind that this is an uncertain source of savings, unless there is a gross level of non-compliance known to be occurring
  • the pattern of savings realised from the other categories is as you would expect:

–      a large contribution initially from reduced funding and programs ceasing tapers off over the forward estimates period

–      the contribution of deferred programs decreases as, presumably, they are implemented at a later date, and

–      the contribution of the initiatives not proceeded with (especially the cut to the company tax rate) is projected to increase, as tax collections at the current rates increase due to fiscal drag.



[1].       Australian Government, Budget Measures: Budget Paper No. 2: 2012-13, Commonwealth of Australia, Canberra, 2012, p. 22, viewed 11 May 2012.

[2].       Op. cit., p. 31.

[3].       Op. cit., p. 195.

[4].       Op. cit., p. 40.

[5].       Op. cit., p. 101.

[6].       Op. cit., p. 209.

[7].       Budget Paper No.2, pages 1 and following (for revenue), 47 and following (for expense) and 287 and following (for capital measures).

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