What do the figures show?

• The underlying budget deficit for the twelve months to April stood at $32.332 billion, the lowest annual deficit in 44 months and a $11.4 billion improvement (26 per cent) on the full-year 2011/12 result. In April 2013 the monthly surplus was $13,262 million – the biggest surplus for an April month on record.
• Smoothed revenues (year to April) were up 5.6 per cent on a year ago – the slowest annual growth rate in 23 months. Expenses grew by 3.9 per cent over the same period – just above the slowest growth pace in 16 months. The Government had previously 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 30 April 2013 was a deficit of $16,337 million compared to the Mid-Year Economic and Fiscal Outlook (MYEFO) profiling Year to Date (YTD) of the underlying cash balance deficit of $6,056 million. The difference of $10,282 million is primarily driven by lower tax receipts.”
• Receipts from the Goods and Services Tax stood at $50.277 billion in the twelve months to April, up 2.2 per cent on a year ago. In the Mid-Year review the government projected GST revenues of $50.79 billion for 2012/13 and projected $50.22 billion in revenues in the May budget.

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?

• The latest data confirm that the government financial accounts are moving in the right direction. But as the Government highlighted at budget time, improvement is occurring at a far slower pace than originally envisaged because of weak growth of tax revenue.
• Tax revenues should lift over 2013/14 provided that the global economy continues to heal as expected, the Aussie dollar softens (meaning less goods price deflation) and cost-cutting and productivity measures across Australian businesses serve to lift profitability.
• The good news in the latest accounts is that GST revenues are tracking in line with forecasts. So while company profits have been soft, receipts from sales have performed as expected.

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