29 April 2015
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
- The Australian national fiscal position (Commonwealth and states and territories general government sector) 1 deteriorated significantly over the past decade. The fiscal balance moved from a surplus of 0.9 per cent of GDP in 2002–03 to a deficit of 2.4 per cent of GDP in 2012–13.
- The deterioration of the national fiscal balance resulted in national net debt increasing from 2.1 per cent of GDP in 2002–03 to 12.4 per cent of GDP in 2012–13.
- The deterioration in the net debt position is even starker when considering that in 2007–08 Australia had negative net debt of 6.8 per cent of GDP. The deterioration in the national fiscal balance from a surplus to deficit position and the consequent rise in national net debt were largely driven by the deterioration in the Commonwealth’s fiscal position.
- The Commonwealth’s fiscal balance moved into deficit in the middle of the past decade and while recovering somewhat has remained in deficit. The deterioration in the Commonwealth’s fiscal balance occurred as expenses growth significantly exceeded revenue growth over the past decade.
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