A multibillion-dollar cut to spending on social services and higher-than-expected tax revenue have helped the government deliver a smaller budget deficit than forecast for 2016-17.
The treasurer, Scott Morrison, said the smaller deficit illustrated the Coalition had been taking a “cautious and wise” approach to the nation’s finances, helping Australia maintain its credit rating.
But Labor says the result is more “good luck than good policy”, with $4bn in extra revenue coming from a better-than-forecast tax take.
Treasury officials released the final budget outcome for the 2016-17 budget on Tuesday, showing an underlying cash deficit of $33.2bn for last financial year.
The Turnbull government had been expecting a deficit of $37.6bn, so it has welcomed the $4.4bn overestimate.
Figures show the budget benefited from higher-than-estimated tax receipts (worth $2bn) and non-tax receipts ($2.1bn) last financial year, and lower-than-expected government payments ($1.2bn), which were also partly offset by higher net Future Fund earnings ($860m).
Company tax receipts last year were $590m higher than estimated; GST receipts were $569m higher; receipts from superannuation fund taxes were $488m higher; and excise and duty receipts were $197m higher, among others.
But the Coalition has also pursued more than $5bn in cuts to spending on social services since last year’s budget, and has brought government payments down by $1.2bn more than expected.
Payments under the National Disability Insurance Scheme were $866m lower that expected last year, due to a more gradual transition of participants into the NDIS than estimated and underutilisation of capital expenditure.
Payments across a range of employment services programs were $205m lower, reflecting lower-than-expected demand for wage subsidies and activities supported by the New Enterprise Incentive Scheme and the Job Commitment Bonus.
Payments under the student payments program were $138m lower, reflecting lower-than-expected number of students receiving income support.
Payments for the management of illegal maritime arrivals (IMA) were hundreds of millions of dollars lower, reflecting lower-than-expected costs under the Onshore Compliance and Detention program ($154m) and the IMA Offshore Management program ($102m).
The decreases in spending were partially offset by the provision for underspends in the contingency reserve and higher-than-expected payments under the Pharmaceuticals Benefits Scheme ($1.2bn), primarily the result of an increased uptake of medicines.
Morrison welcomed the cut in spending on social services, saying it helped the Coalition hold the line on spending.
“Payments have come in at 25% of GDP,” he said on Tuesday. “The biggest contributor to what we’ve been able to achieve on the spending side has been a reduction in payments on social services of more than $5bn from when we first announced that position on budget night in 2016.
“Since 2013-14, we’ve been holding the line on expenditure.
“At the time of our government’s first [budget] in 2013-14, payments for 2016-17 were estimated to be at $447bn. The final budget outcome is at $439bn for that year now.
Labor’s finance spokesman, Jim Chalmers, said the government’s “minor” improvement in the budget is more about “good luck than good policy”.
Earlier this month, Morrison claimed there were better days ahead for Australia’s economy after new figures showed an annual growth rate of 1.8%, thanks to a strong pick-up in economic activity in the June quarter.
He said the pick-up in growth was consistent with economic developments in the US and Britain, and showed the economy was moving towards “balanced growth”.
