04 March 2021
To assess Australia’s fiscal sustainability and budget challenges it is important to look at the budget position of not only the Commonwealth but also states and territories. This report examine the revenue, expenditure, net capital investment, net financial worth and the net debt position across all levels of Australian government over the forward estimates period. Providing an update to the national fiscal outlook based on Commonwealth and state government budget updates.
Overview
- In response to the COVID-19 pandemic, Commonwealth and state and territory (‘state’) governments have ramped up their spending to soften the associated economic shock.
- Nationally, announced COVID-19 response and recovery packages are expected to total $327 billion for the five-year period 2019-20 to 2023-24. This is half of the total revenue raised by the Commonwealth and state governments in the pre-COVID-19 year of 2018-19.
- Since the start of the pandemic, the combined bottom line of governments – as measured by national net operating balance1 – has significantly worsened. The national net operating balance for the four years from 2019-20 to 2022-23 has deteriorated by $671 billion compared to the 2019-20 outlook.
- Of this change, the Commonwealth budget deteriorated by $538 billion, and aggregated state and local government budgets deteriorated by $132 billion. In the 2019-20 outlook, the national net operating balance was forecast to be a surplus of 1.7 per cent of GDP ($35 billion) in 2020-21 – this has been revised to a deficit of 11.1 per cent of GDP ($222 billion) for the same year.
- By comparison, the peak deficit during the Global Financial Crisis was 3.2 per cent of GDP ($42 billion) in 2009-10.
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Supporting information
2020-21 National fiscal outlook: At a Glance
The 2020-21 National fiscal outlook: At a Glance, provides a graphical snapshot of the Commonwealth, state and territory budgets in three charts, plus national aggregates.