Australian Commonwealth Budget receipts are climbing at their fastest rate in 18 years and outlays are climbing at their fastest rate in five years.
Yet, Federal Treasurer Josh Frydenberg has been able to declare Australia's first Budget surplus since the 2008 Global Financial Crisis. But we'll have to wait until next year to see it.
In Treasurer Frydenberg's first Budget it was revealed that Commonwealth receipts in 2018-19 are on track to reach a record $485.2 billion, up 8.6% since last financial year. This near record increase follows the 9.0% increase on the previous financial year.
In the previous financial years, receipts were only able to grow at two-thirds these stellar rates.
According to the Budget Papers, 43% of the increase in receipts is due growth in tax payments by individuals, 24% is due to increasing company tax payments, and 20% is due to increases in revenue from asset sales, interest received and dividends. Increasing taxation revenue from super funds accounted for less than 2% of the total increase in Commonwealth receipts.
Receipts growing so rapidly thanks to recovering commodities markets, labour force expansion and companies exhausting most of their GFC tax losses, has enabled Prime Minister Scott Morrison and his coalition government to easily absorb this year's 6.6% outlays increase. This increase in outlays is about double the rate of increase experienced in each of the last three financial years.
The recovery in Australia's budget is enabling the Treasurer to begin paying down the accumulated $364 billion in budget deficits posted since the GFC of 11 years ago albeit the next four years of expected surpluses will reverse that by just $45 billion.
By way of contrast, Australia's outstanding Commonwealth debt at $534 billion today is more than double the $257 billion it was six years ago when the Abbott Government was elected in 2013, which in-turn was more than four times the $58 billion it was when the Rudd Labor Government was elected in 2007.
Australia's Federal Budget is still 46% reliant on individual taxpayers, which is more than double the 20% reliance on company taxes; 8% reliance on excise; and 7% reliance on asset sales, interest and dividends. As a result the government has little choice but to return revenue to individual taxpayers by way of tax cuts. Reinforcing this, this financial year tax payments by individuals surged $12 billion being three times the lift in corporate tax payments.
Viewed another way, indirect taxes make up just 24% of total Government receipts, including the $66 billion raised through the Goods and Services Tax.
In comparison, it's worth reminding ourselves that opportunistic initiatives such as the bank levy raised only $1.6 billion this financial year which is just 0.3% of total receipts. The Commonwealth Government raises more revenue from the wine equalization and luxury car taxes.
Weighed against these minor revenue items, the Budget Papers meanwhile report the cost of superannuation subsidies will hit $39 billion in 2019-20 before climbing 6.4% pa over the following three years to reach $47 billion.
The Government projects this to be three times the amounts of taxation revenue paid by all super funds in 2022-23.