On current figuring the Government will go close to achieving its goal of a budget deficit just over $37 billion this financial year, representing just over 2.5 per cent of GDP. But a budget surplus next financial year will require hard work and perhaps some accounting gymnastics.
The main issue is revenue as a slower economy is drying up tax receipts. In terms of the Department of Finance profile, revenue is currently around $2 billion short of where it needed to be for March 2012, while expenses are also short by $0.4 billion. Underlying cash receipts are around $3.1 billion short according to the profile while underlying cash payments are over by $700 million.
The CommSec Budget Ready Reckoner assumes a “no change” situation: The Government is assumed to meet its budget forecast this year, there are no changes to economic assumptions (parameters) and we assume the forecasts in the Mid Year Budget review. On this basis revenues (largely taxes) would need to rise by 11.3% and expenses (spending) would need to fall 0.1% to achieve a surplus.
To see the CommSec Budget Ready Reckoner and read the full report, click here.
