What do the figures show?

• The underlying budget deficit for the twelve months to February stood at $37.99 billion, the lowest annual deficit in nine months and a $5.75 billion improvement (13 per cent) on the full-year 2011/12 result. In February 2013 the monthly surplus was $3,165 million – the biggest surplus for a February month in a decade.
• Smoothed revenues (year to February) were up 6.7 per cent on a year ago – the slowest annual growth rate in 20 months. Expenses grew by 4.0 per cent over the same period – the slowest growth in 13 months. The Government has projected 10.5 per cent growth of revenues in 2012/13 with expenses to fall by 0.7 per cent.
• The Government noted: “The underlying cash balance for the 2012-13 financial year to 28 February 2013 was a deficit of $23,646 million compared to the Mid-Year Economic and Fiscal Outlook (MYEFO) profiling Year to Date (YTD) of the underlying cash balance deficit of $17,933 million. The difference of $5,713 million primarily relates to lower taxes received and higher personal benefit payments, partially offset by lower payments for goods and services.”
• Receipts from the Goods and Services Tax stood at $49.19 billion in the twelve months to February, down 0.7 per cent on a year ago, equalling the biggest annual decline in three years.

What is the importance of the economic data?

• The Department of Finance and Deregulation release the Government Financial Statements (Niemeyer Statement) almost every month. The statement allows investors to track the current budget position and provides insights into the effectiveness of fiscal policy.

What does it all mean?

• It’s still a long way short of a surplus, but the budget position continues to slowly improve. The good news is that the annualised deficit stands at 9-month lows while the deficit only represents 2.6 per cent of GDP, substantially better than most major economies such as the US (5.8 per cent of GDP), Japan (9 per cent) and UK (7.8 per cent).
• The bad news is that revenues are over $6 billion short of where the bean-counters had expected to be at this point. And little improvement is expected in corporate profitability until later this year or early 2014.
  Flat GST revenues are a concern for state government treasuries.

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