Australian Government budget: headline numbers

On the day after the budget, we bring you the first of a series of posts. This focuses on the broadest set of numbers that the budget revealed. Future posts will dig into more detail on specific policies and budget measures.

Treasurer Joe Hockey’s second budget gives us a bizarre set of numbers. In opposition, Mr Hockey talked incessantly of a debt and deficit disaster, and as treasurer has spoken repeatedly of the need to shrink the size of government (including as recently as his budget night interview with 7.30). It is hard to comprehend, then, the extent to which this budget sets up the government to grow in the coming financial year. Mr Hockey has delivered a budget that can only be described as high taxing, big spending (at least, by Australian standards).

Expenditure in 2014-15 will be at 25.9 per cent of gross domestic product (GDP). That is the highest level since previous treasurer Wayne Swan spent up big to stimulate the economy through the global financial crisis (26 per cent of GDP in 2009-10). Before then, it is the biggest Australian Government spend since 1993-94 (26.1 per cent). Even in the Howard-Costello years, when revenue was flowing in at record levels and handouts were the order of the day, spending was restrained to a peak of 25.1 per cent in 2001-02. In 1999-2000, it was as low as 23.2 per cent.

On the revenue side, the government will be taking a big chunk from the economy with receipts at 23.5 per cent of GDP, the highest level since before Labor took government in 2007.

Australian Government receipts, expenditure and net debt as a proportion of gross domestic product

With expenditure climbing so high and revenue not keeping pace, the budget papers show a deteriorating balance. Despite Mr Hockey's rhetoric, the defecit is growing beyond previous forecasts.

As this government has gone to great pains to tell us: if you spend more than you earn, you end up in debt. Given the reality of budget deficits to the forecast horizon, debt is continuing to climb. Yesterday’s budget shows net debt climbing to 15.6 per cent of GDP in 2014-15. The last time net debt was that high was in the aftermath of the 1990s recession, when government receipts plummeted and the Hawke and Keating governments ran large deficits.