The Government publishes monthly financial statements from which we can extract monthly budget revenue and expenses, in addition to rolling annual averages.

The Government was approaching a surplus around mid-2019 but moved back into a deficit from then on. By February 2020, pre-covid, the deficit was running around $20 Billion per year. With the Covid spending, the annual deficit peaked at around $200 Billion by February 2021. The total deficit between March 2020 and October 2021 (18 Months) was around $240 Billion.

As of October 2021, the annual deficit is running at around $68 Billion but improving.


At a granular level, annual revenue for 12 months to October 2021 has increased by 7.9%. This belies the nominal 1% increase in Gross income tax withholding for the year, reflecting MYEFO’s forecasts for real wages to remain flat for several years. This highlights the confounding policy of the Government to further encourage home price growth of 21.7% (Australian Bureau of Statistics – weighted average of eight capital cities as of Sep 2021), with a plethora of stimulatory measures for the housing sector. First Home Owner Grants, stamp duty exemptions, Victorian Homebuyer Fund contribution of up to 25% of the purchase price up to $950k, negative gearing tax concessions, low-interest rates in the face of much higher inflation around the world are the many inducements enticing the continued bubble in asset prices.

But wages are not growing. And not planned to grow.

From the AFR – (14th December – Craig Emmerson):  Much is being made of acute labour shortages as the economy rebounds from the heavy lockdowns that began in June. Those shortages should ordinarily force real wages up. But the Morrison government already has a plan to suppress wages through a resumption of temporary work visas for low-skilled workers in the agricultural, tourism, and hospitality industries. Just to be sure, the Morrison government this year withdrew its own bill to criminalize wage theft”.

The consumption taxes below show large increases – GST 18%, Wine tax 8.9%, Excise duties, and Luxury car tax (57.3% – close the car industry but keep the taxes, even on Electric Vehicles). Without an increase in wages – future consumption taxes need to be funded by borrowings to maintain Government revenue.

With the mid-year forecast to be presented on Thursday, it will be interesting to see the forecasts of each of the components – including whether the very large increases in Company tax and Superannuation funds can be maintained.