Summary of budget outcome
The Federal budget position for 2021/2022 exceeded expectations. The budget deficit was -$32.0bn (-1.4% of GDP). This deficit was better than expectations as:
- Receipts were $27.7bn higher than expected
- Payments were $20.1bn lower than forecasted.
Net debt declined $76.6bn in 2021/2022, from $592.2bn in 2020/2021.
Revenue outcome
Revenue for the 2021/2022 financial year was $584.4bn, equal to 25.4% of GDP. Taxation revenue made up $536.6bn of this amount, with company and individual tax revenue both beating expectations.
Income tax from individuals was $264.6bn, including a gain of $28.9bn from the previous year.
Company profits were up $26.8bn to $125.9bn, a dramatic rise sparked by the reopening of the economy.
With both companies and individuals beating expectations, revenue received of $536.6bn was $24.1bn above predictions.
Expense outcome
Payments were $20.1bn lower than expected at $616.3bn (26.8% of GDP). Many government programs experienced lower than expected costs for the following reasons:
- COVID-19 program delays and lower than expected demand
- Health programs experienced lower than expected demand
- Many programs experienced supply chain issues leading to lower or delayed payments.
Due to the strength of the labour market (unemployment at 3.75% in June), social welfare payments were much lower than expected. Besides the COVID-19 related factors above, this is the next largest factor.
Economic overview
Nominal GDP growth was 11.0% in the 2021/2022 year. Economists were only slightly off in their GDP growth predictions, however, the Government payments and receipts surprised them.
GDP growth of 11% is well above average. GDP growth was assisted by the following factors:
- Terms of trade at record highs, up 12.1% for the year. This led to mining profits rising 46% in the year
- Employment grew by 3.3% (above expectations) and total employee compensation grew by 5.6% over the year.
Relatively high inflation has also made a difference to the GDP numbers.
Source: Westpac
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