Budget Overview – the Headline numbers

Budget Review 2016–17 Index

Robert Dolamore

This brief provides a summary of some of the key numbers from this year’s budget.

The headline economic forecasts

Table 1: Treasury forecasts of major economic parameters (per cent)

 

2014–15 2015–16 2016–17 2017–18 2018–19 2019–20

Real GDP

2.2 2.5 2.5 3.0 3.0 3.0

Employment

1.6 2.0 1.75 1.75 1.25 1.5

Unemployment Rate

6.1 5.75 5.5 5.5 5.5 5.5

Consumer price index

1.5 1.25 2.0 2.25 2.5 2.5

Wage price index

2.3 2.25 2.5 2.75 3.25 3.5

Nominal GDP

1.6 2.5 4.25 5.0 5.0 5.0

Terms of trade

-10.3 -8.75 1.25 0.0    

Source: Australian Government, Budget strategy and outlook: budget paper no. 1: 2016–17, 2016, Statement 1, Table 2, p. 1-8, Statement 2, Table 1, p. 2-6.

Table A1 provides a snapshot of how these forecasts have changed since last year’s budget (see Attachment A).

The headline fiscal numbers

  • The underlying cash deficit is estimated to be $39.9 billion (2.4 per cent of gross domestic product (GDP)) in 2015–16, $37.1 billion (2.2 per cent of GDP) in 2016–17 falling to a projected $6.0 billion (0.3 per cent of GDP) in 2019–20.
  • Over the four years to 2019 –20 accumulated deficits are estimated to total $84.6 billion.
  • General government sector receipts are estimated to be $388.0 billion (23.5 per cent of GDP) in 2015–16, $411.3 billion (23.9 per cent of GDP) in 2016–17 rising to a projected $500.7 billion (25.1 per cent of GDP) by 2019–20.
  • Tax receipts are estimated to be $364.5 billion (22.1 per cent of GDP) in 2015–16, $382.8 billion (22.2 per cent of GDP) in 2016–17 increasing to a projected $468.3 billion (23.5 per cent of GDP) by 2019–20.
  • General government sector payments are estimated to be $425.0 billion (25.8 per cent) in 2015–16, $445.0 billion (25.8 per cent of GDP) in 2016–17 and increasing to a projected $502.6 billion (25.2 per cent of GDP) by 2019–20.
  • In terms of total general government receipts and payments, the revenue side is forecast to make the biggest contribution as a share of GDP to reducing the size of the Budget deficit over the forward estimates period.
  • General government sector net debt is estimated to be $285.7 billion (17.3 per cent of GDP) in 2015–16, $326.0 billion (18.9 per cent of GDP) in 2016–17 increasing to a projected $355.1 billion (17.8 per cent of GDP) by 2019–20.
  • General government sector net interest payments are estimated to be $12.0 billion (0.7 per cent of GDP) in 2015–16, $12.6 billion (0.7 per cent of GDP) in 2016–17 increasing to a projected $14.2 billion (0.7 per cent of GDP) in 2019–20.
  • The face value of Commonwealth Government Securities (CGS) on issue is estimated to be $425 billion in 2015–16, $497 billion in 2016–17 and $565 billion in 2018–19. Looking further out the total value of CGS on issue is projected to rise to $640 billion by 2026–27.

 

The Budget deficit is forecast to gradually fall from $39.9 billion in 201516 to $5.9 billion in 201920.

Underlying Cash Balance

Year $m % GDP
2014–15 -37,867 -2.4
2015–16 -39,946 -2.4
2016–17 -37,081 -2.2
2017–18 -26,123 -1.4
2018–19 -15,406 -0.8
2019–20 -5,955 -0.3

Underlying Cash Balance % GDP

Underlying Cash Balance % GDP

Source: Australian Government, Budget strategy and outlook: budget paper no. 1: 2016–17, 2016, Statement 10, Table 1, p. 10–6.

 

Achieving a surplus depends on closing the gap between payments and receipts…

  • In the last decade payments peaked at 26.0 per cent of GDP in 2009–10 and are estimated to be 25.8 per cent of GDP in 2016–17 and decline to 25.2 per cent in 2019–20.
  • In the last decade receipts bottomed at 21.4 per cent of GDP in 2010–11 and are forecast to be 23.9 per cent of GDP in 2016–17 and increase to 25.1 per cent of GDP in 2019–20.

Receipts and Payments % GDP

Receipts and Payments % GDP

Source: Australian Government, Budget strategy and outlook: budget paper no. 1: 2016–17, 2016, Statement 10, Table 1, p. 10–6.

 

Net debt is forecast to peak as a percentage of GDP in 201718.

Net Debt

Year $m % GDP
2014–15 238,721 14.8
2015–16 285,684 17.3
2016–17 325,962 18.9
2017–18 346,842 19.2
2018–19 356,373 18.8
2019–20 355,066 17.8

Net Debt % GDP

Net Debt % GDP

Source: Australian Government, Budget strategy and outlook: budget paper no. 1: 2016–17, 2016, Statement 10, Table 4, p. 10–12.

 

Since MYEFO, policy measures and parameter variations have on balance worsened the near-term budget outlook.

Effect on the Underlying Cash Balance of changes since MYEFO

Year Policy
measures
$m
Parameter
variations
$m
2015–16 -195 -2,352
2016–17 -3,070 -343
2017–18 384 -3,484
2018–19 -1,494 319

Effect of policy and parameter changes
on the Underlying Cash Balance since MYEFO

Effect of policy and parameter changes
on the Underlying Cash Balance since MYEFO

Source: Australian Government, Budget strategy and outlook: budget paper no. 1: 2016–17, 2016, Statement 3, Table 5, p. 3–24.

 

Where does government spending go in 2016–17?

Estimates of Expenses by function

 

$b

%

Social security & welfare

158.6

35.2

Health

71.4

15.9

Education

33.7

7.5

Defence

27.2

6.0

General public services

22.7

5.0

All other functions

47.9

10.6

Other purposes

89.1

19.8

Total

450.6

100.0

Expenses by function in 2016–17

Expenses by function in 2016–17

Source: Australian Government, Budget 2016–17 overview, 2016, Appendix B, p. 25.

 

Where does the revenue come from in 2016–17?

 

$b %

Individuals income tax

201.3 48.3

Company & resource rent taxes

71.0 17.0

Sales tax (incl. the GST)

64.8 15.5

Fuels excise

18.4 4.4

Other taxes

35.8 8.6

Non-tax revenue

25.6 6.1

Total

416.9 100.0

Revenue in 2016–17

Revenue in 2016–17

Source: Australian Government, Budget 2016–17 overview, 2016, Appendix B, p. 25.

 

Attachment A

Table A1: Treasury forecasts of major economic parameters (per cent)

 

2014–15 2015–16 2016–17 2017–18 2018–19 2019–20

Real GDP

           

   Budget 2015–16

2.5 2.75 3.25 3.5 3.5  

   MYEFO 2015–16

2.2 2.5 2.75 3.0 3.0  

   Budget 2016–17

2.2 2.5 2.5 3.0 3.0 3.0

Employment

           

   Budget 2015–16

1.5 1.5 2.0 2.0 2.0  

   MYEFO 2015–16

1.5 2.0 1.75 1.5 1.5  

   Budget 2016–17

1.6 2.0 1.75 1.75 1.25 1.5

Unemployment Rate

           

   Budget 2015–16

6.25 6.5 6.25 6.0 5.75  

   MYEFO 2015–16

6.0 6.0 6.0 5.75 5.5  

   Budget 2016–17

6.1 5.75 5.5 5.5 5.5 5.5

Consumer price index

           

   Budget 2015–16

1.75 2.5 2.5 2.5 2.5  

   MYEFO 2015–16

1.5 2.0 2.25 2.5 2.5  

   Budget 2016–17

1.5 1.25 2.0 2.25 2.5 2.5

Wage price index

           

   Budget 2015–16

2.5 2.5 2.75 2.75 3.25  

   MYEFO 2015–16

2.3 2.5 2.75 2.75 3.0  

   Budget 2016–17

2.3 2.25 2.5 2.75 3.25 3.5

Nominal GDP

           

   Budget 2015–16

1.5 3.25 5.5 5.25 5.5  

   MYEFO 2015–16

1.6 2.75 4.5 5.0 5.25  

   Budget 2016–17

1.6 2.5 4.25 5.0 5.0 5.0

Terms of trade

           

   Budget 2015–16

-12.25 -8.5 0.75      

   MYEFO 2015–16

-10.2 -10.5 -2.25      

   Budget 2016–17

-10.3 -8.75 1.25 0.0    

Source: Australian Government, Budget strategy and outlook: budget paper no. 1: 2015–16, 2015, Statement 1, Table 2, p. 1-7, Statement 2, Table 1, p. 2-5; S Morrison (Treasurer) and M Cormann (Minister for Finance), Mid-year economic and fiscal outlook 2015–16, 2015, Table 1.2, p. 3, Table 2.2, p. 9; Australian Government, Budget strategy and outlook: budget paper no. 1: 2016–17, 2016, Statement 1, Table 2, p. 1-8, Statement 2, Table 1, p. 2-6.

 

All online articles accessed May 2016. 

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