Save
Budget surplus to fall below estimates: Deloitte
The federal budget surplus in 2019-20 is expected to come in $1.7 billion below the government’s forecast, according to new analysis performed by Deloitte.

Budget surplus to fall below estimates: Deloitte
The federal budget surplus in 2019-20 is expected to come in $1.7 billion below the government’s forecast, according to new analysis performed by Deloitte.

According to a new analysis by Deloitte Access Economics partner Chris Richardson, the federal government will be on target to achieve its first budgetary surplus since before the global financial crisis.
Deloitte’s latest Budget Monitor has been released in anticipation of the government’s Mid-Year Economic and Financial Outlook (MYEFO), which will report on official budgetary figures and is due to be released prior to the end of the year.
Deloitte’s analysis suggests that the surplus for 2019-20 is now expected to come in at $5.3 billion, an estimate that is $1.7 billion lower than the figure announced by Treasurer Josh Frydenberg in April this year.
Mr Richardson stated that despite a slow national economy, the budget had been able to improve to the point of surplus for the first time since 2007-08, largely driven by strong commodity price growth, leading to increased national revenue and higher company taxes.
According to Mr Richardson, contrary to claims made by industry figures and the Treasurer, Australia has been the biggest beneficiary of international trade tensions, which has pushed up the price of Australia’s key commodities.
“Thanks to Chinese stimulus (and to tragedy in Brazil), commodity prices rose in recent years, making this the first ever global slowdown in which the world has given Australia a pay rise instead of a pay cut,” Mr Richardson said.
In fact, according to Mr Richardson’s analysis, the government’s April projections for key commodity prices, including iron ore and coal, were lower than the actual revenue figures (to October 2019) by $0.8 billion.
Increased demand on higher-priced commodities, accompanied with the falling Australian dollar and corporate tax paid on these exports, paints a positive picture for the government’s budget.
However, despite stronger-than-budgeted revenue from commodities, and the additional tax paid on these, Deloitte’s budget surplus forecast has come in at $1.7 billion below the government’s April figure.
Mr Richardson stated this reduction was thanks to reduced government revenue, largely caused by the ongoing slow national economy, record-low interest rates, and lower consumer spending.
With wage growth stubbornly stagnant, and increasing underemployment, the Deloitte data has forecast a fall in PAYG tax that sees the government $2.9 billion short of its expected figure this year, and a further $4.1 billion in 2020-21.
The government will also see reduced tax revenue due to decreases in consumer spending and gambling, which Mr Richardson also chalked up to slow wage growth.
The recent surge in commodity prices will see profit taxes beat their budget-time forecasts by $0.3 billion according to the data, however “the best news is already behind us” according to Mr Richardson, as banks’ profit margins feel the squeeze of the low-interest rate environment and commodity prices begin to fall.
Lower interest rates will see a reduction in non-tax revenue of $0.1 billion this year, and a further $1.1 billion reduction in 2020-21, however this can be largely offset due to the fact that lower rates also make the government’s national debt cheaper to service.
While national income hit above the official budget expectations, the overall budgeted revenue for 2019-20 is expected to be down $3.3 billion on the official government forecast, with the shortfall expected to double to $7 billion in the following year, according to Deloitte.
“To be clear, that damage isn’t huge,” Mr Richardson said. “And we do expect Treasury’s figures to look healthier than ours.
“But our bottom line sees revenues losing momentum, thereby narrowing the gap between what’s happening in the economy and what’s happening in the budget.”

How to budget
Handy tips to send your money worries to the chopping block
Sorting out your finances can be easier said than done, especially in the aftermath of the short Easter break when distractions are unrelenting and stress levels are worked up at fever pitch. ...Read more

How to budget
6 ways to clean up your personal finances
Bringing your spending under control can sometimes feel daunting. Here are some ways to start. ...Read more

How to budget
5 ways to be smarter about your money in 2021
Start the new year on a high note by stepping away from bad financial habits. ...Read more

How to budget
Tips to avoid overspending in the holiday season
Stopping yourself from going overboard ahead of Christmas might be easier than you think. ...Read more

How to budget
Budgeting habits to relearn as the borders reopen
The return of international travel may mean hard lessons for those who aren’t sticking to good financial habits. ...Read more

How to budget
After months of saving, Aussies are eager to break the habit
Australian consumers are looking to spend big as they say goodbye to a year of lockdowns. ...Read more

How to budget
Financial wellness is shifting the way we think about wealth
Australians looking to work towards financial freedom are embracing a new approach. ...Read more

How to budget
How to stay in control of spending ahead of Christmas
Those looking to improve their finances need to find the middle ground between being a grinch and going overboard ahead of the holiday season. ...Read more

Wrapping up an eventful 2021
Listen now

What Omicron means for property, and are units right for first-time buyers? What is equity crowdfunding? Are industry super funds tapping into member funds to save their skins?
Listen now

Will housing affordability improve in 2022? Will buy now, pay later become the norm? Why are Aussies staying in failing super products?
Listen now

Who really benefits from crypto ETFs? How will the RBA respond to rising inflation? Could a mandate help address unpaid super?
Listen now

How to budget
Handy tips to send your money worries to the chopping block
Sorting out your finances can be easier said than done, especially in the aftermath of the short Easter break when distractions are unrelenting and stress levels are worked up at fever pitch. ...Read more

How to budget
6 ways to clean up your personal finances
Bringing your spending under control can sometimes feel daunting. Here are some ways to start. ...Read more

How to budget
5 ways to be smarter about your money in 2021
Start the new year on a high note by stepping away from bad financial habits. ...Read more

How to budget
Tips to avoid overspending in the holiday season
Stopping yourself from going overboard ahead of Christmas might be easier than you think. ...Read more

How to budget
Budgeting habits to relearn as the borders reopen
The return of international travel may mean hard lessons for those who aren’t sticking to good financial habits. ...Read more

How to budget
After months of saving, Aussies are eager to break the habit
Australian consumers are looking to spend big as they say goodbye to a year of lockdowns. ...Read more

How to budget
Financial wellness is shifting the way we think about wealth
Australians looking to work towards financial freedom are embracing a new approach. ...Read more

How to budget
How to stay in control of spending ahead of Christmas
Those looking to improve their finances need to find the middle ground between being a grinch and going overboard ahead of the holiday season. ...Read more