BUDGET STRATEGY AND OUTLOOK
BUDGET PAPER NO. 1
Circulated by
The Honourable Jim Chalmers MP
Treasurer of the Commonwealth of Australia
and
Senator the Honourable Katy Gallagher
Minister for Finance, Minister for Women,
Minister for the Public Service of the Commonwealth of Australia
For the information of honourable members
on the occasion of the Budget 2024–25
14 May 2024
© Commonwealth of Australia 2024
ISSN 0728 7194 (print); 1326 4133 (online)
This publication is available for your use under a Creative Commons Attribution 4.0
International licence, with the exception of the Commonwealth Coat of Arms, third-party
content and where otherwise stated. The full licence terms are available from
http://creativecommons.org/licenses/by/4.0/legalcode.
Use of Commonwealth of Australia material under Creative Commons Attribution 4.0
International licence requires you to attribute the work (but not in any way that suggests that
the Commonwealth of Australia endorses you or your use of the work).
Commonwealth of Australia material used ‘as supplied’.
Provided you have not modified or transformed Commonwealth of Australia material in any
way including, for example, by changing the Commonwealth of Australia text; calculating
percentage changes; graphing or charting data; or deriving new statistics from published
statistics – then the Commonwealth of Australia prefers the following attribution:
Source: The Commonwealth of Australia.
Derivative material
If you have modified or transformed Commonwealth of Australia material, or derived new
material from those of the Commonwealth of Australia in any way, then the Commonwealth
of Australia prefers the following attribution:
Based on Commonwealth of Australia data.
Use of the Coat of Arms
The terms under which the Coat of Arms can be used are set out on
the Department of the Prime Minister and Cabinet website (see www.pmc.gov.au/
honours-and-symbols/commonwealth-coat-arms).
Other uses
Enquiries regarding this licence and any other use of this document are welcome at:
Manager
Media Unit
The Treasury
Langton Crescent
Parkes ACT 2600
Email: media@treasury.gov.au
Internet
A copy of this document is available on the central Budget website at: www.budget.gov.au.
Printed by CanPrint Communications Pty Ltd
Page iii
Contents
Statement 1: Budget Overview .................................................................................... 1
Economic and Fiscal Outlook ........................................................................................................ 5
Budget priorities ............................................................................................................................ 8
Statement 2: Economic Outlook ................................................................................ 39
Outlook for the international economy......................................................................................... 43
Outlook for the domestic economy .............................................................................................. 50
Statement 3: Fiscal Strategy and Outlook ................................................................ 73
Economic and Fiscal Strategy ..................................................................................................... 79
Fiscal outlook .............................................................................................................................. 84
The Government’s balance sheet ............................................................................................. 103
Fiscal impacts of the net zero transformation ............................................................................ 107
Physical Impacts of Climate Change......................................................................................... 107
Net zero spending ..................................................................................................................... 108
New net zero spending measures ............................................................................................. 113
Appendix A: Other fiscal aggregates ......................................................................................... 116
Statement 4: Meeting Australia’s Housing Challenge ........................................... 121
Australia has underinvested in housing for too long .................................................................. 125
Affordability pressures are high ................................................................................................. 135
Barriers to the construction of new homes need to be addressed ............................................ 140
The Government’s plan to meet Australia’s housing challenge ................................................. 149
Australian Government housing measures since May 2022 ..................................................... 156
Statement 5: Revenue ............................................................................................... 163
Overview .............................................................................................................................. 167
Variations in receipts estimates ................................................................................................ 172
Variations in revenue estimates ................................................................................................ 183
Appendix A: Tax Expenditures .................................................................................................. 186
Statement 6: Expenses and Net Capital Investment ............................................. 189
Overview .............................................................................................................................. 193
Estimated expenses by function ............................................................................................... 196
General government sector expenses ...................................................................................... 200
General government net capital investment .............................................................................. 227
Appendix A: Expense by function and sub-function .................................................................. 231
Page iv
Statement 7: Debt Statement ................................................................................... 235
Australian Government Securities on issue .............................................................................. 239
Green Treasury Bonds .............................................................................................................. 244
Non-resident holdings of AGS on issue .................................................................................... 244
Net debt .............................................................................................................................. 245
Interest on AGS ........................................................................................................................ 247
Appendix A: AGS issuance ....................................................................................................... 251
Statement 8: Forecasting Performance and Sensitivity Analysis ....................... 253
Assessing past forecasting performance .................................................................................. 257
Assessing forecast uncertainty – confidence interval analysis .................................................. 265
Assessing current forecasts through sensitivity analysis........................................................... 271
Statement 9: Statement of Risks ............................................................................. 275
Risks to the Budget – Overview ................................................................................................ 279
Agriculture, Fisheries and Forestry ........................................................................................... 288
Attorney-General’s .................................................................................................................... 290
Climate Change, Energy, the Environment and Water.............................................................. 292
Defence .............................................................................................................................. 296
Employment and Workplace Relations ..................................................................................... 299
Finance .............................................................................................................................. 301
Foreign Affairs and Trade ......................................................................................................... 305
Health and Aged Care ............................................................................................................... 307
Home Affairs ............................................................................................................................. 311
Industry, Science and Resources.............................................................................................. 314
Infrastructure, Transport, Regional Development, Communications and the Arts ..................... 317
Prime Minister and Cabinet ....................................................................................................... 323
Social Services ......................................................................................................................... 324
Treasury .............................................................................................................................. 326
Veterans’ Affairs ........................................................................................................................ 333
Government loans ..................................................................................................................... 334
Statement 10: Australian Government Budget Financial Statements ................. 349
Appendix A: Financial reporting standards and budget concepts ............................................. 385
Appendix B: Assets and Liabilities ............................................................................................ 393
Statement 11 Historical Australian Government Data........................................... 407
Data sources ............................................................................................................................. 411
Comparability of data across years ........................................................................................... 411
Revisions to previously published data ..................................................................................... 413
Notes .......................................................................................................................... 435
Statement 1: Budget Overview | Page 1
Statement 1
Budget Overview
The 2024–25 Budget delivers cost-of-living help and builds a future made in Australia.
It helps ease the pressures people are under today, invests in a stronger and more resilient
economy and continues the Government’s record of responsible economic management.
Global uncertainty, high but moderating inflation, and higher interest rates are contributing
to cost-of-living pressures and combining to slow the economy. At the same time, the
global transformation to net zero and rapid shifts in the geostrategic landscape are creating
new opportunities and challenges for Australia’s economic prosperity and security.
While many Australians remain under pressure, Australia is better placed than most
economies to manage these challenges and become the beneficiaries of change. This Budget
strikes the right balance between keeping pressure off inflation, delivering cost-of-living
relief, supporting sustainable economic growth and strengthening public finances.
Following a surplus in 2022–23, a second is expected in 2023–24, which would be the first
back-to-back surpluses in nearly two decades. The Budget forecasts lower gross
debt-to-GDP and lower inflation, which is expected to return to the RBA’s target band
earlier than previously expected.
This Budget responds to the challenges of today and lays the foundation for future
prosperity by:
• easing cost-of-living pressures
• building more homes for Australians
• investing in a Future Made in Australia
• strengthening Medicare and the care economy
• broadening opportunity and advancing equality.
Global growth is expected to remain subdued over the next few years as the effects of high
inflation, restrictive macroeconomic policies, geopolitical tensions, and challenges in the
Chinese economy weigh on the outlook. Tackling inflation remains the primary focus but,
as inflationary pressures abate and labour markets soften, the global policy focus will
increasingly shift to managing risks to growth.
Inflation remains elevated, but has moderated to less than half of its peak in 2022. Annual
inflation has moderated more quickly than forecast at the 2023–24 Mid-Year Economic and
Fiscal Outlook (MYEFO) and is expected to be lower in 2023–24. The Government’s
responsible cost-of-living relief measures of energy bill relief and Commonwealth Rent
Assistance are estimated to directly reduce headline inflation by ½ of a percentage point in
| Budget Paper No. 1
Page 2 | Statement 1: Budget Overview
2024–25 and are not expected to add to broader inflationary pressures. This could see
headline inflation return to the RBA’s target band by the end of 2024, slightly earlier than
expected at MYEFO.
The labour market has been resilient, with employment growing faster than many other
advanced economies, the unemployment rate near its 50-year historical low, nominal
wages growing at their its fastest rate in nearly 15 years and real wages now growing.
The Government delivered a $22.1 billion surplus in 2022–23. A second surplus of
$9.3 billion (0.3 per cent of GDP) is expected in 2023–24, an improvement of $10.5 billion
since MYEFO. The back-to-back surpluses reflect the Government’s discipline to return
96 per cent of tax upgrades to Budget in 2023–24 and 82 per cent of tax upgrades since the
Pre-election Economic and Fiscal Outlook 2022 (PEFO) over the forward estimates period.
A deficit of $28.3 billion is forecast in 2024–25. Over the six years to 2027–28, the underlying
cash balance is stronger in every year compared to PEFO and has improved by a
cumulative $214.7 billion. Gross debt as a share of the economy is projected to be lower
than MYEFO in every year of the forward estimates and medium term.
This Budget delivers further cost-of-living relief, with tax cuts to all 13.6 million taxpayers.
The Government’s tax changes deliver bigger tax cuts for low- and middle-income
Australians in a way that does not add to the inflation outlook. The Budget also provides
energy bill relief for all households, further increases to Commonwealth Rent Assistance,
financial support for students and cheaper medicines.
The Government is taking action to build more homes for Australians. This Budget delivers
more housing, provides additional funding for social housing and homelessness, and helps
address infrastructure bottlenecks to support the building of more homes. It also invests in
better transport in growth areas, including Western Sydney and South East Queensland.
This Budget invests in a stronger and more resilient economy by building a future made in
Australia. It reforms investment settings and approvals, and accelerates Australia’s plan to
become a renewable energy superpower by unlocking private investment in the production
of hydrogen, critical minerals, and clean manufacturing. It invests in digital and defence
priorities, supports small business and boosts engagement and trade in our region.
This Budget will reform higher education to expand access and deliver the highly skilled
workforce of the future. It invests in skills in priority industries and creates a more
integrated tertiary education system that responds and adapts to skills needs.
The Government is investing in strengthening Medicare and providing cheaper and more
accessible health care, including Medicare Urgent Care Clinics and PBS listings. The
Government continues to improve aged care, and reform the NDIS to get it back on track.
The Budget builds on the Government’s commitment to broaden opportunity and advance
equality. It includes initiatives to support gender equality, including superannuation on
Government-funded Paid Parental Leave and support for women affected by violence, and
makes investments in essential services, housing and support for First Nations Australians.
Statement 1: Budget Overview | Page 3
Statement contents
Economic and Fiscal Outlook ...................................................................................... 5
Responsible economic management ............................................................................................ 7
Budget priorities............................................................................................................ 8
Easing cost-of-living pressures ..................................................................................................... 8
Building more homes for Australians........................................................................................... 11
Investing in a Future Made in Australia ....................................................................................... 14
Strengthening Medicare and the care economy .......................................................................... 27
Broadening opportunity and advancing equality ......................................................................... 32
Measures to support economic inclusion since May 2022 .......................................................... 36
Statement 1: Budget Overview | Page 5
Statement 1: Budget Overview
Economic and Fiscal Outlook
Global growth is expected to remain subdued over the next few years as the effects of high
inflation, restrictive macroeconomic policies, geopolitical tensions, and challenges in the
Chinese economy weigh on the outlook. Global growth is forecast to remain flat at around
3¼ per cent in 2024, 2025, and 2026. This would represent the longest stretch of
below-average global growth since the early 1990s. While fighting inflation remains the
primary task, as inflationary pressures abate and labour markets soften, the global policy
focus will begin to shift to managing risks to growth.
Australia is not immune from global developments and the combination of moderating but
high inflation and higher interest rates have resulted in lower growth over the past year.
Real GDP is forecast to grow by 1¾ per cent in 2023–24. The Australian economy is well
placed to navigate these economic challenges, with moderating inflation, a resilient labour
market, a return to annual real wage growth and a solid pipeline of business investment.
Although inflation remains elevated, it has moderated substantially and is now less than
half of its peak in 2022. The moderation has occurred more quickly than anticipated at
MYEFO. While there remains considerable uncertainty around the outlook for the domestic
and global economy, energy bill relief and Commonwealth Rent Assistance in this Budget
are expected to directly reduce inflation by ½ of a percentage point in 2024–25 and not
expected to add to broader inflationary pressures. This could see headline inflation return
to the target band by the end of 2024, slightly earlier than expected at MYEFO.
The labour market has been resilient. The unemployment rate is historically low, the
participation rate is near its record high and employment is growing faster than any major
advanced economy over the past year. As labour market conditions continue to ease over
2024–25, the unemployment rate is expected to rise slightly but remain below
pre-pandemic levels.
Nominal wage growth has picked up and is growing at its fastest rate in nearly 15 years.
The moderation in inflation and pick up in wage growth have contributed to an
improvement in real wages. Real wages have risen for three consecutive quarters and
returned to annual growth at the end of 2023, which is earlier than previously forecast.
Real wages are expected to rise further and grow by ½ per cent through-the-year to the
June quarter 2024.
There is a solid pipeline of business investment, with annual investment growth expected
to continue through to 2025–26. If realised, this would be the longest sustained increase in
investment since the mining boom.
| Budget Paper No. 1
Page 6 | Statement 1: Budget Overview
Growth is expected to remain subdued over the forecast period. Real GDP is forecast to
grow by 2 per cent in 2024–25, 2¼ per cent in 2025–26 and 2½ per cent in 2026–27. Higher
wages growth, the forecast moderation in inflation, continuing employment growth and
the Government’s cost-of-living tax cuts should support real household disposable incomes
and a recovery in household consumption.
Table 1.1: Major economic parameters
(a)
Outcome
Forecasts
2022-23
2023-24
2025-26
2026-27
Real GDP
3.1
1 3/4
2 1/4
2 1/2
Employment
3.5
2 1/4
1 1/4
1 3/4
Unemployment rate
3.6
4
4 1/2
4 1/2
Consumer price index
6.0
3 1/2
2 3/4
2 1/2
Wage price index
3.7
4
3 1/4
3 1/2
Nominal GDP
9.9
4 3/4
4
5 1/4
a) Real GDP and Nominal GDP are percentage change on preceding year. Employment, the consumer
price index and the wage price index are through-the-year growth to the June quarter.
The unemployment rate is the rate for the June quarter.
Source: ABS Australian National Accounts: National Income, Expenditure and Product; Labour Force
Survey, Australia; Wage Price Index, Australia; Consumer Price Index, Australia; and Treasury.
Following a $22.1 billion surplus in 2022–23, another $9.3 billion surplus is now forecast for
2023–24 – the first back-to-back surpluses in almost two decades and a $65.9 billion
improvement from PEFO.
The Government is supporting monetary policy to keep the pressure off inflation by
targeting a surplus and banking 96 per cent of tax receipt upgrades in 2023–24. Since
coming to government, 82 per cent of tax upgrades have been returned to the budget.
A deficit of $28.3 billion (1.0 per cent of GDP) is forecast in 2024–25. The larger deficit is
driven by the Government’s cost-of-living relief and addressing unavoidable spending
including terminating health funding and frontline services. Over the six years to 2027–28,
the underlying cash balance is stronger in every year compared to PEFO and has improved
by a cumulative $214.7 billion.
The upgrades to receipts in this Budget are much smaller than recent budget updates, at
around a fifth of the average of the previous three Budgets. This Budget sees tax receipts,
excluding GST and policy decisions, increasing since MYEFO by $8.2 billion in 2024–25 and
$27.0 billion over the forward estimates.
Real payments growth has been limited to an average 1.4 per cent per year over the period
since coming to government to 2027–28, compared to around 3.2 per cent over the past
30 years. The Government has identified $32.2 billion in budget improvements in this
Budget, bringing the total to $104.8 billion since coming to government.
Budget Paper No. 1 |
Statement 1: Budget Overview | Page 7
Gross debt as a share of the economy is projected to be lower than at MYEFO and PEFO in
every year of the forward estimates and medium term, helping to rebuild fiscal buffers to
prepare for future challenges. Gross debt is projected to be $183.0 billion lower in 2024–25
than at PEFO. The improvements to the Budget position since PEFO will save around
$80 billion in interest costs over the decade.
Table 1.2: Budget aggregates
Actual
Estimates
Projections
2022-23
2023-24
2024-25
2025-26
2026-27
2027-28
Total(a)
2034-35
$b
$b
$b
$b
$b
$b
$b
Underlying cash balance
22.1
9.3
-28.3
-42.8
-26.7
-24.3
-112.8
Per cent of GDP
0.9
0.3
-1.0
-1.5
-0.9
-0.8
-0.1
Gross debt(b)
889.8
904.0
934.0
1,007.0
1,064.0
1,112.0
Per cent of GDP
34.7
33.7
33.9
35.1
35.2
34.9
30.2
Net debt(c)
491.0
499.9
552.5
615.5
660.0
697.5
Per cent of GDP
19.2
18.6
20.0
21.5
21.8
21.9
18.7
a) Total is equal to the sum of amounts from 2023–24 to 2027–28.
b) Gross debt measures the face value of Government Securities (AGS) on issue.
c) Net debt is the sum of interest-bearing liabilities (which includes AGS on issue measured at market
value) less the sum of selected financial assets (cash and deposits, advances paid and investments,
loans and placements).
Responsible economic management
The Government’s Economic and Fiscal Strategy is making the economy and the budget
stronger, more resilient and more sustainable over the medium term. The back-to-back
surpluses reflect the Government’s discipline to return 96 per cent of tax upgrades to
Budget in 2023–24 and 82 per cent of tax upgrades since PEFO. Since coming to
government real payments growth has been limited to an average 1.4 per cent per year and
$104.8 billion in budget improvements have been identified up to 2027–28.
The Government is directly reducing inflation through responsible cost-of-living measures.
In 2024–25, these measures are estimated to directly reduce inflation by ½ of a percentage
point and are not expected to add to broader inflationary pressures.
In this Budget, the Government has identified $27.9 billion in savings and spending
reprioritisations to support the Government’s commitment to improve the quality of
spending and ensure spending is targeted at national priorities. This brings the total
savings and spending reprioritisations since PEFO to $77.4 billion.
The Budget also incorporates the impact of National Disability Insurance Scheme (NDIS)
reforms being undertaken by the Government as part of the Getting the NDIS back on track
measure. These reforms are expected to offset increases in NDIS payments of $14.4 billion
over four years from 2024–25, based on the NDIS Actuary’s revised projections without
further action.
This Budget also includes measures to strengthen the fairness and sustainability of the tax
system, which will improve the budget by $3.1 billion over five years. This includes
| Budget Paper No. 1
Page 8 | Statement 1: Budget Overview
funding for the Australian Taxation Office to address fraud, extending tax compliance
activities focused on domestic and multinational tax avoidance, the shadow economy and
the personal income tax system, and strengthening the foreign resident capital gains tax
regime to ensure foreign residents pay their fair share of tax in Australia.
The Government has taken $15.4 billion in unavoidable spending decisions, including to
extend terminating programs and continue to address legacy issues left by the former
Government. Investment in these critical areas ensures that we keep existing programs in
place to prevent any cuts to the services that Australians rely on. This includes funding to:
• address pressures at Services Australia, help stabilise claim processing performance and
continue emergency response capability, continue to operate, maintain and enhance
myGov, and improve safety for staff and customers
• address unavoidable cost pressures for existing projects in the Infrastructure Investment
Program
• extend terminating health programs and to continue the COVID-19 response
• support digital capability and sustainment of aged care systems
• address underfunding at Home Affairs and the Australian Border Force, helping to
sustain operations and maintain capability to secure our borders.
Budget priorities
Easing cost-of-living pressures
Australian households and businesses are still under pressure from high, but moderating,
inflation and higher interest rates. In addition to the Government’s cost-of-living tax cuts,
this Budget delivers a further $7.8 billion in cost-of-living relief. The Government’s income
tax changes, energy bill relief, and rent assistance that will take pressure off households
and are not expected to add to broader inflationary pressures. The Government is also
delivering initiatives to build a more competitive and dynamic economy to put downward
pressure on prices into the future.
Tax cuts for every Australian taxpayer
The Government has legislated tax cuts for all 13.6 million Australian taxpayers from
1 July 2024 to provide cost-of-living relief, return bracket creep and boost labour supply.
The Government’s tax changes have been designed to ensure they will not add to the
inflation outlook.
Budget Paper No. 1 |
Statement 1: Budget Overview | Page 9
From 1 July 2024:
• the 19 per cent tax rate will be reduced to 16 per cent
• the 32.5 per cent tax rate will be reduced to 30 per cent
• the income threshold above which the 37 per cent tax rate applies will be increased from
$120,000 to $135,000
• the income threshold above which the 45 per cent tax rate applies will be increased from
$180,000 to $190,000.
The Government’s tax cuts return bracket creep and lower average tax rates for all
taxpayers, with an average tax cut of $1,888. Someone earning an average income will pay
$21,915 less in tax by 2034–35 as a result of the tax cuts. The reductions in average tax rates
provide all taxpayers, particularly low- to middle-income taxpayers, with greater
protection against bracket creep.
Compared to previously legislated settings, 11.5 million taxpayers (or 84 per cent of
taxpayers) will receive a bigger tax cut. This includes 2.9 million lower-income taxpayers
with taxable income of $45,000 or less, who would not have received any support
previously.
The tax cuts are expected to increase labour supply by around 930,000 hours per week,
equivalent to around 25,000 full time jobs. This increase is primarily driven by increases in
hours worked and participation of women and individuals in the low- to middle-income
range, particularly those earning between $25,000 and $75,000. All 6.5 million women
taxpayers will receive a tax cut in 2024–25, and 90 per cent of women taxpayers will get a
bigger tax cut, increasing the financial return from work and supporting participation.
The Government has increased the Medicare levy low-income thresholds for singles,
families and seniors from 1 July 2023 to provide additional cost-of-living relief. This will
mean more than one million Australians on lower incomes continue to be exempt from
paying the Medicare levy or pay a reduced levy rate.
New power bill relief
The Government is directly easing cost-of-living pressures for households and eligible
small businesses through additional energy bill relief, which will be extended to all
households, at a cost of $3.5 billion. From 1 July 2024, the Government will deliver rebates
of $300 to every household and $325 to around one million small businesses across the
country. Extending energy bill relief and expanding it to all households is expected to
directly reduce headline inflation by around ½ a percentage point in 2024–25 and is not
expected to add to broader inflationary pressures.
| Budget Paper No. 1
Page 10 | Statement 1: Budget Overview
Support for renters
The Government recognises that many renters are still facing pressure from rising rents.
This Budget provides further relief for renters by increasing maximum rates of
Commonwealth Rent Assistance by an additional 10 per cent, at a cost of $1.9 billion over
five years from 2023–24. This increase will support nearly one million households and help
further relieve rental stress among low-income households.
This builds upon relief provided in the 2023–24 Budget, where the Government delivered
the largest increase in Commonwealth Rent Assistance in more than 30 years, increasing
maximum rates by 15 per cent. This is the first back-to-back real increase in the maximum
rates of Commonwealth Rent Assistance in more than three decades.
Cheaper medicines
The Government is continuing to assist households facing cost-of-living pressures by
keeping down the costs of medicines. Instead of rising with inflation, medicines will be
kept cheaper through a one-year freeze on the maximum Pharmaceutical Benefits Scheme
(PBS) patient co-payment for everyone with a Medicare card and a five-year freeze for
pensioners and other concession cardholders. The Government is working to finalise the
new Eighth Community Pharmacy Agreement, supported by up to an additional $3 billion
in funding.
Supporting students
The Government will cut $3 billion in student debt for more than three million Australians.
This will provide relief for everyone with Higher Education Loan Program (HELP) and
other student loan debt, while continuing to protect the integrity and value of the student
loan system which has massively expanded access to tertiary education. In response to the
Universities Accord, the Government will cap the HELP indexation rate to be the lower of
either the Consumer Price Index (CPI) or the Wage Price Index (WPI). The Government will
backdate this relief to all HELP, VET Student Loan, Australian Apprenticeship Support
Loan and other student support loan accounts that existed on 1 June 2023. This will benefit
all Australians with a HELP debt, fix last year’s spike and prevent growth in debt from
outpacing wages in the future.
These changes complement other investments to set students up for success including
payments for mandatory placements and to apprentices in priority occupations.
Support for vulnerable Australians
The Government is extending eligibility for the existing higher base rate of JobSeeker
Payment to single JobSeeker Payment recipients with an assessed partial capacity to work
between zero and 14 hours per week. Combined with a higher rate of Energy Supplement
this will provide an increase of at least $54.90 per fortnight for these recipients. This is in
addition to the broader $40 fortnightly base rate increase for working age and student
payments announced in the 2023–24 Budget and regular indexation increases.
Budget Paper No. 1 |
Statement 1: Budget Overview | Page 11
The Government is also supporting social security recipients to manage their budgets by
continuing the freeze on social security deeming rates for financial investments at their
current levels for a further 12 months until 30 June 2025. This will benefit around
876,000 income support recipients, including around 450,000 Age Pensioners.
The Government is providing $138.0 million over five years for community services
delivered under the Financial Wellbeing and Capability Activity program, including
financial resilience, capability building and crisis support. This program supports over
580,000 people experiencing financial distress including to help meet the cost of unexpected
bills and expenses.
A fair go for consumers
The cost of food and groceries is putting many family budgets under significant pressure.
The Government is committed to ensuring that the right regulatory settings are in place to
support a competitive and sustainable food and grocery industry in Australia.
The Government has appointed Dr Craig Emerson to review the Food and Grocery Code of
Conduct, to promote good faith commercial dealings between supermarkets and suppliers.
The Government has also directed the Australian Competition and Consumer Commission
(ACCC) to undertake a price inquiry into the supermarket sector, to ensure Australians are
paying a fair price for their groceries.
Further, the Government has commissioned respected consumer advocate CHOICE to
prepare quarterly reports, looking at the comparative cost of a basket of goods from
retailers. This initiative will help consumers to make an informed choice and save money.
The Government has announced the biggest reform to Australia’s merger control system in
almost 50 years, and is working with state and territory governments over the coming year
to revitalise National Competition Policy. These initiatives will promote a more competitive
and productive economy, support living standards and put downward pressure on prices
into the future.
Building more homes for Australians
This Budget invests in delivering the housing and infrastructure needed to support
Australia’s thriving cities and regional communities. The Government is boosting housing
supply including social and affordable housing and investing in infrastructure to build
more homes in well-located areas. The Government is also investing in the road, rail and
port infrastructure needed to make our cities and regional communities more liveable and
connect them with each other and to the world.
Help to build, rent and buy
The Government will make a further $1 billion available to the states and territories to
boost housing supply in well-located areas. This includes funding to unblock local
infrastructure bottlenecks that are preventing housing from being built by supporting
| Budget Paper No. 1
Page 12 | Statement 1: Budget Overview
better shared facilities and essential services such as water, power, and roads. This
responds directly to requests from states and territories for an earlier boost to infrastructure
funding to help them meet National Cabinet’s 1.2 million homes target and achieve their
share of the $3 billion New Homes Bonus incentive payment being offered by the
Commonwealth.
Under the new National Agreement on Social Housing and Homelessness the Government
is offering the states and territories an additional $423.1 million over five years for social
housing and homelessness services, bringing the total to $9.3 billion. For this new
agreement, the Commonwealth will double its dedicated funding allocation for
homelessness services – funding the states and territories must match.
The Government will implement regulatory requirements to ensure public universities
provide more purpose-built student accommodation. The Government will consult on the
details of these requirements and transition arrangements prior to commencement. This
will help increase the supply of student accommodation for all students and will ease
pressure on the private rental market.
To encourage investment in the Build to Rent sector, the Government will allow foreign
investors to purchase established Build to Rent developments and apply lower application
fees to these investments. This builds on the Government’s 2023–24 MYEFO commitment to
apply lower fees to foreign investment applications for new Build to Rent developments.
Building the construction workforce
To strengthen the pipeline of skilled workers in the construction and housing sector, the
Government is investing $88.8 million to deliver 20,000 additional Fee-Free TAFE and VET
places in courses relevant to construction, including increased access to pre-apprenticeship
programs. This is on top of more than 355,000 Fee-Free TAFE places delivered in 2023, and
the 300,000 places being delivered from 2024 to 2026 in areas of skills need.
The Government will also provide $1.8 million to deliver streamlined skills assessments for
around 1,900 migrants from comparable countries who wish to work in Australia’s housing
construction industry.
More Social and Affordable Housing
The first $500 million minimum annual disbursement from the $10 billion Housing
Australia Future Fund (HAFF) will be made in 2024–25. These funds will support social,
affordable, and acute housing, including for women and children impacted by family
violence and older women at risk of homelessness. The Government will also provide
additional concessional financing of up to $1.9 billion to community housing providers and
other charities to support delivery of new social and affordable dwellings under the HAFF
and the National Housing Accord.
The Government will further expand the Affordable Housing Bond Aggregator program
by increasing Housing Australia’s liability cap by $2.5 billion to $10 billion, and lend an
additional $3 billion to Housing Australia to support ongoing delivery of the program.
Budget Paper No. 1 |
Statement 1: Budget Overview | Page 13
These changes will enable Housing Australia to provide more low-cost finance to
community housing providers.
The Government will target $1 billion for social housing under the National Housing
Infrastructure Facility towards crisis and transitional accommodation for women and
children fleeing domestic violence, and youth.
Better transport for cities, regions and suburbs
The Government is focusing its over $120 billion ten-year infrastructure investment
pipeline on nationally significant projects which improve the prosperity, accessibility and
liveability of our cities, regions and communities. This Budget provides $16.5 billion over
10 years from 2024–25 for priority road and rail infrastructure projects, including additional
funding of $3.3 billion for the North East Link and $437.3 million for suburban road
upgrades in south eastern and northern Melbourne.
To ensure Perth has an effective public transport network to support its growth, this
Budget provides an additional $1.4 billion to existing METRONET projects and
$300 million for a new High-Capacity Signalling Program.
This Budget will provide every state and territory with additional funding for new and
existing infrastructure projects over the forward estimates; with $9.5 billion additional
being provided over the forward estimates.
Better transport for Western Sydney
The Government is committed to unlocking the economic potential of Western Sydney,
investing $2 billion of additional infrastructure funding this Budget. This brings total
infrastructure investment in Western Sydney to $17.3 billion.
Investments in more efficient transport networks will transform the way communities live
and move within Western Sydney and connect people to opportunities in the region. Key
projects include:
• $1.9 billion for priority road and rail projects; including Mamre Road, Elizabeth Drive,
and Richmond Road from the M7 Motorway to Townson Road
• $100.0 million for zero emission rapid bus infrastructure to connect the metropolitan
centres of Penrith, Liverpool and Campbelltown to the Western Sydney International
(Nancy-Bird Walton) Airport and Aerotropolis at Bradfield.
Western Sydney International Airport is due to welcome its first travellers and freight in
2026. The Government is providing a further $302.6 million over five years to enable
operations at the Airport, including for border agencies to progress design, fit out and
commissioning of facilities, provide federal policing and establish a detector dog unit.
| Budget Paper No. 1
Page 14 | Statement 1: Budget Overview
Meeting the infrastructure needs for South East Queensland
The Government is investing $2.2 billion in vital transport infrastructure projects in South
East Queensland to accommodate a population that has grown by over 50 per cent in the
last 20 years, better integrating the region, and unlocking future housing development.
Investments in this Budget will enhance rail connectivity and reduce trip times between
Brisbane and the Sunshine Coast, including an additional $1.2 billion for the Direct
Sunshine Coast Rail and $226.7 million for the Beerburrum to Nambour Rail Upgrade,
ahead of the 2032 Olympic and Paralympic Games. In addition, $431.7 million is provided
for the Coomera Connector Stage 1 project, and an extra $467.2 million is being committed
for the Bruce Highway Corridor, including in South East Queensland.
Better connections for regional and remote communities
Australia’s regions rely on efficient and resilient transport links to connect communities
and businesses. The Government is investing $2.6 billion in road and rail projects in
regional Australia, including $541.7 million for upgrades to critical roads in Northern
Australia and an additional $290.1 million for the Gippsland Rail Line Upgrade. Following
the completion of additional planning, $720.0 million will be released for the construction
of the Inland Freight Route in Queensland, providing an alternative to the Bruce Highway
and improved connectivity between the NSW border and Charters Towers. The
Government is also investing $540.0 million to improve the reliability of the Australian Rail
Track Corporation’s interstate freight rail network, including $150.0 million to upgrade the
Maroona to Portland Line.
This Budget also provides $101.9 million to improve safety and accessibility at regional
airports, including funding to upgrade remote airstrips recognising their importance in
delivering healthcare and other services to remote communities.
Investing in a Future Made in Australia
This Budget invests $22.7 billion over the next decade to build a Future Made in Australia.
This plan is about maximising the economic and industrial benefits of the net zero
transformation and securing Australia’s place in a changing global economic and strategic
landscape.
The Future Made in Australia package encourages and facilitates the private sector
investment required for Australia to make the most of these structural shifts. It will help
Australia better attract and enable investment, encourage the transition to cheaper and
cleaner energy and support Australia to become a renewable energy superpower. It will
also value-add to our resources, strengthen our economic security, boost our innovation
and digital capabilities and invest in the highly skilled workforce of the future.
The Future Made in Australia plan recognises the best opportunities for Australia and its
people are at the intersection of industry, energy, resources, human capital, and our ability
to attract and deploy investment. It will help build a stronger, more diversified and more
Budget Paper No. 1 |
Statement 1: Budget Overview | Page 15
resilient economy powered by clean energy, in a way that creates secure, well-paid jobs in
our regions and suburbs, and benefits communities across Australia.
The Future Made in Australia plan is complemented by broader government priorities and
initiatives in this Budget. These include but are not limited to investments in education,
defence capabilities, trade and regional engagement and support for small business,
farmers and regions.
Attracting investment in key industries
The Government will legislate a Future Made in Australia Act and establish a National
Interest Framework to identify priority industries and guide investments associated with
these industries, to ensure they are responsible and targeted.
The Framework will have a focus on industries that contribute to net zero transformation
where Australia has a comparative advantage, and in areas where Australia has national
interest imperatives related to economic security and resilience. It will also allow for the
setting of new Community Benefit Principles to ensure government investment has flow on
benefits for the broader Australian community, and will complement the Buy Australian
Plan and Secure Jobs Plan.
New front door for investors
To facilitate the investment Australia’s dynamic economy needs, the Government will
establish a new front door for investors with major, transformational investment proposals
to make it simpler to invest in Australia and attract more global and domestic capital. The
single point of contact for investors and companies with major investment proposals will
streamline engagement with government, helping those investors and companies navigate
approvals processes and fast-tracking major projects where possible.
It is proposed the new front door will deliver a joined-up approach to investment attraction
and facilitation, identify priority projects related to the Government’s Future Made in
Australia agenda, support accelerated and coordinated approvals, and connect investors
with the Government’s Specialist Investment Vehicles. Its core functions and institutional
arrangements will be subject to consultation, led by the Treasury.
The Net Zero Economy Authority (NZEA) will continue to support regions affected by
energy system change through public and private investment, facilitating worker
transition, and driving skills development. The front door will work in partnership with
the NZEA to provide investment facilitation support and lead place-based co-investment.
The mandate of Export Finance Australia’s National Interest Account will be expanded to
provide financial support for projects where public investment can strengthen the
alignment of economic incentives with Australia’s national interests and incentivise private
investment at scale in the development of priority industries. Support from the National
Interest Account will be guided by the National Interest Framework and Community
Benefit Principles, outlined in Box 1.1. Export Finance Australia will continue to rigorously
assess the technical and commercial viability of proposed projects.
| Budget Paper No. 1
Page 16 | Statement 1: Budget Overview
Strengthening and streamlining approvals
The Government is making it easier to invest in transformational projects by streamlining
approval processes in ways that strengthen standards. Through smarter use of data, better
decision-making processes and appropriate resourcing, this Budget provides a faster
pathway to better decisions on environmental, energy, planning, cultural heritage and
foreign investment approvals.
The Government is providing $96.6 million over four years to support timely
environmental approval decisions by providing more support for project assessments,
better planning in priority regions and more funding for threatened species research.
This Budget provides an additional $19.9 million over four years to support assessment of
priority renewable energy projects, to support the identification of national priority
projects, working in collaboration with states and territories. Together, these measures
support the recently announced second stage of the Government’s Nature Positive Plan.
The Government is also providing $17.7 million over three years to help reduce the backlog
and support the administration of complex cultural heritage applications in the system.
The Government is working in partnership with states and territories to improve approval
processes for energy infrastructure. This Budget invests $20.7 million over seven years in
improving community engagement in energy infrastructure, including through
introducing voluntary national standards for renewable energy developers, improving
community benefits realisation in regional communities, and permanently establishing the
Australian Energy Infrastructure Commissioner. Through the National Energy
Transformation Partnership and support for the Australian Energy Market Operator grid
connections pilot, the Government is also improving how planning decisions and electricity
grid connections are delivered. To date, these actions have fast-tracked the delivery of an
additional 3.2 gigawatts of generation capacity.
Foreign Investment Framework
This Budget provides $15.7 million to deliver a stronger, more streamlined and more
transparent approach to foreign investment. These reforms will help attract the foreign
capital flows Australia needs while protecting the national interest in an increasingly
complex economic and geostrategic environment.
The Government will apply greater scrutiny to high-risk investments and enhance
monitoring and enforcement activities. At the same time, low-risk investments will be
processed faster to help bring in the capital Australia needs. This will be supported by
Treasury adopting a new target of processing 50 per cent of foreign investment applications
within the 30-day statutory timeframe from 1 January 2025.
Sustainable finance strategy
The Government is investing $17.3 million to deliver its ambitious sustainable finance
agenda to mobilise private sector investment in the net zero transformation. This Budget
fully funds completion of Australia’s preliminary sustainable finance taxonomy, as well as
development of a labelling regime for investment products marketed as sustainable.
Budget Paper No. 1 |
Statement 1: Budget Overview | Page 17
An additional $1.3 million will enable the development of guidance on best practices for
businesses disclosing net zero transition plans.
The Government is also issuing around $7 billion of green bonds in 2023–24 which
will support the development of Australia’s broader sustainable finance markets.
The sustainable finance strategy will support reforms such as the new front door for
investors and those that enhance Australia’s ability to attract investment needed to make
Australia a renewable energy superpower.
Making Australia a renewable energy superpower
The Government is making substantial investments to establish Australia as a renewable
energy superpower. Maximising the opportunities of cheaper, cleaner, more reliable energy
and the transformation to net zero are foundational in building a future made in Australia.
Powering Australia with cheaper, cleaner, more reliable energy
The Government is unlocking over $65 billion of investment in renewable generation and
clean dispatchable capacity through the Capacity Investment Scheme. This will transform
Australia’s electricity grid and provide the foundation for an economy powered by
renewables.
This Budget commits $27.7 million to help Australians benefit from cheaper, cleaner energy
sooner by supporting development of priority reforms to ensure consumer energy
resources, such as rooftop solar, household batteries and electric vehicles, contribute to our
grid. It also introduces the New Vehicle Efficiency Standard, which will save Australians
around $95 billion at the bowser by 2050 while reducing transport emissions.
Unlocking investment in net zero industries and jobs
This Budget accelerates the growth of new industries by providing a $1.5 billion extension
over seven years to the Australian Renewable Energy Agency’s industry-building
investments and establishing the $1.7 billion Future Made in Australia Innovation Fund.
This Fund will support innovation, commercialisation, pilot and demonstration projects
and early stage development in priority sectors, including renewable hydrogen, green
metals, low carbon liquid fuels and clean energy technology manufacturing such as
batteries. The Budget also invests $44.4 million in an Energy Industry Jobs Plan and
$134.2 million for skills and employment support in key regions impacted by the net zero
transition.
The Government is establishing a Hydrogen Production Tax Incentive for renewable
hydrogen produced from 2027–28 to 2039–40 to incentivise greater investment in renewable
hydrogen production, at an estimated cost of $6.7 billion over the decade. This Government
is also expanding the Hydrogen Headstart program by $1.3 billion, supporting early
movers to invest in the industry’s development.
| Budget Paper No. 1
Page 18 | Statement 1: Budget Overview
These investments are supported by an extension to the First Nations Renewable Hydrogen
Engagement Fund and the 2024 National Hydrogen Strategy, which outlines Australia’s
approach to becoming a global hydrogen leader through the development of a domestic
low emissions hydrogen industry, working with international partners. Together, these
new commitments are expected to unlock $50 billion in private capital investment into the
Australian renewable hydrogen industry by 2030.
Green metals and low carbon liquid fuels are also key to Australia’s net zero
transformation. This Budget initiates further consultation on policy approaches to
accelerate investment and incentivise efficient production of green metals and low carbon
liquid fuels.
Boosting demand for Australia’s green exports
The Government is supporting the growth of green industries and making it easier for
businesses and trading partners to source low-emissions products by developing product
standards for green products. The Budget provides $32.2 million to fast-track the initial
phase of the Guarantee of Origin scheme focused on renewable hydrogen in 2024–25,
before expanding the scheme to accredit the emissions content of green metals and low
carbon liquid fuels.
Realising the opportunities of net zero transformation
Australia is committed to reaching net zero greenhouse gas emissions by 2050 and is
developing six sector plans covering electricity and energy, transport, industry, resources,
agriculture and land, and the built environment. This Budget continues the Government’s
investment in effective emissions abatement, including through $63.8 million to support
emissions reduction efforts in the agriculture and land sector.
The Government is also investing $399.1 million to establish the Net Zero Economy
Authority, which will support the economy-wide net zero transformation that is underway
by acting as a catalyst for private and public investment, major project development,
employment transition, skills and community development. The Budget strengthens
community engagement in and benefits from the transition by investing $48.0 million in the
reforms to the Australian Carbon Credit Unit scheme and $20.7 million to improve
community engagement and realise community benefits for regional communities affected
by the energy transition.
Adding value to resources and strengthening economic security
Critical minerals are a key input to many clean energy technologies. Scaling the supply of
critical minerals will be essential in order to support the global transition to net zero by
2050. Australia can improve the resilience of supply chains and add more value to our
resources by processing and refining critical minerals.
Budget Paper No. 1 |
Statement 1: Budget Overview | Page 19
Backing a strong resources sector
Critical minerals are a key input to many clean energy technologies. Scaling the supply of
critical minerals will be essential to support the global transition to net zero by 2050.
By adding more value to our resources by processing and refining critical minerals,
Australia can improve the resilience of global supply chains.
This Budget establishes a Critical Minerals Production Tax Incentive for eligible processing
and refining costs from 2027–28 to 2039–40 to incentivise investment in refining and
processing of the 31 critical minerals currently identified on the Government’s Critical
Minerals List, at an estimated cost of $7.0 billion over the decade.
The Government is also partnering with states and territories to complete pre-feasibility
studies for critical minerals common-use infrastructure through the Critical Minerals
National Productivity Initiative, and supporting up to $1.2 billion in priority critical
minerals projects through the Critical Minerals Facility and Northern Australia
Infrastructure Facility. This includes the Alpha HPA alumina project in Queensland and
Arafura Rare Earth’s Nolans Rare Earth project in the Northern Territory.
The Government is investing $556.1 million over ten years to progressively map Australia’s
potential for critical minerals, alternative energy, groundwater and other resources,
providing scientific information to guide future investment.
Manufacturing clean energy technologies
The Government is providing $1.5 billion in support administered by the Australian
Renewable Energy Agency for the manufacturing of clean energy technologies that
strengthens supply chain resilience. The $1 billion Solar Sunshot program will incentivise
private investment in solar panel manufacturing capability and the Battery Breakthrough
Initiative, costing $523.2 million over seven years, will promote further opportunities to
add value to Australia’s critical minerals and target the high-value opportunities in the
battery manufacturing value chain.
Building resilient supply chains
Resilient supply chains will be critical to delivering the Government’s renewable energy
superpower vision. The Government is working with the states and territories through the
National Energy Transformation Partnership to secure the inputs required to achieve the
82 per cent renewable energy target. This is on top of the $2.2 million over two years
previously committed to improve supply chain transparency and identify future demand
for critical inputs.
The Government will also invest an additional $14.3 million to improve the
competitiveness of the Australian economy by working with trade partners to support
global rules on unfair trade practices and to negotiate benchmarks for trade in high-quality
critical minerals.
| Budget Paper No. 1
Page 20 | Statement 1: Budget Overview
Box 1.1: The Future Made in Australia National Interest Framework
The net zero transition and heightened geostrategic competition are transforming
the global economy. Australia’s comparative advantages, capabilities and trade
partnerships mean that these global shifts present a profound opportunity for
Australian workers and businesses. In certain circumstances, targeted public
investment can strengthen the alignment of economic incentives with Australia’s
national interests and incentivise private investment at scale to develop priority
industries.
In considering the prudent basis for public investment, the Government has had
regard to: Australia’s grounds for lasting competitiveness, the role the industry will
play in securing an orderly path to net zero and in building Australia’s economic
resilience and security, whether the industry will build key capabilities, and whether
the barriers to private investment can be resolved through public investment in a
way that delivers compelling public value.
These five tests have informed the development of a National Interest Framework
(the Framework), which will impose rigour on Government’s decision making on
significant public investments, particularly those used to incentivise private
investment at scale. The Framework has two streams that will be used to identify
priority industries and principles for government support.
• Net zero transformation stream: Industries may warrant public investment
under this stream if Australia is assessed to have grounds for sustained
comparative advantage in a net zero global economy, and public investment is
needed for the sector to make a significant contribution to emissions reduction at
an efficient cost.
• Economic resilience and security stream: Industries may warrant public
investment under this stream if some level of domestic capability is necessary or
efficient to deliver adequate economic resilience and security, and the private
sector would not invest in this capability in the absence of public investment.
The Government will apply community benefit principles in relation to investments
in priority industries. These principles will have a focus on investment in local
communities, supply chains and skills, and the promotion of diverse workforces and
secure jobs.
continued on next page
Budget Paper No. 1 |
Statement 1: Budget Overview | Page 21
Box 1.1: The Future Made in Australia National Interest Framework
(continued)
The following industries are consistent with the National Interest Framework
in the context of the Government’s Future Made in Australia agenda in the
2024–25 Budget:
Net zero transformation
Economic resilience and security
Renewable hydrogen
Green metals
Low carbon liquid fuels
Processing and refining of critical minerals
Manufacturing of clean energy technologies
Treasury will be responsible for the Framework. Further details will be made
available and consulted on as part of the Future Made in Australia legislative
package. The Framework is not intended to direct all Government investments or
replace other policy frameworks.
The Future Made in Australia package in the 2024–25 Budget puts in place
meaningful but targeted incentives for private investment consistent with the
Framework, including production tax credits for renewable hydrogen and critical
minerals processing and refining. The Future Made in Australia package also
includes broader investments in the Government’s growth agenda, including critical
technologies, defence priorities, skills in priority sectors, a competitive business
environment and reforms to better attract and deploy investment.
Investing in digital, science and innovation
Science and research lay the foundations for new industries and productivity growth.
This Budget invests in the data, technology and capabilities that will underpin future
innovations.
Investing in new technologies and capabilities
Building on Australia’s existing strengths in research and applied technology, the
Government is partnering with PsiQuantum and the Queensland Government to develop
Australia’s quantum computing capabilities. As part of this $466.4 million partnership,
PsiQuantum will build the world’s first commercial-scale quantum computer in Brisbane,
become the anchor tenant in a growing quantum precinct in Brisbane and deliver PhD
positions and research collaborations.
The Government is initiating an independent, strategic examination of Australia’s research
and development system to ensure a robust and sustainable policy for a future made in
Australia and to maximise the impact of investments in science, research and innovation.
| Budget Paper No. 1
Page 22 | Statement 1: Budget Overview
The Government is providing $448.7 million to partner with the United States in the
Landsat Next satellite program to provide access to critical data to monitor the earth’s
climate, agricultural production, and natural disasters, and $145.4 million for the National
Measurement Institute to support its core scientific capabilities. To increase diversity in
education and industry, the Government will invest $38.2 million to provide funding for
a range of STEM programs.
Modernising and digitising industries
To guide safe and responsible development of new technologies, the Government will
invest $39.9 million to progress Australia’s regulatory response to ensure safe and
responsible development and deployment of AI and release a National Robotics Strategy to
promote the responsible production and adoption of robotics and automation technologies
in Australia.
The Government will invest $288.1 million to support the further delivery and expansion of
Australia’s Digital ID System so more Australians can realise the economic, security and
privacy benefits of Digital ID.
Reforming tertiary education and investing in priority skills
A highly skilled workforce will be a core enabler of the Government’s ambitious agenda to
modernise the Australian economy, drive productivity growth and build a future made in
Australia. This Budget invests to build and enhance Australia’s human capital base through
key reforms to the tertiary education sector.
As part of the response to the Universities Accord, the Government will set a tertiary
attainment target of 80 per cent of the working age population to have a VET or higher
education qualification by 2050. To achieve this target, the Government is committing
$1.1 billion over five years, and an additional $2.7 billion from 2028–29 to 2034–35, to
expand access to higher education and support future productivity.
Broadening access to university
Increasing tertiary attainment and meeting the 80 per cent target will require greater
numbers of underrepresented students to attend university. To help more of these students
succeed, the Government is committing to needs-based funding. Universities will receive
additional funding to provide dedicated support to students from low-socioeconomic
backgrounds, First Nations students, students with disability and students studying at
regional campuses.
The Government will also redesign the university funding model to drive attainment levels
that meet our long-term skills needs. To provide more pathways to university for students
who do not qualify for direct entry, the Government is also investing $350.3 million to
expand access to free university enabling courses from 1 January 2025.
Budget Paper No. 1 |
Statement 1: Budget Overview | Page 23
Supporting students on placements
The Government is investing $427.4 million over four years to make Commonwealth Prac
Payments to students studying in critical sectors while they undertake mandatory
placements. Support will be available to nursing including midwifery, teaching and social
work students in higher education and nursing students in VET. Eligible students will
receive payments of $319.50 per week for the duration of their placement. This is expected
to support more than 73,000 students per year, will help to alleviate the financial impact of
being on placement and will support retention in courses related to sectors with skills
shortages.
Investing in priority skills
The Government is supporting gender equality and women’s participation by driving
structural and cultural change in work and training environments in traditionally
male-dominated industries. The Government is investing $55.6 million to launch the
Building Women’s Careers program which will deliver around ten large-scale projects, and
several smaller local projects, to support women to access flexible training in clean energy,
construction, tech and advanced manufacturing.
To support apprentice retention and completion rates, the Government has committed to
increase Phase Two Incentive System payments for apprentices in priority occupations
from $3,000 to $5,000 and hiring incentives for priority occupation employers from
$4,000 to $5,000 for 12 months from 1 July 2024. This will provide certainty to apprentices
while the Government awaits the findings of the Strategic Review of the Australian
Apprenticeship Incentive System.
To strengthen the pipeline of skills in the construction sector, the Government is investing
$88.8 million to deliver 20,000 additional Fee-Free TAFE places in courses relevant to
construction, including increased access to pre-apprenticeship programs. This is on top of
more than 355,000 Fee-Free TAFE places delivered in 2023, and the 300,000 places being
delivered from 2024 to 2026 in areas of skills need.
The Government is investing $91.0 million to develop the clean energy workforce,
including by turbocharging the VET teacher, trainer and assessor workforce, and funding
clean energy training facility upgrades and capacity expansion. Expanded eligibility for the
New Energy Apprenticeships Program will also allow more apprentices to access $10,000
payments and will increase completions in priority sectors. Eligible Group Training
Organisations will be reimbursed for reducing fees to small-to-medium enterprises seeking
clean energy, manufacturing, and construction apprentices.
The Government is reforming Australia’s migration system to drive greater economic
prosperity and restore its integrity, implementing actions outlined in the Migration
Strategy. This Budget supports skills in demand, with around 70 per cent of the permanent
Migration Program allocated to skilled visa categories. The Government will also introduce
a new National Innovation visa to attract exceptionally talented migrants and replace the
Global Talent visa and the Business Innovation and Investment visa. These actions
complement reforms being developed for the points test used for certain skilled visas.
| Budget Paper No. 1
Page 24 | Statement 1: Budget Overview
The actions underway as part of the Migration Strategy are delivering a better managed
migration system. Government actions are estimated to reduce net overseas migration by
110,000 people over the forward estimates from 1 July 2024. Net overseas migration is
forecast to approximately halve from 528,000 in 2022–23 to 260,000 in 2024–25.
Strengthening our defence industry capability
The Government is committed to delivering an integrated, focused Australian Defence
Force to protect the nation in a complex geostrategic environment, including by
strengthening defence supply chains.
National Defence Strategy
As part of the 2024 National Defence Strategy, the Government is investing $330 billion
over the next decade to deliver a rebuilt Integrated Investment Program (IIP) to support the
required shift in Defence’s posture and structure, and deliver critical capabilities for the
Australian Defence Force (ADF). This includes an additional $50.3 billion over the decade
to uplift the ADF’s preparedness including through long-range strike capability and
accelerating the modernisation of the Royal Australian Navy’s surface combatant fleet.
The Government’s significant investment in a rebuilt IIP involves reprioritisation of
$22.5 billion over the next four years and $72.8 billion across the decade to support
accelerated delivery of critical capabilities for the ADF.
Developing defence industry and skills
The Government will provide $101.8 million over seven years from 2024–25 to attract and
retain the Australian industrial workforce required to support the delivery of Australia’s
conventionally-armed nuclear-powered submarines. This includes initiatives delivered
through the Skills and Training Academy, such as a pilot apprenticeship program in trades
required to support the nuclear-powered submarine enterprise. It will also support
scholarships for students studying relevant undergraduate STEM courses.
The Government’s Defence Industry Development Strategy will further support the
creation of a resilient and competitive sovereign industrial base, providing economic
opportunities for Australians and strengthening national defence. Funding of
$165.7 million for the Defence Industry Development Grants Program will support
businesses to increase their scale and competitiveness to deliver Sovereign Defence
Industrial Priorities, including continuous naval shipbuilding and sustainment, domestic
manufacture of guided weapons, explosive ordnance and munitions, and development and
integration of autonomous systems.
Securing Australia’s place in the world
Successfully developing a new industrial base in Australia depends on our ability to
compete in global markets and sell Australian products to the world. Strengthening trade
partnerships can bolster supply chains and improve the competitiveness of Australia’s
economy as it transitions to net zero.
Budget Paper No. 1 |
Statement 1: Budget Overview | Page 25
This Budget includes $14.3 million to improve the competitiveness of the Australian
economy by working with trade partners to support global rules on unfair trade practices
and to negotiate benchmarks for trade in high quality critical minerals. This Future Made in
Australia agenda will drive a set of initiatives designed to deliver concrete benefits to
industries central to a future made in Australia, and begin to shape an international trading
environment that supports Australia’s comparative advantages.
From 1 July 2024, the Government will abolish 457 nuisance tariffs at a cost of $41 million
over five years from 2023–24. The largest unilateral tariff reform in two decades will boost
productivity, reduce red tape and simplify the tariff system. It will streamline
approximately $8.5 billion in trade, saving Australian businesses approximately $30 million
per year in compliance costs.
The Government is also making trade faster, easier and cheaper. This is a $29.9 million
investment includes a Simplified Trade System unit to drive integrated cross-border trade
reforms, and a new Digital Trade Accelerator Program to give businesses new, secure
digital access to important trade data, with enhanced risk assessments to better facilitate
trade across our borders.
This Budget will also take forward a whole-of-government approach to securing
Australia’s place in the world. This includes ensuring the security of our critical diplomatic
network over the long term and improving resilience to cyber threats, by investing more
than $388.2 million over the forward estimates to upgrade Australia’s communications
infrastructure and overseas property, including in the Pacific.
Investing in our relationship with Southeast Asia
The Government understands that our prosperity, security and economic future is tied to
our region. We continue to implement Invested: Australia’s Southeast Asia Economic
Strategy to 2040, including the $505.9 million already committed to deepen ties with the
region. The new Southeast Asia Investment Financing Facility will provide up to $2 billion
in loans, guarantees, equity and insurance to catalyse Australian trade and investment in
the region.
A stable, prosperous and resilient Pacific region
This Budget demonstrates the Government’s longstanding commitment to support a stable,
prosperous and resilient Pacific region. This includes programs which promote economic
and social development, address infrastructure needs, build climate resilience, support
access to reliable banking services, and strengthen our contribution to the regional
approach in addressing shared security priorities. The Government’s aim is for Australia to
remain the partner of choice for Pacific countries.
Support for small businesses
The Government is delivering a better deal for small businesses by easing the pressure on
them, supporting them to grow, and levelling the playing field. This Budget is creating the
| Budget Paper No. 1
Page 26 | Statement 1: Budget Overview
conditions for small businesses to invest, innovate and generate new jobs that will drive the
economy and benefit Australian communities.
Improving cash flow
The Government is supporting up to four million small businesses to invest and grow
by extending the $20,000 instant asset write-off to improve cash flow and reduce
compliance costs. This extension is estimated to provide $290.0 million in cash flow support
for small businesses over the forward estimates, building on support announced in the
2023–24 Budget.
Small businesses with an aggregated annual turnover of less than $10 million will continue
to be able to immediately deduct eligible depreciating assets costing less than $20,000,
which are first used or installed ready for use by 30 June 2025. The asset threshold applies
on a per asset basis, so small businesses can instantly write off multiple assets.
The Government will provide $25.3 million over four years from 2024–25 to improve
payment times for small businesses and ensure the Payment Times Reporting Regulator
can deliver its expanded functions, which include naming slow paying big businesses, and
fund fit-for-purpose ICT infrastructure for an overhauled Payment Times Reporting
Scheme.
Supporting confidence and resilience in the small business sector
This Budget invests $10.8 million over two years to 2025–26 to continue delivering
critical mental health and financial counselling supports for small business owners.
The Government is extending funding for the NewAccess for Small Business Owners
program, which provides tailored, free and confidential mental health support, and for the
Small Business Debt Helpline, a national, free and confidential phone-based financial
counselling service.
The Government will provide $3.0 million over two years to implement the Government’s
response to the Review of the Franchising Code of Conduct, including remaking and
enhancing the Code, and an additional $2.6 million over four years (and $0.7 million
per year, ongoing) to expand small businesses’ access to low-cost legal advice and
alternative dispute resolution services.
Small businesses will be supported to understand and comply with recent workplace
relations changes by providing $20.5 million to the Fair Work Ombudsman to enhance and
make permanent the Employer Advisory Service and to support the implementation of the
new right to disconnect.
The Productivity, Education and Training Fund will provide $60.0 million to employer and
employee representatives to engage with their members and government on the
implementation of significant reforms that impact businesses, workers, and the community,
including the transition to a net zero economy, Securing Australians’ Superannuation
reforms and recent workplace relations changes.
Budget Paper No. 1 |
Statement 1: Budget Overview | Page 27
A more resilient Australia
The Government is investing $831.7 million to enhance water security and help farmers
and rural communities prepare for future droughts and reduce agricultural emissions.
This Budget provides $519.1 million over eight years to maintain and grow agricultural
output and support the wellbeing of farmers and communities in a changing climate.
This includes $235.0 million over eight years to build local drought and climate resilience
solutions through greater collaboration and $137.4 million over five years to help farmers
better plan for a changing climate and future droughts. An additional $120.3 million over
six years will test and implement innovative farming and land management practices.
The Government will enhance water security and climate resilience in rural communities
through $174.6 million over six years from the National Water Grid Fund. This funding will
assist to boost regional development, agricultural production and help secure Australia’s
water supplies. Another $32.0 million will support sustainable management of water
resources in the Great Artesian Basin, vital to many regional communities.
In addition, this Budget also invests $63.8 million over ten years to support the
Government’s Agriculture and Land Sector Plan, which will help farmers reduce their
agricultural emissions. These investments will help farmers implement the latest farming
practices and technologies, making them more sustainable and profitable.
The Government is providing $40.9 million over two years to continue implementation of
the Nature Positive Plan and establishing the Nature Repair Market. This Budget also
provides $23.0 million to continue transitioning to a circular economy in Australia.
Strengthening Medicare and the care economy
This Budget continues the Government’s commitment to reform and deliver a more
sustainable and productive health, care and support economy that provides high-quality
services and supports fairly-paid jobs for Australians.
High-quality health services through Medicare
Boosting access to essential health services
The Government is investing $2.8 billion to continue its significant reforms to strengthen
Medicare, ensuring it provides affordable and timely access to health services for
Australians. This includes the $1.2 billion package agreed to by National Cabinet in
December 2023 to take pressure off hospitals.
As part of this package, the Government is supporting better health outcomes for older
Australians and helping states and territories free up hospital capacity by investing
$882.2 million over five years. This will support older Australians to avoid hospital
admission, be discharged from hospital earlier and improve their transition out of hospital
to other appropriate care.
| Budget Paper No. 1
Page 28 | Statement 1: Budget Overview
This Budget will also reduce pressure on emergency departments by delivering a further
29 Medicare Urgent Care Clinics across Australia, taking the total number of clinics to 87.
This $227.0 million investment will also increase support for clinics in regional and rural
areas. Australians can enter any Medicare Urgent Care Clinic for bulk billed urgent care.
Improving access to medicines
The Government is providing $3.4 billion over five years for new and amended listings on
the PBS and the Repatriation Pharmaceutical Benefits Scheme, including treatments for
certain types of heart disease and breast cancer. The Government is also providing
$11.1 million over five years from 2023–24 (and $2.8 million per year ongoing) to improve
First Nations people’s access to PBS subsidised medicines.
Widespread vaccination is crucial for reducing the spread of disease in the community.
This Budget will provide $141.1 million over four years from 2024–25 to support ongoing
access to life-saving vaccines. This includes support for the expansion of the National
Immunisation Program Vaccinations in Pharmacy Program, to allow pharmacists to
administer vaccines in residential aged care homes and residential disability services.
Mental health support
The Government is committed to reforming Australia’s mental health and suicide
prevention system so all Australians can access affordable care. In this Budget, the
Government will provide $888.1 million over eight years to strengthen Australia’s mental
health and suicide prevention system. This funding will help address the significant gaps in
services for people with mild mental health concerns, tackle the limited support available
for people with complex needs and respond to the recommendations made in the
independent evaluation of the Better Access program.
In this package of reforms, $588.5 million over eight years from 2024‑25 (and $113.4 million
per year ongoing) will be invested to support people with mild mental health concerns by
establishing a national low intensity digital mental health service that is free of charge and
free of need for referral.
For people with moderate to complex mental health needs, the Government will provide
$29.9 million over four years from 2024–25 to enhance clinical services by uplifting the
nationwide network of free, walk-in Medicare Mental Health Centres.
For people with complex needs, funding of $71.7 million over four years from 2024–25 (and
$24.4 million per year ongoing) will be provided to Primary Health Networks to support
wrap around care through mental health multidisciplinary services.
Improving health outcomes
Almost half of all Australians live with one or more chronic conditions, which are the
leading cause of illness, disability and death in Australia. The Government is providing
$141.1 million to improve cancer and other chronic disease outcomes in Australia. Funding
will support research and services for people with conditions such as bowel and skin
Budget Paper No. 1 |
Statement 1: Budget Overview | Page 29
cancer, diabetes, and dementia. This includes $10.3 million towards the development of a
roadmap for a national skin cancer screening program.
The Government is also supporting Australians to enjoy healthier, more active lives by
investing $132.7 million in sport programs.
COVID-19 continues to be a contributor to the burden of disease. The Government is
ensuring continued access to oral antiviral medicines on the PBS for those at risk of serious
disease, and is providing $490.0 million over four years from 2024–25 (and $107.4 million
per year ongoing) to continue the National COVID-19 Vaccine Program.
The Government is also providing $335.7 million over four years from 2024–25 for two new
permanent items on the Medicare Benefits Schedule (MBS) for Polymerase Chain Reaction
(PCR) testing, which is expected to benefit 8.9 million patients over the next four years.
Improving the aged care system
The Government is committed to supporting older Australians to receive the quality care
they need in the later years of their lives. This Budget invests $2.2 billion to deliver key
aged care reforms and to continue to respond to the recommendations of the Royal
Commission into Aged Care Quality and Safety.
The new Aged Care Act will put older people at the centre of aged care. It will also support
the Government’s response to the Aged Care Taskforce. These reforms are crucial to create
a stable and sustainable sector that delivers high-quality care. The Government is
continuing to consult with older Australians and stakeholders to ensure there is broad
support for reforms to improve the standard of aged care.
To support older Australians who wish to remain at home for longer, the Government is
providing $531.4 million to fund an additional 24,100 Home Care Packages in 2024–25 to
reduce average wait times. $1.2 billion is being invested into critical digital systems to
support the introduction of the new Aged Care Act and deliver a contemporary IT system.
The Government is also providing $110.9 million over four years to implement the new
Aged Care Regulatory Framework and continuing to invest in the Aged Care Quality and
Safety Commission, in response to its independent capability review. This funding will
assist the Commission to ensure aged care services adhere to the Aged Care Quality
Standards and are held accountable.
Reforming the disability sector
Getting the NDIS back on track
The Government is committed to improving outcomes for NDIS participants and
ensuring every dollar of NDIS funding goes to those who need it most. This Budget provides
$468.7 million to support people with disability and get the NDIS back on track. This includes
$268.1 million to better protect NDIS participants and prevent fraud and $200.6 million to
design and consult on key recommendations of the independent NDIS review.
| Budget Paper No. 1
Page 30 | Statement 1: Budget Overview
In December 2023, National Cabinet agreed to work together to address growing pressures
on the NDIS, to ensure the Scheme can continue to provide support to future generations of
Australians with disability.
The Getting the NDIS Back on Track Bill, introduced in March 2024, addresses priority
recommendations from the independent NDIS Review to improve participant experience
and return the NDIS to its original intent. Priority reform for the Government in this Bill is
focused on access, plans and budget settings, and quality and safety. The NDIS reforms
being undertaken by the Government are expected to moderate the additional growth in
NDIS expenditure projected by the NDIS Actuary from 2024–25 to that projected at the
2023–24 MYEFO.
National Cabinet also committed to jointly design and fund additional foundational
supports outside the NDIS. This Budget includes initial funding to develop these supports.
Improving employment for people with disability
The Government is also investing $227.6 million from 2023–24 to replace the existing
Disability Employment Services program with a new specialised disability employment
program by 1 July 2025. The reforms aim to improve employment and career outcomes for
people with disability by improving the quality of services and increasing flexibility and
individualised supports to meet the unique requirements of participants.
Eligibility for the new program will also be expanded to include volunteers outside the
income support system and those with less than eight hours per week work capacity.
This measure also addresses findings of the Disability Royal Commission.
The Budget will invest $23.3 million to establish a Disability Employment Centre of
Excellence to share innovation and best-practice, and to lift the capacity of all employment
service providers to support people with disability into employment.
Delivering essential services
Strengthening resourcing for Services Australia
The Government is improving the way Services Australia delivers services to the
Australian community. In this Budget, $1.8 billion will be invested over three years for
additional frontline and service delivery staff to manage claims, to continue emergency
response capability and improve the cyber security environment. An additional
$314.1 million will also be provided to continue to enhance safety and security at Services
Australia centres.
To ensure that the millions of Australian myGov accounts remain contemporary, secure,
and fit for purpose, the Government is investing $580.3 million over four years from
2024–25 and $139.6 million per year ongoing to sustain the myGov platform and identify
future potential enhancements. A further $50.0 million will also improve the usability,
safety and security of the myGov platform and ensure Services Australia can support
people to protect their information and privacy.
Budget Paper No. 1 |
Statement 1: Budget Overview | Page 31
After a decade of outsourcing, reduced service outcomes and underinvestment under the
former Government, these investments are part of the Government’s commitment to
rebuild the Australian Public Service to ensure it is appropriately resourced to deliver the
services that Australians expect. The actions the Government is taking to rebuild the public
service and reduce its reliance on consultants and contractors recognises that delivering
outcomes for Australians must be built on the foundations of a strong public service.
Looking after our veterans
Improving service delivery for veterans and their families is a priority for the Government.
This Budget continues work to implement the recommendations of the Interim Report of
the Royal Commission into Defence and Veteran Suicide and ensure veterans have access
to the supports they deserve in recognition of their service.
Having successfully eliminated the claims backlog in early 2024, this Budget invests a
further $186.0 million in the Department of Veterans’ Affairs, bolstering staffing resources
to ensure claims processing continues to be appropriately resourced.
The Government will provide $222.0 million to harmonise veterans’ compensation and
rehabilitation legislation, creating a simpler system so veterans and their families can more
easily get the support they are entitled to. Eligible veterans and their families will receive
more generous benefits, such as increased death compensation, travel for treatment, and
Gold Card eligibility.
The Government is also providing a further $48.4 million in funding for Veterans’ Home Care
and Community Nursing programs and $10.2 million is being invested to better support
veterans seeking early medical intervention while their claims for liability are processed.
Supporting the care economy workforce
The Government is building the workforce needed for the care economy through measures
to support skills development and training, increase wages and attract skilled workers.
This Budget invests $87.2 million in workforce initiatives to support, attract and retain aged
care staff including continuing the Aged Care Nursing Clinical Placements Program, Aged
Care Transition to Practice Program and Aged Care Nursing Scholarships. These programs
provide specialist skills and training for nurses and promote aged care as an attractive
career path for nurses.
The Government is also getting wages moving again through supporting award wage
increases for aged care workers and committing to providing funding towards a wage
increase for early childhood education and care workers, with details to be settled
following Fair Work Commission processes. This support builds on the $11.3 billion
already allocated to support an interim wage increase of 15 per cent for aged care workers
and changes to the Fair Work Act to consider gender equality.
| Budget Paper No. 1
Page 32 | Statement 1: Budget Overview
Broadening opportunity and advancing equality
This Budget builds on the Government’s commitment to broaden opportunity, lower
barriers to participation and drive further progress on economic inclusion, outlined in more
detail in Table 1.3. This includes investments as part of the first national strategy to achieve
gender equality, to support economic empowerment and better life outcomes for
First Nations Australians and to enhance our employment services system.
Progressing equality, supporting women
The Government has delivered the first national strategy to achieve gender equality.
Working for Women: A Strategy for Gender Equality will guide efforts to shift the persistent
attitudes and stereotypes that drive gender inequality. Working for Women: A Strategy for
Gender Equality will drive government action on women’s safety, sharing and valuing care,
economic equality, women’s health, and women’s leadership, representation and decision
making, and ensure this action has impact.
The National Plan to End Violence against Women and Children 2022–2032 continues to direct
the efforts and actions of all Governments to end gender-based violence in one generation.
Addressing violence against women requires cultural and systemic responses across all
levels of government and community. The Government is committed to ongoing action to
end gender-based violence.
Responding to gender-based violence
Financial barriers are a key impediment to many victim-survivors leaving a violent
relationship. In recognition of this, the Government is investing $925.2 million over
five years from 2023–24 to establish the permanent Leaving Violence Program.
The Leaving Violence Program will support victim-survivors of intimate partner violence
to not only leave a violent relationship, but also establish a life free from violence. Eligible
individuals will be supported through up to $5,000 in financial support, including up to
$1,500 in cash and up to $3,500 in goods and services, indexed annually to keep pace with
the cost of living. Additional support services including safety planning, risk assessment
and referrals to other services will also be available for up to 12 weeks.
The Escaping Violence Payment trial and Temporary Visa Holders Experiencing Violence
Pilot will be extended until 30 June 2025. Building on the successes and learnings of the
current trial and pilot, the Leaving Violence Program will commence from mid-2025
following the procurement of an appropriate service provider.
The Government is also investing $44.1 million in legal assistance, including one-year
indexation supplementation to the funding for Legal Aid Commissions, Community Legal
Centres, and Aboriginal and Torres Strait Islander Legal Services, and additional funding
to address community legal sector pay disparity.
Budget Paper No. 1 |
Statement 1: Budget Overview | Page 33
Addressing gender-based violence in higher education
In response to recommendations of the Universities Accord, the Government is establishing
an independent National Student Ombudsman for higher education students to escalate
complaints about the actions of their higher education providers, including those relating
to gender-based violence, if they are unsatisfied with the provider response.
The Government is also introducing a National Higher Education Code to Prevent and
Respond to Gender-based Violence (the National Code). The National Code will set
requirements for higher education providers, such as primary prevention and transparent
reporting, and strengthen accountability for systemic issues relating to gender-based
violence.
Preventing gender-based violence
The Government is also providing $1.3 million to establish an independent expert panel to
undertake a rapid review and advise Government on approaches to prevention and ending
the cycle of violence, and $4.3 million in 2024–25 to commission Australia’s National
Research Organisation for Women’s Safety to expand perpetrator research, building the
evidence base to inform practical action.
Funding of $6.5 million is also being provided for a pilot of age assurance technologies to
protect children from harmful online content, like pornography and other age-restricted
online services. This forms part of broader online safety reforms.
This funding is supported by work underway through the National Cabinet to strengthen
accountability for perpetrators, improve information sharing and strengthen system
responses to gender-based violence.
Taking pressure off parents and carers
To support a more dignified retirement for parents of babies born or adopted on or after
1 July 2025, the Government will provide $1.1 billion to make superannuation guarantee
(SG) equivalent payments on their Government-funded Paid Parental Leave (PPL).
Payments will benefit around 180,000 families each year, with recipients being primarily
women. Superannuation on Government-funded PPL recognises the important
contribution parents make to society and will reduce the impact on superannuation
balances of career breaks to care for young children.
The Government is changing the 25 hour per week participation limit rules for the Carer
Payment to provide recipients with greater flexibility to undertake paid work, study or
volunteering. The changes include amending the current participation limit to apply only
to employment and allow up to 100 hours of work over a four-week settlement period and
other adjustments. Around 31,000 Carer Payment recipients, including over 25,000 women,
who earn income may benefit from the ability to work more flexibly.
| Budget Paper No. 1
Page 34 | Statement 1: Budget Overview
Investing in women’s health
The Government is investing $56.1 million in initiatives that will improve access to sexual
and reproductive healthcare for women at all stages of life. This includes training for GPs
to provide better menopause care, and to become qualified in the insertion and removal of
long-acting reversible contraceptives. It also includes the delivery of free period products in
remote Aboriginal and Torres Strait Islander communities.
Support for Aboriginal and Torres Strait Islander Australians
The Budget is investing $2.4 billion over five years to deliver more economic opportunities
and better outcomes for First Nations Australians, with a focus on the priority areas of jobs,
health, education, justice, housing and essential infrastructure and services. These
commitments will support First Nations peoples’ self-determination and progress the
Priority Reforms and socioeconomic targets of the National Agreement on Closing the Gap.
Investing in First Nations economic empowerment and self-determination
As a first step in replacing the Community Development Program with real jobs, proper
wages and decent conditions, the Government is investing $777.4 million for a new Remote
Jobs and Economic Development Program.
The new Remote Jobs and Economic Development Program will create up to 3,000 jobs in
remote Australia and establish a Community Jobs and Business Fund to enable community
organisations to identify and pursue projects that support community development and
create local economic opportunities. The Remote Jobs and Economic Development Program
will be implemented in partnership with First Nations communities to build skills and
experience and deliver important local services.
This Budget provides $76.2 million to implement a new voluntary First Nations Prison to
Employment Program to replace the existing Time to Work Employment Service from
1 July 2025. The new program will have a strong focus on supports that are culturally safe
and tailored to First Nations clients. The program will address the underlying barriers to
employment to better connect clients with opportunities post-release.
The Government also intends to enhance Indigenous Business Australia’s ability to
leverage their capital, enabling greater investment in First Nations housing, communities
and businesses.
Northern Territory Homelands and housing
The Government will contribute $2.1 billion in support of a joint $4 billion investment with
the Northern Territory Government for housing in remote communities. The Government’s
contribution will support a ten-year remote housing agreement to halve overcrowding in
the Northern Territory and provide $120.0 million over three years for urgent repairs and
maintenance of housing and essential infrastructure on Northern Territory Homelands.
Budget Paper No. 1 |
Statement 1: Budget Overview | Page 35
Improving remote First Nations communities’ access to essential services in the
Northern Territory
Essential services in the Northern Territory will receive continued support from the
Government. This Budget provides $111.1 million in 2024–25 for health, safety, wellbeing,
schooling and justice services under the National Partnership on Northern Territory
Remote Aboriginal Investment.
The Government is also supporting First Nations digital inclusion and languages, including
$68.0 million to rollout community Wi-Fi in additional remote communities and better
support digital literacy through the establishment of a First Nations Digital Support Hub
and a network of digital mentors. To increase the number of First Nations language
speakers, $53.8 million will be provided to establish two new First Nations language
centres and expand language learning services provided through the existing centres.
Enhancing employment services
This Budget includes a range of improvements to the employment services system,
consistent with the eight principles of employment services reform outlined in the
Employment White Paper. Changes include the introduction of new paid employment
pathways to support job seekers with complex barriers to work, with jobs paid at award or
above wages in businesses and social enterprises.
Other changes include strengthening the integrity of the employment services system
through a new complaints mechanism, improving the consistency of how mutual
obligations are applied, and ensuring providers have more time available to service clients
through critical IT system improvements.
| Budget Paper No. 1
Page 36 | Statement 1: Budget Overview
Measures to support economic inclusion since May 2022
The Australian Government is working to build a stronger, fairer and more inclusive
society where more Australians have the chance to contribute and share in our economic
success. The Australian Government has made ongoing investments to address
disadvantage, promote economic inclusion and support some of the most vulnerable in the
community.
The following table outlines measures the Australian Government has announced since
May 2022 that support this work. The Australian Government will continue to do what it
responsibly can for Australians who need help the most.
Table 1.3: Measures to support economic inclusion
Strengthening the social safety net
Increasing working age and student
payments and expanded eligibility
for the higher rate of JobSeeker
Payment for older Australians
$4.9 billion over 5 years from 2022–23, benefiting around
1.1 million income support recipients including access for more
than 51,000 recipients aged 55 and over to the higher rate.
(b)
Expanded eligibility for the higher
rate of JobSeeker Payment for
individuals with a partial capacity to
work between zero and 14 hours
per week
(a)
$41.2 million over 5 years from 2023–24, expected to benefit
around 4,700 single recipients.
(b)
Back-to-back increases in
Commonwealth Rent Assistance
$31.8 billion total spend on CRA over five years from 2023–24
which includes a 10 per cent increase in this Budget, building on
last year’s Budget which delivered a 15 per cent increase,
benefiting around 1 million households.
Expanded eligibility for Parenting
Payment (Single)
$1.9 billion over 5 years from 2022–23, benefiting around 82,000
single principal carers, the majority of whom are women.
(b)
Increased flexibility for Carer
Payment recipients to work, study
or volunteer
(a)
$18.6 million over 5 years from 2023–24, benefiting around
31,000 Carer Payment recipients who earn income.
Family payments
Enhancing Paid Parental Leave and
paying superannuation on Paid
Parental Leave
(a)
$1.1 billion over four years from 2024–25 to pay superannuation
on Paid Parental Leave (PPL), benefitting around 180,000
households
(b)
and $1.2 billion over five years from 2022–23 to
expand and enhance PPL.
Making the child support system
fairer
$5.1 million over 5 years from 2022–23 to improve the child
support system.
Providing tax relief
Cost-of-living tax cuts
(a)
$1.3 billion over five years from 2023–24, benefitting 13.6 million
Australian taxpayers, including 2.9 million lower-income
taxpayers with incomes $45,000 or less.
Increasing the Medicare levy
low-income thresholds
Ensuring more than one million Australians on lower incomes
continue to be exempt from the levy or pay a reduced levy rate.
Budget Paper No. 1 |
Statement 1: Budget Overview | Page 37
Table 1.3: Measures to support economic inclusion (continued)
Getting wages moving again
Submissions to the Annual Wage
Review
The Government has recommended the real wages of Australia’s
low-paid workers do not go backwards. There are over 2.9 million
award reliant workers.
Closing Loopholes reforms
$94.6 million over four years from 2023–24, benefiting all
employees under the national Fair Work system.
Secure Jobs, Better Pay reforms
$43.2 million over four years from 2022–23, benefiting all
employees under the national Fair Work system.
Funding a wage increase for aged
care workers
$11.3 billion over four years from 2023–24, benefiting over
250,000 low paid care workers.
Paying for essentials
Energy Bill Relief Fund
Up to $1.5 billion over two years from 2023–24, providing energy
bill relief to five million vulnerable households and one million
eligible small businesses.
Energy Bill Relief Fund – extension
and expansion
(a)
$3.5 billion over three years from 2023–24, extending energy bill
relief to provide $300 to all households and $325 to one million
eligible small businesses from 1 July 2024.
Cheaper Child Care
$4.7 billion over four years from 2022–23, providing cheaper child
care for around 1.2 million families.
Tripling the bulk billing incentive
$3.5 billion over five years from 2022–23, benefiting 11.6 million
children and people on low incomes.
Cheaper medicines – 60-day
dispensing
When fully implemented, over six million Australians with chronic,
ongoing conditions will benefit, with the costs of certain medicines
reduced by up to half.
Cheaper medicines
$787.1 million over four years from 2022–23, reducing the
maximum PBS co-payment for general patients from $42.50 to
$30 on 1 January 2023.
(c)
$681.0 million over six years from 2023–24 for temporary pauses
to the indexation of the maximum PBS co-payments, and an
increase to the weekly cap on Dose Administration Aids.
Investing in frontline services and community support
Targeting entrenched disadvantage
$199.8 million over six years from 2023–24 for an integrated
package to target disadvantage and support positive outcomes
for communities.
Financial wellbeing and capability
(a)
$138.0 million over five years from 2023–24, supporting over
580,000 individuals most at risk of financial vulnerability and
disadvantage.
Ensuring access to government
services
(a)
$3.0 billion over five years from 2023–24 to improve the way
Services Australia delivers services to the Australian community.
Support for community sector
organisations (CSOs)
$560.0 million over four years from 2022–23 to help CSOs meet
the higher costs of delivering services.
| Budget Paper No. 1
Page 38 | Statement 1: Budget Overview
Table 1.3: Measures to support economic inclusion (continued)
Increasing the availability of social and affordable housing
National Agreement on Social
Housing and Homelessness
(a)
An additional $423 million over five years under the $9.3 billion
National Agreement on Social Housing and Homelessness.
Building more social and affordable
homes and funding acute housing
needs
Minimum $2.0 billion in disbursements from the HAFF over
four years from 2024–25, plus $72 million per year by 2028–29
under the Accord, to help fund 40,000 new social and affordable
homes for low-income households as well as provide $330 million
to address acute housing needs, including crisis accommodation
for women and children experiencing domestic and family
violence, housing for indigenous communities, and veterans
housing.
Expanding Housing Australia’s
community housing lending
program
(a)
A $2.5 billion increase to Housing Australia’s liability cap in
addition to the $2 billion increase on 1 July 2023 and lending an
additional $3 billion to Housing Australia to support it provide
more low-cost finance to community housing providers delivering
social and affordable housing.
Social Housing Accelerator
$2 billion paid to the states and territories in 2022–23 to deliver
around 4,000 new and refurbished social homes.
Household Energy Upgrades Fund –
social housing component
$300.0 million over four years from 2023–24, supporting
low-income households in 60,000 social housing properties
reduce up to one‑third of their energy consumption from
upgrades each year.
Northern Territory Homelands and
Housing
(a)
$2.1 billion over ten years from 2024–25 in support of a joint
$4 billion investment with the Northern Territory Government to
halve overcrowding in remote communities.
Increased funding for social housing
in the National Housing
Infrastructure Facility (NHIF)
$1 billion funding for social housing targeted to better support
housing for women and children experiencing domestic violence
and for youth.
Capacity building support for the
social and affordable housing
sector
(a)
$2.0 million over three years from 2024–25, extending Housing
Australia’s existing capacity building program and for a new
program to build the capacity of Aboriginal and Torres Strait
Islander Community Controlled Housing Organisations.
Equity in employment and education
Response to Australian Universities
Accord
(a)
$1.1 billion over five years from 2023–24 supporting reforms to
boost equity in and access to higher education.
New voluntary pre-employment
service for parents
$20.9 million over four years from 2023–24 supporting
disadvantaged parents of children under six years old.
Supporting people with disability with
the highest need into employment
$57.0 million over four years from 2023–24, for the evolution of
the supported employment sector.
Reform of Disability Employment
Services (DES)
(a)
$227.6 million over five years from 2023–24 for a new service,
which supports approximately 270,000 people.
Remote Jobs and Economic
Development Program
(a)
$777.4 million over five years from 2023–24, to create up to
3,000 jobs in remote communities. Developed in partnership to
support community development.
a) Indicates or includes 2024–25 Budget measure.
b) Financial impacts are before related receipts.
c) Subject to indexation; $31.60 from 1 January 2024.
Statement 2: Economic Outlook | Page 39
Statement 2:
Economic Outlook
Global growth is forecast to remain subdued over the next few years and is expected to
record the longest stretch of below-average growth since the early 1990s. Tackling inflation
remains the primary focus but, as inflationary pressures abate and labour markets soften,
the global policy focus will increasingly shift to managing risks to growth.
Several global factors pose risks to the outlook. Monetary policy settings could remain tight
for an extended period due to persistent inflation. Heightened geopolitical tensions in the
Middle East have added to the risks associated with Russia’s invasion of Ukraine. A further
escalation in geopolitical tensions could add to energy costs, disrupt international trade,
and slow global growth. The outlook for the Chinese economy, including the property
sector, also remains uncertain.
Australia is not immune from global developments and the combination of elevated
inflation and high interest rates here has resulted in lower growth over the past year. These
factors have put people under pressure, with household consumption flat over the past
year. High interest rates and ongoing supply constraints have also weighed on dwelling
investment. These factors are expected to see real GDP growth of 1¾ per cent in 2023–24.
The Australian economy is well placed to navigate these economic challenges. Inflation is
moderating, the labour market has been resilient, annual real wages are growing for the
first time in years and there is a solid pipeline of business investment. This means that
Australia can face global and domestic challenges from a position of economic strength.
Although inflation remains elevated, it has moderated substantially and is now less than
half of its peak in 2022. The moderation in inflation has occurred more quickly than forecast
at MYEFO, with inflation now expected to be lower in 2023–24.
While there remains considerable uncertainty around the outlook for the domestic and
global economy, the Government’s responsible cost-of-living measures will provide relief
for households. Energy bill relief and rent assistance are estimated to directly reduce
headline inflation by ½ of a percentage point in 2024–25 and are not expected to add to
broader inflationary pressures. This could see headline inflation return to the Reserve Bank
of Australia’s target band by the end of 2024, slightly earlier than expected at MYEFO. This
will ease pressure on households and help to keep inflation expectations well anchored.
The labour market has been resilient with the unemployment rate remaining near its
50-year low at 3.8 per cent, the participation rate near its record high at 66.6 per cent, and
employment growing faster than any major advanced economy. However, there are clear
signs that labour market conditions are softening. So far, a decline in average hours worked
has delayed the expected moderation in employment growth and an associated modest
increase in the unemployment rate. As labour market conditions continue to ease over
2024–25, the unemployment rate is expected to rise but remain below pre-pandemic levels.
Page 40 | Statement 2: Economic Outlook
Nominal wages over 2023–24 have grown at their fastest rate in nearly 15 years, reflecting
recent labour market strength, as well as Fair Work Commission determinations on the
minimum wage and the Aged Care Work Value Case. As the labour market softens,
nominal wage growth is expected to soften to 3¼ per cent in both 2024–25 and 2025–26.
The moderation in inflation and pick-up in wage growth have contributed to an
improvement in real wages. Real wages have risen for three consecutive quarters and
returned to annual growth at the end of 2023, earlier than previously forecast. Real wages
are expected to continue to pick up and grow by ½ per cent through the year to the
June quarter 2024.
Business investment has withstood the global and domestic pressures, growing by a strong
8.3 per cent last year. The upswing in business investment is expected to continue through
to 2025–26 and, if realised, will be the longest sustained increase in business investment
since the mining boom.
Growth is expected to remain subdued over the forecast period. Real GDP is forecast to
grow by 2 per cent in 2024–25, and 2¼ per cent in 2025–26. Higher wages growth, the
forecast moderation in inflation, continuing employment growth and the Government’s
cost‑of‑living tax cuts should support real household disposable incomes and a recovery in
household consumption (see Box 2.1).
The improvement in household consumption is expected to be complemented by an
elevated level of business investment and a gradual pick-up in dwelling investment as cost
pressures ease and asset returns improve. Services exports are also expected to contribute
to growth as the recovery in the number of international students and tourists continues.
Productivity, which has grown for two consecutive quarters, is expected to continue to pick
up as economic conditions improve.
Domestically, there is a risk that household consumption may not respond as quickly as
expected to the anticipated recovery in real disposable incomes, particularly if households,
facing budget constraints, instead seek to replenish savings or if employment growth is
slower than forecast. Inflation could also be more persistent than forecast and delay the
return of inflation to the target band.
Statement 2: Economic Outlook | Page 41
Statement contents
Outlook for the international economy ..................................................................... 43
Outlook for global growth ............................................................................................................ 43
Outlook for global inflation ........................................................................................................... 45
Key risks to the international outlook........................................................................................... 46
Outlook for major trading partners............................................................................................... 48
Outlook for the domestic economy ........................................................................... 50
Household consumption .............................................................................................................. 54
Dwelling investment .................................................................................................................... 56
Business investment ................................................................................................................... 57
Public final demand ..................................................................................................................... 58
Net exports ................................................................................................................................ 59
Inflation ................................................................................................................................ 60
The labour market ....................................................................................................................... 64
Outlook for the terms of trade ..................................................................................................... 67
Outlook for nominal GDP growth ................................................................................................ 70
Medium-term projections ............................................................................................................. 70
Statement 2: Economic Outlook | Page 43
Statement 2: Economic Outlook
Outlook for the international economy
Outlook for global growth
Global growth is expected to remain subdued over the next few years as the effects of high
inflation, restrictive macroeconomic policies, geopolitical tensions, and challenges in the
Chinese economy weigh on the outlook. If inflationary pressures continue to ease as
expected, the global policy focus will increasingly shift to managing risks to growth.
Most advanced economies recorded subdued outcomes during 2023, with around a third of
OECD nations recording a technical recession. The United States has been the notable
exception where earlier disinflation and a strong recovery in productivity have contributed
to the economy consistently exceeding expectations.
Global growth is forecast to remain flat at around 3¼ per cent in 2024, 2025 and 2026
(Charts 2.1 and 2.2; Table 2.1). If realised, this would represent the longest stretch of
below-average growth since the early 1990s. Major trading partner growth is also expected
to remain subdued at 3¼ per cent in 2024, 2025 and 2026 as a forecast softening in China
offsets a modest pickup elsewhere.
Chart 2.1: Contribution to global GDP growth
-4
-1
2
5
8
1990 1995 2000 2005 2010 2015 2020 2025
China Rest of world Average (1990-2019)
Ppt
Source: Treasury, IMF.
| Budget Paper No. 1
Page 44 | Statement 2: Economic Outlook
Market pricing implies that central banks in most advanced economies are likely to have
reached the peak in their monetary policy tightening phases (Chart 2.3). An exception is the
Bank of Japan, which only began to withdraw longstanding monetary policy stimulus in
March 2024 after emerging from decades of deflation and weak growth.
Market pricing also implies that most advanced economy central banks will begin easing
monetary policy later this year. However, this policy easing is now expected to occur later
than had been priced in earlier in the year given inflation has been more persistent than
forecast.
Table 2.1: International GDP growth forecasts
(a)
Outcome
Forecasts (Calendar Years)
2023
2024
2025
2026
Australia
2.0
1 3/4
2 1/4
2 1/4
China
5.2
4 3/4
4 1/4
4 1/4
India
7.7
6 1/2
6 1/2
6 1/2
Japan
1.9
3/4
1
1
United States
2.5
2 1/2
1 1/2
2
Euro area
0.5
3/4
1 1/2
1 1/2
United Kingdom
0.1
1/2
1 1/4
1 1/2
Other East Asia
(b)
3.3
4
4
4 1/4
Major trading partners
3.5
3 1/4
3 1/4
3 1/4
World
3.2
3 1/4
3 1/4
3 1/4
a) World and Other East Asia growth rates are calculated using GDP weights based on purchasing power
parity (PPP). Growth rates for major trading partners are calculated using Australian goods and services
export trade weights.
b) Other East Asia comprises Indonesia, Malaysia, the Philippines, Thailand, Vietnam, Singapore, Hong
Kong, South Korea and Taiwan.
Source: National statistical agencies, IMF, Refinitiv and Treasury.
Budget Paper No. 1 |
Statement 2: Economic Outlook | Page 45
Chart 2.2: 2024 GDP growth forecasts
Chart 2.3: Monetary policy rates
0
1
2
3
US AU CA JP EA UK
%
-2
0
2
4
6
Dec-21 Dec-23 Dec-25
CA EA UK US
%
Source: Treasury.
Notes: US is United States. AU is Australia. CA is
Canada. JP is Japan. EA is euro area. UK
is United Kingdom.
Source: Bloomberg.
Notes: United States based on the midpoint of the
target range for the Fed funds rate.
Dotted lines reflect policy rate expectations
implied by overnight indexed swaps (7 May
2024).
Outlook for global inflation
Inflation in advanced economies has declined significantly since peaking in mid-to-late
2022 (Chart 2.4). Nonetheless, inflation generally remains elevated and is not expected to
return to central bank targets until 2025 (Chart 2.5).
The rapid increase in goods and energy prices associated with earlier supply and demand
shocks, including the pandemic and Russia’s invasion of Ukraine, have largely dissipated.
With the disinflation in goods and energy prices having mostly run its course, services
inflation remains the main driver of above-target inflation.
Strong rental inflation, solid nominal wages growth, and the continued pass-through of
earlier increases in other input costs, have contributed to persistent services inflation in
many advanced economies.
To date, the decline in inflation in advanced economies has not been associated with a
significant increase in unemployment, which is consistent with a soft landing. Nonetheless,
wage growth has begun to moderate and medium-term inflation expectations have
generally remained well anchored around central bank inflation targets, mitigating the risk
of a wage-price spiral.
In contrast to most advanced economies, China has experienced a period of low inflation
amid weakness in domestic demand and deleveraging by developers in the property
sector.
| Budget Paper No. 1
Page 46 | Statement 2: Economic Outlook
Chart 2.4: Headline inflation
Chart 2.5: Deviation of inflation from
central bank targets
-2
2
6
10
14
Apr-20 Apr-22 Apr-24
US CA UK
EA JP CN
%, tty
-4
-2
0
2
US UK CA JP EA CN
Ppt
Source: National statistical agencies and Refinitiv.
Note: JP is Japan. US is United States. CA is
Canada. EA is euro area. UK is United
Kingdom. CN is China.
Source: National statistical agencies and Refinitiv.
Notes: Inflation target reflects mid-point of target
range for Canada. US is United States. UK
is United Kingdom. CA is Canada. JP is
Japan. EA is euro area. CN is China.
Key risks to the international outlook
The global outlook remains complex and uncertain. Heightened geopolitical tensions in the
Middle East have added to the risks associated with Russia’s invasion of Ukraine. A further
escalation in geopolitical tensions remains a key risk to inflation and global growth, with
the potential to disrupt energy and commodity markets and increase shipping costs by
compromising traditional trade routes.
Elevated geopolitical risks have been reflected in asset markets during 2024. The price of
gold increased sharply to all-time highs supported by safe-haven demand (Chart 2.6), and
oil prices firmed to six-month highs in mid-April in response to the escalation of tensions
between Iran and Israel (Chart 2.7).
Budget Paper No. 1 |
Statement 2: Economic Outlook | Page 47
Chart 2.6: Gold spot price
Chart 2.7: Tapis oil spot price
0
1,000
2,000
3,000
May-14 May-19 May-24
$US/oz
60
80
100
120
May-23 Nov-23 May-24
$US/bbl
Source: Bloomberg.
Source: Bloomberg.
The evolution of global inflation and associated implications for the timing of monetary
policy easing remain a key risk to the outlook. If inflation proves to be more persistent than
expected, monetary policy settings may need to remain restrictive for longer. There may
also be implications for financial stability. For example, in the United States, a prolonged
period of high interest rates could generate additional stress in the commercial real estate
sector.
Developments in China also present significant risks to global demand, particularly for key
trading partners including Australia. Sharper or more persistent weakness in Chinese
domestic demand associated with deleveraging in the residential property sector represents
a downside risk to growth, particularly if it leads to more acute pressures in the Chinese
financial system that adversely affects the balance sheets of households and local
governments. In the near term, stronger-than-expected fiscal policy expansion would
present an upside risk to Chinese growth.
Some governments, particularly in Europe, will be under pressure to repair public finances
given the considerable expansion in debt and deficits to support growth during the
pandemic and, more recently, to ease cost-of-living pressures. Fiscal consolidation may
prove difficult due to a deterioration in the outlook for fiscal revenues in some economies,
presenting longer-term challenges. At the same time, if consolidation is too rapid, it could
disrupt growth.
| Budget Paper No. 1
Page 48 | Statement 2: Economic Outlook
Outlook for major trading partners
China’s economy is forecast to grow by 4¾ per cent in 2024, broadly in line with the
Chinese government’s target of around 5 per cent, and then slow to 4¼ per cent in 2025 and
2026. If realised, this will be the slowest period of economic growth since the Chinese
economy began opening up in the late 1970s.
In 2023, the Chinese economy grew by 5.2 per cent as investment in infrastructure and
manufacturing offset weakness in residential property investment and consumer spending.
Further adjustment in the residential property sector is expected to remain a drag on
growth. Falling prices and financial stress in the residential construction sector will
continue to weigh on consumer confidence and spending. Local governments also have
limited capacity to support growth as finances are strained due to a reliance on property
sales for revenue.
The Chinese economy faces increasing structural challenges from slowing urbanisation, an
ageing population and lower productivity growth. Authorities are attempting to address
these structural challenges by supporting new industries, such as electric vehicles and
green energy, while pivoting away from traditional growth drivers, such as property.
The United States is forecast to grow by 2½ per cent in 2024, 1½ per cent in 2025 and
2 per cent in 2026. The US recorded stronger-than-expected growth through 2023, while
inflation moderated largely as expected. This reflected buoyant demand and an expansion
in supply capacity, given strong employment growth and a rebound in productivity.
Positive momentum in household consumption and business investment has carried over
into 2024. Strong employment growth and a lift in real wages have supported consumption
growth. Business investment has been boosted by government stimulus and tax incentives,
including for investment in renewable energy. The impact of monetary policy tightening on
growth has been more muted than expected. Stronger activity in 2023 and 2024 has pushed
out the expected timing and quantum of monetary policy easing.
Growth is expected to slow somewhat in the second half of 2024 and into 2025 as an easing
in the labour market, diminished household savings buffers that accumulated during the
pandemic and less accommodative fiscal policy weigh on activity.
Monetary policy easing in the United States is assumed to commence towards the end of
2024 as inflation returns towards the Federal Reserve’s target. Market pricing implies a
slower pace of easing than was expected earlier in the year as progress towards the Federal
Reserve’s inflation target has slowed. Monetary policy easing from later this year would
support a modest cyclical upswing towards the end of 2025.
Euro area GDP is forecast to grow by ¾ per cent in 2024, 1½ per cent in 2025 and
1½ per cent in 2026. The euro area economy experienced a mild recession in the second half
of 2023 and its largest economy, Germany, contracted in 2023. Euro area manufacturers
suffered a loss of market share due to sharp increases in energy costs and increased
competition from China, particularly in emerging industries such as electric vehicle
manufacturing.
Budget Paper No. 1 |
Statement 2: Economic Outlook | Page 49
Euro area growth is expected to pick up during 2024. Declining inflation is expected to
support a recovery in real disposable income growth and household consumption across
the region. The European Central Bank is also expected to begin easing monetary policy
from mid-2024, which will provide further support for growth into 2025. Fiscal policy
across the euro area will, however, drag on growth in 2024 and 2025 as fiscal support to
cushion the impact of high energy costs is withdrawn and some member states reduce their
deficits to conform with EU fiscal rules.
The United Kingdom is forecast to grow by ½ per cent in 2024, 1¼ per cent in 2025 and
1½ per cent in 2026. The United Kingdom entered a technical recession during the second
half of 2023 due to high energy costs, cost-of-living pressures, restrictive monetary policy,
and a decline in exports exacerbated by continued EU trade frictions following Brexit. Real
income growth driven by moderating inflation will support a recovery in consumption
growth across the forecast period, with monetary policy easing also expected to be a
tailwind.
Japan is forecast to grow by ¾ per cent in 2024 and 1 per cent in 2025 and 2026. Japan
recorded solid growth in the first half of 2023 supported by strong inbound tourism and the
resolution of supply chain disruptions in the auto industry. However, growth slowed in the
second half of the year as falling real wages weighed on consumption growth.
Recent wage negotiations imply a marked lift in the pace of nominal wages growth in 2024,
which is expected to support real wages growth as inflation moderates. This, alongside
households’ access to savings accumulated during the pandemic, is expected to support
a mild rebound in consumption growth. High corporate profits and the strengthening of
supply chains are also expected to support business investment in the near term.
The Bank of Japan began withdrawing extraordinary monetary policy stimulus in
March 2024 and is expected to gradually normalise its policy stance. Nonetheless, monetary
policy is likely to remain accommodative for some time.
India is forecast to grow by 6½ per cent in 2024, 2025 and 2026. Growth in India was
stronger than expected in 2023 and was driven by public investment in transport and
energy infrastructure. India is expected to remain one of the world’s fastest growing major
economies over the next two years. Public investment is expected to remain a key source of
growth though it will be dampened by expected fiscal consolidation. Restrictive monetary
policy is expected to weigh somewhat on consumption and private investment growth in
the near term.
Other East Asia is forecast to grow by 4 per cent in 2024 and 2025 and 4¼ per cent in 2026.
Growth in the region is expected to be supported by rising domestic demand, an upturn in
exports of goods and services, and continued recovery in the tourism sector. Foreign direct
investment inflows are also expected to remain strong as multinationals continue to
diversify their manufacturing supply chains.
| Budget Paper No. 1
Page 50 | Statement 2: Economic Outlook
Outlook for the domestic economy
The Australian economy has slowed in response to elevated inflation and higher interest
rates here and the impact of global economic volatility. These factors have put people
under pressure, weighing on consumption growth and dwelling investment (Chart 2.8).
However, the economy is well placed to face these global and domestic economic
challenges, with moderating inflation, a resilient labour market, a return to annual real
wage growth and strong business investment.
Household consumption was flat over the past year, as people have responded to
cost-of-living pressure by pulling back on discretionary spending to make room for
essentials. Higher interest rates and elevated construction costs are weighing on the
demand for new housing, with dwelling investment expected to contract further in
2023–24.
Although inflation remains elevated, it has moderated substantially and is now less than
half of its peak in 2022. The moderation in inflation has occurred more quickly than forecast
at MYEFO, with inflation now expected to be lower in 2023–24.
While there remains considerable uncertainty around the outlook for the domestic and
global economy, the Government’s targeted cost-of-living measures are expected to reduce
inflation. Energy bill relief and Commonwealth Rent Assistance is expected to directly
reduce inflation by ½ of a percentage point in 2024–25 and is not expected to add to
broader inflationary pressures (see Box 2.2). This could see headline inflation return to the
target band by the end of 2024, slightly earlier than expected at MYEFO. This will ease
pressure on households and help to keep inflation expectations well anchored.
The labour market has been resilient, with faster employment growth than any major
advanced economy, near historically low unemployment, and the participation rate near its
record high. However, conditions in the labour market are softening and are expected to
ease further over 2024–25. The unemployment rate is expected to remain low by historical
standards but rise gradually to 4½ per cent by the June quarter 2025.
Nominal wages are growing at 4.2 per cent, their fastest annual rate in nearly 15 years. This
has been driven by recent strength in the labour market and administered wage decisions.
As labour market conditions ease, annual wage growth is expected to decline to
3¼ per cent in 2024–25 and 2025–26. Moderating inflation and a pick-up in wage growth
resulted in a return to positive annual real wage growth at the end of 2023. Real wages are
expected to rise by ½ per cent through the year to the June quarter 2024.
Business investment has withstood the global and domestic pressures and grew strongly at
8.3 per cent last year. The upswing in business investment is expected to continue through
to 2025–26 and, if realised, will be the longest sustained increase in business investment
since the mining boom.
Budget Paper No. 1 |
Statement 2: Economic Outlook | Page 51
Growth is expected to remain subdued over the forecast period. Real GDP is forecast to
grow by 2 per cent in 2024–25, and 2¼ per cent in 2025–26 (Chart 2.9). Higher wages
growth, the forecast moderation in inflation, continuing employment growth and the
Government’s cost‑of‑living tax cuts should support real household disposable incomes
and a recovery in household consumption. The cash rate is assumed to gradually ease from
around the middle of 2025 to reach 3.6 per cent by the middle of 2026.
Recent strength in business investment, net exports and public investment is expected to
continue and provide further support for the economy. Net exports are expected to
contribute to growth in 2024–25 driven by the ongoing recovery of services exports. Public
final demand is expected to support activity, driven by a record infrastructure investment
pipeline and the Australian and state governments’ strengthening essential government
services.
There are substantial risks to the domestic outlook. Inflation could prove more persistent
than forecast, with possible implications for policy settings and growth. If productivity
does not pick up as expected, price pressures may be more persistent, with potential
implications for unemployment and the real economy. There is also significant uncertainty
about how quickly aggregate household consumption will respond to the expected
recovery in real disposable incomes.
Internationally, there remains a risk that current geopolitical tensions could escalate into
larger economic shocks that could derail the global recovery, with implications for
Australian exports and supply chains. If downside risks to Chinese growth crystalise, this
could directly impact the domestic economy through weaker commodity prices and lower
national income. In the medium term, this could also impact activity through weaker
mining investment and resources exports.
| Budget Paper No. 1
Page 52 | Statement 2: Economic Outlook
Chart 2.8 Contribution to GDP growth
Chart 2.9: Real GDP growth
-2
0
2
4
6
2022-23 2023-24 2024-25 2025-26
Ppt
Net exports
Public final demand
Business investment
Other
Consumption
GDP
-2
0
2
4
6
2010-11 2015-16 2020-21 2025-26
%
Source: ABS Australian National Accounts: National
Income, Expenditure and Product and
Treasury.
Note: Other includes dwelling investment, change
in inventories, ownership transfer costs and
the statistical discrepancy. Data are
seasonally adjusted.
Source: ABS Australian National Accounts: National
Income, Expenditure and Product and
Treasury.
Budget Paper No. 1 |
Statement 2: Economic Outlook | Page 53
Table 2.2: Domestic economy – detailed forecasts
(a)
Outcomes
Forecasts
2022-23
2023-24
2024-25
2025-26
Real gross domestic product
3.1
1 3/4
2
2 1/4
Household consumption
5.0
1/4
2
2 3/4
Dwelling investment
-3.8
-3
0
6 1/2
Total business investment
(b)
8.3
5 1/2
1
2
By industry
Mining investment
1.7
4 1/2
-3 1/2
2
Non-mining investment
10.5
5 1/2
2 1/2
2
Private final demand
(b)
4.2
1
1 3/4
3
Public final demand
(b)
2.4
4 1/2
1 1/2
1 1/2
Change in inventories
(c)
-0.1
- 1/2
1/4
0
Gross national expenditure
3.5
1 1/4
1 3/4
2 1/2
Exports of goods and services
6.7
5
5
2 1/2
Imports of goods and services
9.3
2 1/2
4
4 1/2
Net exports
(c)
-0.1
3/4
1/2
- 1/4
Nominal gross domestic product
9.9
4 3/4
2 3/4
4
Prices and wages
Consumer price index
(d)
6.0
3 1/2
2 3/4
2 3/4
Wage price index
(d)
3.7
4
3 1/4
3 1/4
GDP deflator
6.5
3
1/2
1 3/4
Labour market
Participation rate (per cent)
(e)
66.6
66 1/2
66 1/2
66 1/4
Employment
(d)
3.5
2 1/4
3/4
1 1/4
Unemployment rate (per cent)
(e)
3.6
4
4 1/2
4 1/2
Balance of payments
Terms of trade
(f)
-0.5
-3 3/4
-7 3/4
-4
Current account balance (per cent of GDP)
1.1
1 1/4
- 3/4
-2
Net overseas migration
(g)
528,000
395,000
260,000
255,000
a) Percentage change on preceding year unless otherwise indicated.
b) Excluding second-hand asset sales between the public and private sector.
c) Percentage point contribution to growth in GDP.
d) Through-the-year growth rate to the June quarter.
e) Seasonally adjusted rate for the June quarter.
f) Key commodity prices are assumed to decline from elevated levels over four quarters to the end of the
March quarter of 2025: the iron ore spot price is assumed to decline to US$60/tonne; the metallurgical
coal spot price declines to US$140/tonne; the thermal coal spot price declines to US$70/tonne; and the
LNG spot price converges to US$10/mmBtu. All bulk prices are in free on board (FOB) terms.
g) Net overseas migration is forecast to be 235,000 in 2026–27 and 2027–28.
Note: The forecasts for the domestic economy are based on several technical assumptions. The
exchange rate is assumed to remain around its recent average level – a trade‑weighted index of
around 62 and a $US exchange rate of around 65 US cents. Interest rates are informed by the
Bloomberg survey of market economists. World oil prices (Malaysian Tapis) are assumed to
remain flat around US$94 per barrel.
Source: ABS Australian National Accounts: National Income, Expenditure and Product; Balance of
Payments and International Investment Position, Australia; National state and territory population;
Labour Force Survey, Australia; Wage Price Index, Australia; Consumer Price Index, Australia;
unpublished ABS data and Treasury.
| Budget Paper No. 1
Page 54 | Statement 2: Economic Outlook
Household consumption
Households have pulled back sharply on consumer spending in response to sustained
cost-of-living pressures and higher interest rates (Chart 2.10). However, higher wages
growth, the forecast moderation in inflation, continuing employment growth and the
Government’s cost‑of‑living tax cuts are expected to support real household disposable
incomes and household consumption from the second half of 2024 (see Box 2.1).
Household consumption was broadly flat over 2023. With subdued growth in real
household disposable income, consumption is expected to remain weak in the first half of
2024 (Chart 2.11). A recovery in real disposable income growth is then expected to support
household consumption, which is forecast to grow by 2 per cent in 2024–25 and 2¾ per cent
in 2025–26.
There remains significant uncertainty around the responsiveness of household
consumption to evolving economic conditions. While aggregate real household disposable
income is expected to pick up in 2024–25, households will still face tight budgets and may
look to replenish savings as their real incomes increase. A faster-than-anticipated softening
in labour market conditions could also temper the recovery in consumption.
Chart 2.10: Contribution to
consumption growth
Chart 2.11 Growth in consumption
-2
0
2
3
5
Mar-23 Jun-23 Sep-23 Dec-23
Ppt, tty
Essential
Discretionary
0
1
2
3
4
Mar-23 Apr-24 May-25 Jun-26
%, tty
Source: ABS Australian National Accounts:
National Income, Expenditure and Product
and Treasury.
Source: ABS Australian National Accounts:
National Income, Expenditure and Product
and Treasury.
Budget Paper No. 1 |
Statement 2: Economic Outlook | Page 55
Box 2.1: Recovery in real household disposable income
Real disposable income is forecast to grow by 3½ per cent in 2024–25 (Chart 1). This is
expected to be driven by a 4½ percentage point contribution from growth in labour
incomes and a 1 percentage point contribution from the Government’s cost-of-living
tax cuts. Inflation is expected to be a smaller drag on real incomes compared to recent
years. If realised, this would be the fastest rate in over a decade (excluding the
pandemic).
Australia’s resilient labour market and historically low unemployment rate means
more Australians have jobs. Employment in Australia grew faster than in any major
advanced economy over the past year, with more Australians now securing
meaningful work. Employment is expected to continue to grow next year, even as the
labour market softens in response to weaker growth. Nominal wages are now growing
at their fastest rate in nearly 15 years. This is due to strength in the labour market and
the Fair Work Commission’s wage determinations, which the Government supported.
Continued growth in wages will contribute to the improvement in household
disposable incomes over the coming year.
The Government’s cost-of-living tax cuts will ensure households keep a greater
proportion of their incomes to help navigate cost-of-living pressures. Compared to
previously legislated settings, 11.5 million taxpayers will receive a larger tax cut.
The Government’s tax cuts deliver a permanent reduction in tax for all taxpayers, with
an average tax cut of $1,888 in 2024–25 compared to 2023–24 settings.
In addition, the continued moderation of inflation and the Government’s responsible
cost-of-living policies will strengthen the purchasing power of households.
continued over next page
| Budget Paper No. 1
Page 56 | Statement 2: Economic Outlook
Box 2.1: Recovery in real household disposable income (continued)
Chart 1: Contribution to real household gross disposable income growth
-10
-5
0
5
10
2022-23 2023-24 2024-25
Ppt
Income tax Inflation
Non-labour income Labour income
Real household gross disposable income
Source: ABS Australian National Accounts: National Income, Expenditure and Product and Treasury.
Dwelling investment
Higher interest rates and elevated construction costs are weighing on the demand for new
housing (Chart 2.12). These factors are expected to cause dwelling investment to contract
by 3 per cent in 2023–24 and remain flat in 2024–25. Alongside an improvement in
household finances and asset returns, growth in new dwelling investment is expected to
increase to 6½ per cent in 2025–26 (Chart 2.13).
Government initiatives to increase housing supply will help to support an increase in the
stock of dwellings. The Government’s $32 billion housing plan will deliver the biggest
investment in social housing in over a decade, enable construction of more homes, reduce
red tape and planning hurdles, train the necessary workforce, and support Australians into
home ownership and those in the rental market. These initiatives will help support the
shared Australian and state governments’ ambition to deliver 1.2 million new homes over
the next five years.
Budget Paper No. 1 |
Statement 2: Economic Outlook | Page 57
Chart 2.12: Private sector residential
building approvals
Chart 2.13: Dwelling investment
20
35
50
65
Mar-08 Mar-16 Mar-24
'000
85
100
115
130
2010-11 2015-16 2020-21 2025-26
$b
Source: ABS Building Approvals and Treasury.
Note: 3-month rolling average.
Source: ABS Australian National Accounts: National
Income, Expenditure and Product and
Treasury.
Business investment
Recent growth in business investment has been underpinned by strong business balance
sheets, elevated capacity utilisation, and resilient business sentiment. The upswing is
expected to continue through to 2025–26 and, if realised, would be the longest sustained
increase in business investment since the mining boom (Chart 2.14).
The positive outlook for business investment is reflected in the strength of recent outcomes
as well as forward-looking capital expenditure intentions (Chart 2.15). High levels of
capacity utilisation and the desire to drive cost efficiencies has, to date, offset the impact of
global uncertainty and the drag from the slowdown in household demand. A large pipeline
of non-dwelling construction projects should underpin near-term growth with business
investment forecast to grow by 5½ per cent in 2023–24.
Business investment is expected to remain at high levels, with growth expected to be
1 per cent in 2024–25 and 2 per cent in 2025–26, as the pipeline of non-dwelling
construction projects is worked through. Moderating domestic demand is expected to see
investment in machinery and equipment ease, albeit from elevated levels.
At the sectoral level, non-mining investment is expected to be the main driver of growth in
business investment over the coming years. Non-mining investment is forecast to increase
by 5½ per cent in 2023–24, 2½ per cent in 2024–25 and 2 per cent in 2025–26. Continued
expenditure on non-dwelling construction projects is driving growth throughout the
profile, with investments focussed on renewable energy infrastructure, data centres and
warehouses.
| Budget Paper No. 1
Page 58 | Statement 2: Economic Outlook
The outlook for mining investment primarily reflects expenditure to maintain existing
resource production capacity along with a modest number of new LNG and metal ore
projects. Mining investment is expected to grow by 4½ per cent in 2023–24, before falling by
3½ per cent in 2024–25 as large projects are worked through. In 2025–26, growth in mining
investment is expected to pick up to 2 per cent.
Chart 2.14: Business investment
by component
Chart 2.15: Capital expenditure
expectations (CAPEX) by sector
(nominal)
0
100
200
300
400
2005-06 2015-16 2025-26
$b
Total business investment
Non-mining investment
Mining investment
0
50
100
150
200
2003-04 2010-11 2017-18 2024-25
$b
Mining
Non-mining
Source: ABS Australian National Accounts: National
Income, Expenditure and Product and
Treasury.
Source: ABS Private New Capital Expenditure and
Expected Expenditure and Treasury.
Note: Last two columns denote new capital
expenditure expectations adjusted using
long-run average realisation ratios for
2023–24 and 2024–25.
Public final demand
Public final demand is forecast to rise by 4½ per cent in 2023–24, before slowing to
1½ per cent in 2024–25 and 2025–26 (Chart 2.16). Government expenditure on goods and
services is expected to continue to grow, which reflects, in part, an increase in public health
spending by all levels of government.
A large pipeline of public infrastructure projects at the state and federal level is expected to
support public investment (Chart 2.17). As capacity constraints ease, this will allow the
pipeline of projects, including on energy, water and transport infrastructure, to be worked
through and support growth.
Budget Paper No. 1 |
Statement 2: Economic Outlook | Page 59
Chart 2.16: Annual growth in public
final demand by component
Chart 2.17: Public sector construction
pipeline
-4
0
4
8
2007-08 2013-14 2019-20 2025-26
Ppt
Total Investment Consumption
0
20
40
60
80
Dec-08 Dec-13 Dec-18 Dec-23
$b
Source: ABS National Accounts: National Income,
Expenditure and Product and Treasury.
Source: ABS Building Activity, Engineering
Construction Activity and National Accounts:
National Income, Expenditure and Product.
Note: Nominal pipeline of public infrastructure
work is deflated by non-dwelling
construction prices.
Net exports
Net exports are expected to add ¾ of a percentage point to GDP growth in 2023–24 and
½ of a percentage point in 2024–25 (Chart 2.18). This is largely the result of the ongoing
rebound in services exports following the pandemic. In 2025–26, net exports are expected to
subtract ¼ of a percentage point from GDP growth. This is largely due to the anticipated
moderation in mining exports and increase in goods imports, which reflects the forecast
upswing in household consumption and strong business investment.
Exports are forecast to grow by 5 per cent in both 2023–24 and 2024–25 (Chart 2.19). This
reflects the expected ongoing recovery in tourism and international education exports
following the prolonged period of international border closures during the pandemic. A
recovery in mining exports from weather and supply disruptions is also forecast to support
export growth. Export growth is then expected to slow to 2½ per cent in 2025–26, which is
consistent with moderating growth in mining and services exports.
Imports growth is forecast to moderate to 2½ per cent in 2023–24, reflecting weaker
domestic demand for goods imports and an expected moderation in service imports
growth with Australians prioritising closer and less expensive holiday destinations amid
cost-of-living pressures. Growth in imports is expected to pick up to 4 per cent in 2024–25
and then 4½ per cent in 2025–26, as domestic demand improves.
| Budget Paper No. 1
Page 60 | Statement 2: Economic Outlook
Chart 2.18: Net export contribution to
GDP growth
Chart 2.19: Contribution to exports
growth
-2
-1
0
1
2
2023-24 2024-25 2025-26
Goods exports Services exports
Goods imports Services imports
Net exports
Ppt
-10
-5
0
5
10
2013-14 2017-18 2021-22 2025-26
Rural goods Mining
Other Services
Total
Ppt
Source: ABS Balance of Payments and International
Investment Position, ABS Australian
National Accounts: National Income,
Expenditure and Product and Treasury.
Source: ABS Balance of Payments and International
Investment Position and Treasury.
Note: ‘Other’ includes exports of non-commodity
goods and additive differences due to
rebasing of volume change measures.
Inflation
Although inflation remains elevated, it has moderated substantially and is now less than
half of its peak in 2022. The moderation in inflation has occurred more quickly than forecast
at MYEFO. Inflation is expected to be 3½ per cent through the year to the June quarter 2024,
¼ of a percentage point lower than previously forecast. This moderation in inflation has
been assisted by a continued easing of goods inflation – and the Government’s
cost-of-living policies.
While there remains considerable uncertainty around the outlook for the domestic and
global economy, the Government’s responsible cost-of-living measures could see headline
inflation return to the target band by the end of 2024, slightly earlier than expected at
MYEFO (Chart 2.20). This will ease pressure on households and help to keep inflation
expectations well-anchored.
Annual headline inflation moderated to 3.6 per cent in the March quarter 2024, well
below its peak of 7.8 per cent (Chart 2.21). The Energy Price Relief Plan and increases to
Commonwealth Rent Assistance are estimated to reduce measured inflation in 2023–24
by ¾ of a percentage point. The extension of the Energy Bill Relief Fund (EBRF) and the
further increase in Commonwealth Rent Assistance payments announced in this Budget
are expected to directly reduce headline inflation by ½ a percentage point in 2024–25
(see Box 2.2).
Budget Paper No. 1 |
Statement 2: Economic Outlook | Page 61
The peak in services inflation lagged that of goods inflation. Services inflation remains
elevated, driven by the increased cost of business inputs. However, services inflation is
expected to gradually normalise over the next two years.
Rental market conditions remain very tight, with national vacancy rates persisting at near
record lows. National advertised rents grew at over 8 per cent in the year to April 2024.
Growth in rental costs is expected to remain elevated as increases in advertised rents flow
through with the renewal of existing leases. Over the forecast horizon, rental pressures are
expected to gradually ease. The demand for rental accommodation has increased sharply,
owing to the reopening of international borders and strong nominal income growth. On the
supply side, high interest rates and elevated costs of construction are weighing on activity,
limiting the pace at which housing supply catches up to demand.
While inflation expectations over the medium-term have remained well-anchored, there are
several risks to the inflation outlook. While productivity has grown for two consecutive
quarters, the extent to which productivity growth will recover remains uncertain. A slower
recovery in productivity growth could have implications for both inflation and growth.
Any further escalation of current geopolitical tensions also present risks to the outlook.
Chart 2.20: Headline inflation
Chart 2.21: Inflation decomposition
-2
0
2
4
6
8
Jun-14 Jun-18 Jun-22 Jun-26
%, tty
Budget 2024-25
MYEFO 2023-24
-2
0
2
4
6
8
Mar-20 Mar-21 Mar-22 Mar-23 Mar-24
%, tty
Housing Transport Food
Other CPI
Source: ABS Consumer Price Index and Treasury.
Note: Grey shading denotes the RBA target band.
Forecasts are June quarter
through-the-year inflation rates.
Source: ABS Consumer Price Index and Treasury.
Note: Contributions are approximations as they
are back cast prior to the December quarter
2023 using the 2023 CPI expenditure
weights, and use rounded analytical series
contributions.
| Budget Paper No. 1
Page 62 | Statement 2: Economic Outlook
Box 2.2: The impact of cost-of-living relief on inflation
The Government’s cost-of-living policies are providing responsible relief to
households and small businesses with cost-of-living pressures.
The Government’s existing Energy Price Relief Plan (EPRP), Cheaper Child Care and
boost to Commonwealth Rent Assistance are directly easing cost-of-living pressures.
These targeted polices are expected to take ¾ of a percentage point off inflation in
2023-24. New policies as part of the 2024–25 Budget will provide further
cost-of-living relief for households. The Government’s energy bill relief will support
all households with their energy bills.
The Government’s EPRP has shielded households from the worst effects of the
extraordinary energy price rises in 2022–23 and 2023–24. The EPRP included
temporary caps on wholesale coal and gas prices and up to $3 billion of targeted
energy bill relief for households and small businesses, jointly funded by the
Australian and state and territory governments. From the June quarter 2023 to the
March quarter 2024, household energy bill relief directly reduced growth in CPI
electricity prices by 12.9 percentage points (Chart 1).
As part of the October Budget 2022–23, the Government invested $4.6 billion to
increase Child Care Subsidy rates to make early childhood education more
affordable for eligible Australian families. In 2023, child care prices fell by
7.2 per cent; without increases to the child care subsidy, they would have risen by
13.0 per cent.
To alleviate rental pressures on low-income renters, the Government increased the
maximum rates of Commonwealth Rent Assistance by 15 per cent at the 2023–24
Budget. This has reduced CPI Rents growth by 1.7 percentage points through the
year to the March quarter 2024.
As households continue to face significant cost-of living- pressures, the Government
has expanded electricity bill relief to all households and provided further increases
to maximum Commonwealth Rent Assistance rates as part of Budget 2024–25. These
two policies are estimated to directly reduce headline inflation by around ½ a
percentage point in 2024–25 and are not expected to add to broader inflationary
pressures in the economy.
Further cost-of-living relief is being delivered through a suite of other policy changes
as part of Budget 2024–25. The Government’s decision to redesign tax relief through
its cost-of-living tax cuts will provide relief to all 13.6 million taxpayers and will not
impact the inflation outlook.
continued over next page
Budget Paper No. 1 |
Statement 2: Economic Outlook | Page 63
Box 2.2: The impact of cost-of-living relief on inflation (continued)
Chart 1: Impact of Energy Bill Relief Fund (EBRF) on electricity prices in
the CPI
80
100
120
140
Mar-22 Mar-23 Mar-24
Including EBRF
Excluding EBRF
Index (Mar-22 = 100)
Source: ABS Consumer Price Index and Treasury.
Note: All rebates in this period can be attributed to the EBRF except an additional $50 rebate for
ACT concession households in July 2023. The ACT rebate is also included in the
‘including EBRF’ line above.
| Budget Paper No. 1
Page 64 | Statement 2: Economic Outlook
The labour market
The labour market has so far proven to be highly resilient. The unemployment rate remains
low by historical standards, employment growth has been strong, and the participation rate
is near record highs (Charts 2.22 and 2.23). The strength in the labour market reflects strong
business balance sheets and the expansion of more labour-intensive sectors of the economy.
Despite this resilience, conditions in the labour market have begun to gradually ease and
this is expected to continue over the coming year. To date, the moderation in the labour
market has mainly occurred through a reduction in average hours.
Employment is forecast to continue to grow, albeit at a more modest pace and by less than
the growth in the size of the labour force. Leading indicators of employment growth, such
as job advertisements and vacancies, have consistently declined from record highs in
mid-2022. This is expected to lead to a gradual rise in the unemployment rate, which is
forecast to be 4½ per cent in the June quarter 2025. The participation rate is expected to
decline modestly as easing labour market conditions discourage some workers from
participating in the labour force. Even as labour market conditions ease, the unemployment
rate will remain low by historical standards and is forecast to remain below the
pre-pandemic decade average of 5.5 per cent.
Chart 2.22: Unemployment and
underemployment rate
Chart 2.23: Employment growth
0
5
10
15
Mar-18 Mar-20 Mar-22 Mar-24
%
Unemployment rate
Underemployment rate
-8
-4
0
4
8
Mar-18 Mar-20 Mar-22 Mar-24
%, tty
Source: ABS Labour Force Survey.
Source: ABS Labour Force Survey.
Nominal wages have picked up and are growing at their fastest rate in nearly 15 years.
Nominal wages, as measured by the Wage Price Index (WPI), grew by 4.2 per cent through
the year to the December quarter 2023 (Chart 2.24). Wages are expected to grow by
4 per cent through the year to the June quarter 2024. There are no signs of a wage-price
spiral developing and medium-term inflation expectations are well anchored.
Budget Paper No. 1 |
Statement 2: Economic Outlook | Page 65
The pick-up in wages has been broad-based across both the private and public sectors. The
improvement in wage outcomes was initially driven by private sector wages. Administered
wage decisions have supported the pick-up in private-sector wage growth, particularly the
Fair Work Commission’s determinations on the minimum wage and the Aged Care Work
Value Case. More recently, public sector wage outcomes have made a material contribution
to wage growth. In both the public and private sector, multi-year enterprise agreements
typically respond to higher inflation with a lag and, therefore, are expected to continue to
support wages growth over coming years.
Administered wage decisions are expected to continue to support wage growth in the near
term. The Government has recommended that the real wages of Australia’s low-paid
workers do not go backwards in its submission to the Fair Work Commission’s Annual
Wage Review. As a technical assumption, Treasury has assumed that the forthcoming Fair
Work Commission determinations on both the Annual Wage Review and the aged care
work value case are broadly consistent with the Government’s submissions.
Moving through 2024–25, wage growth is expected to decline as labour market conditions
ease in line with aggregate demand. Growth in wages set by individual arrangements is
moderating in line with the softening in labour market conditions. Nominal wage growth is
expected to ease to 3¼ per cent through the year to the June quarter 2025.
The moderation in inflation and higher nominal wage outcomes lifted real wages through
the latter half of 2023. Annual real wages returned to growth at the end of 2023, which was
earlier than had previously been expected. Real wage growth is expected to rise to
½ per cent by the June quarter 2024 (Chart 2.25).
Chart 2.24: WPI growth by method of
pay-setting
Chart 2.25: Real wage growth by income
quintile
0
2
4
6
8
Dec-11 Dec-15 Dec-19 Dec-23
%, tty
Individual arrangements
Enterprise agreements
Awards
-6
-4
-2
0
2
4
Dec-11 Dec-15 Dec-19 Dec-23
%, tty
Total
Lowest 20 per cent
Lowest 20 to 40 per cent
Source: ABS Wage Price Index.
Source: ABS Wage Price Index and Treasury.
| Budget Paper No. 1
Page 66 | Statement 2: Economic Outlook
Box 2.3: Labour market resilience and employment opportunities
Employment growth in Australia has been stronger than any major advanced
economy over the past two years (Chart 1). Strong employment and strong growth
in labour supply has translated into a pick-up in the employment-to-population
ratio. The share of Australians who have a job is larger than in any major advanced
economy (Chart 2). If the employment-to-population ratio was the same level as
Canada, the most comparable major economy to Australia, around 600,000 fewer
Australians would be employed.
The resilient Australian labour market has provided employment opportunities for
a broad section of the community, including cohorts that have traditionally faced
barriers to employment. Youth and female employment-to-population ratios reached
record highs over the past two years, while their respective unemployment rates
reached record lows. Job attachment for these workers will have enduring benefits
and ensure employment is more inclusive, despite the expected moderate rise in
unemployment.
Chart 1: Employment growth since
May 2022
Chart 2: Employment-to-population
ratio
-2
0
2
4
6
AU US CA EA JP UK
%
Employment growth
Labour supply growth
45
50
55
60
65
AU CA JP US UK EA
%
Sources: National statistical agencies, Refinitiv.
Note: Euro area data is since June 2022.
US employment growth represents
growth in non-farm payrolls. AU is
Australia. CA is Canada. US is the
United States. EA is euro area. JP
is Japan. UK is the United Kingdom.
Source: National statistical agencies, Refinitiv.
Note: AU is Australia. CA is Canada. JP is
Japan. US is the United States. UK is
the United Kingdom. EA is euro area.
Budget Paper No. 1 |
Statement 2: Economic Outlook | Page 67
Outlook for the terms of trade
Australia’s terms of trade, the ratio of export to import prices, are forecast to decline by
15 per cent over the next three years. As the terms of trade are falling from a high level,
they are expected to stabilise to around the average level of the past 15 years in 2025–26.
The decline in the terms of trade primarily reflects the assumption that bulk commodity
export prices will trend to their long-run fundamental levels. Commodity prices are
assumed to reach their long-run anchors over four quarters by the end of March quarter
2025 (Table 2.2).
The outlook for the terms of trade is highly uncertain, reflecting potential volatility in
commodity prices. Recent developments in the outlook for demand for steel in China and
a modest improvement in iron ore and metallurgical coal supply has driven a sharp
correction in iron ore and metallurgical coal prices. Box 2.4 presents scenarios outlining the
sensitivity of nominal GDP and tax receipts to alternative bulk commodity price assumptions.
Box 2.4: Commodity prices
Commodity prices have remained volatile over the past two years. Further volatility
in the prices of Australia’s bulk commodity exports remains a key source of
uncertainty in the outlook for nominal GDP and Government tax receipts. This box
explores the sensitivity of the outlook for nominal GDP and tax receipts to
alternative near-term profiles for iron ore and metallurgical coal prices.
Iron ore and metallurgical coal prices have been elevated over the past two years
due to strong demand from China and disruptions to supply both in Australia and
globally. However, recent indications suggest that steel demand in China has likely
peaked and a recovery in the supply of iron ore and metallurgical coal has put
downward pressure on prices.
Chinese imports of iron ore reached record levels in 2023 in line with near-record
steel production. This was due to strong demand from investment in infrastructure,
expanding industrial capacity and exports, which offset weak demand from
property investment. However, as property sector demand is expected to remain
weak, with residential construction starts in China having fallen to their lowest level
in over 15 years, steel production has likely passed its peak and is expected to ease in
2024 (Chart 1). Coinciding with the weak outlook for demand, global supply of iron
ore has improved with a recovery in Brazilian supply in recent months (Chart 2).
continued over next page
| Budget Paper No. 1
Page 68 | Statement 2: Economic Outlook
Box 2.4: Commodity prices (continued)
Chart 1: China crude steel
production and residential
construction starts
Chart 2: China iron ore imports
50
100
150
200
250
Mar-08 Mar-16 Mar-24
Index (Dec-08=100)
Crude steel production
Residential construction starts
0
30
60
90
120
Mar-08 Mar-16 Mar-24
Total
Australia
Rest of world
Mt
Source: National Bureau of Statistics, China;
World Steel Association; Bloomberg;
Refinitiv and Treasury.
Note: 12-month rolling average.
Source: General Administration of Customs,
China; Bloomberg and Treasury.
Note: 12-month rolling average.
Two alternative price scenarios have been considered to assess the sensitivity of
Budget forecasts to alternative profiles for iron ore and metallurgical coal prices
(Charts 3 and 4).
• In the upside scenario, iron ore and metallurgical coal prices are assumed to stay
at their recent averages until the end of the September quarter 2024, after which
they glide to their long-run anchor prices by the end of March quarter 2025.
• In the downside scenario, iron ore and metallurgical coal prices fall to their
long-run anchor prices by the end of the September quarter 2024.
Compared with the Budget forecasts, nominal GDP is higher by $16.5 billion in the
upside scenario and lower by $18.1 billion in the downside scenario over the
forward estimates (Table 1). The level of company tax receipts is $4.1 billion higher
in the upside scenario and $4.5 billion lower in the downside scenario over the
forward estimates.
continued over next page
Budget Paper No. 1 |
Statement 2: Economic Outlook | Page 69
Box 2.4: Commodity prices (continued)
Chart 3: Iron ore spot price
Chart 4: Metallurgical coal spot
price
0
50
100
150
Jun-23 Jun-24 Jun-25 Jun-26
Spot prices
2024-25 Budget
Upside scenario
Downside scenario
$US/t, FOB
0
100
200
300
400
Jun-23 Jun-24 Jun-25 Jun-26
Spot prices
2024-25 Budget
Upside scenario
Downside scenario
$US/t, FOB
Source: Argus Media and Treasury.
Note: Iron ore – 62% Fe, FOB.
Source: Argus Media and Treasury.
Note: Metallurgical coal – premium-hard
low-vol, FOB.
Note: Calculations made by Treasury are based on confidential proprietary data from Argus
Media under licence. Argus Media shall not be liable for any loss or damage arising from
any party’s reliance on, or use of, the data provided or the Treasury’s calculations.
Table 1 – Changes in nominal GDP and company tax receipts relative to
Budget forecast
2023-24
2024-25
2025-26
2026-27
2027-28
Total
Upside scenario
Nominal GDP ($b)
1.0
15.4
0.1
0.0
0.0
16.5
Company tax receipts ($b)
0.1
2.2
1.9
0.0
0.0
4.1
Downside scenario
Nominal GDP ($b)
-1.1
-16.9
-0.1
0.0
0.0
-18.1
Company tax receipts ($b)
-0.1
-2.4
-2.0
0.0
0.0
-4.5
Note: Totals may not sum due to rounding.
| Budget Paper No. 1
Page 70 | Statement 2: Economic Outlook
Outlook for nominal GDP growth
Nominal GDP is expected to grow 4¾ per cent in 2023–24. This reflects underlying growth
in economic output as well as strength in prices for domestic consumption and investment.
Nominal GDP growth is then expected to slow to 2¾ per cent in 2024–25, as higher output
growth and domestic inflation are offset by the fall in the terms of trade.
Medium-term projections
The fiscal aggregates are underpinned by economic forecasts over the forward estimates
period and projections over the medium term (Chart 2.26).
Chart 2.26: Medium-term projection period
2023–24
2024–25
2025–26
2026–27
2027–28
2028–29
2029–30
2030–31
2031–32
2032–33
2033–34
2034-35
Economic medium-term projections
Budget medium-term projections
Detailed forecasts
Budget estimates
Economic forecasts
Source: Treasury
Treasury uses a macroeconometric model of the Australian economy for its forecasts and
projections beyond the detailed forecast horizon of 2025–26. The model informs how the
economy returns to its trend level of output, known as potential GDP, following short-term
fluctuations of the business cycle.
Potential GDP is estimated based on an analysis of trends for population, productivity, and
participation. Potential GDP growth is projected to average 2½ per cent per annum over the
2028–29 to 2034–35 projection period.
Both the population (aged over 15) and the trend participation rate have been revised up by
¼ of a percentage point by 2034–35. The updated estimates for population and its age
structure are reflected in trend participation.
The upgrade in the size of the workforce has been offset by a lower estimated level of trend
productivity in the near term. This reflects weak underlying productivity growth, which
pre-dated COVID-19 pandemic related disruptions that are largely expected to unwind.
In the long run, underlying productivity is assumed to grow at 1.2 per cent per annum.
The unemployment rate settles at Treasury’s Non-Accelerating Inflation Rate of
Unemployment (NAIRU) assumption of 4¼ per cent by the June quarter 2028 and
remains at that rate over the medium-term projection period.
Budget Paper No. 1 |
Statement 2: Economic Outlook | Page 71
Domestic price growth converges over time to the midpoint of the Reserve Bank of
Australia’s inflation target band of 2 to 3 per cent. The terms of trade are projected to
remain around their 2025–26 level over the medium term, with key commodity prices being
at levels consistent with their long-term fundamentals. Nominal wage growth converges to
around 3¾ per cent, reflecting the outlook for labour productivity growth and inflation.
Statement 3: Fiscal Strategy and Outlook | Page 73
Statement 3:
Fiscal Strategy and Outlook
Following a $22.1 billion surplus in 2022–23, a $9.3 billion surplus is now forecast for
2023–24 – the first back-to-back surpluses in nearly two decades. The Government’s
responsible economic and fiscal management has returned the budget to surplus faster than
any major advanced economy.
This Government is continuing to support monetary policy, keeping pressure off inflation
by targeting a second surplus and returning over 96 per cent of tax upgrades to the budget
in 2023–24. Since the Pre-election Economic and Fiscal Outlook 2022 (PEFO), 82 per cent of
tax upgrades have been returned to the budget over the forward estimates period.
Real payments growth has been limited since coming to government and over the forward
estimates period to 1.4 per cent per year, compared to around 3.2 per cent over the past
30 years. The Government has identified $32.2 billion in budget improvements in this
Budget, bringing the total to $104.8 billion since coming to government.
The Government is delivering cost-of-living relief, with energy bill relief and rent assistance
estimated to directly reduce headline inflation by ½ of a percentage point in 2024–25. This
could see headline inflation return to the target band by the end of 2024, slightly earlier
than expected at the Mid-Year Economic and Fiscal Outlook (MYEFO).
Inflation is the primary focus of the Budget in the near term. As inflation moderates, fiscal
policy will shift emphasis towards promoting sustainable economic growth and public
finances over time. This is achieved through a balanced approach that manages near-term
risks to inflation and growth, puts in place reforms to build a stronger and more resilient
economy, and safeguards fiscal sustainability.
The underlying cash balance forecast for 2023–24 has improved by $10.5 billion since
MYEFO and $65.9 billion since the PEFO. A deficit of $28.3 billion is forecast in 2024–25.
The larger deficit is driven by the Government’s cost-of-living relief and addressing
unavoidable spending pressures including the extension of funding for terminating health
measures and frontline services. The underlying cash balance has improved by a
cumulative $214.7 billion over the six years to 2027–28 compared to the forecasts at the
PEFO. Gross debt is projected to be $183.0 billion lower at 30 June 2025 than forecast in the
PEFO, saving around $80 billion in interest costs over the decade.
In line with the Economic and Fiscal Strategy, the Government is on track to stabilise and
reduce gross debt as a share of the economy. Gross debt as a share of the economy is lower
than at MYEFO and the PEFO in every year of the forward estimates and medium term.
Gross debt is projected to peak at 35.2 per cent of GDP at 30 June 2027, 9.7 percentage
points lower than the peak forecast in the PEFO.
The underlying cash balance improves over the medium term. However, Australia faces
long‑term fiscal challenges due to climate change, an ageing population, regional security
and rising demand for care and support services.
Statement 3: Fiscal Strategy and Outlook | Page 75
Statement contents
Economic and Fiscal Strategy ................................................................................... 79
Delivering on the Economic and Fiscal Strategy ......................................................................... 80
Fiscal outlook .............................................................................................................. 84
Underlying cash balance estimates............................................................................................. 84
Addressing Unavoidable and Legacy Issues .............................................................................. 84
Primary balance estimates .......................................................................................................... 88
Medium-term projections ............................................................................................................. 89
Changes in the medium-term outlook since MYEFO .................................................................. 90
Receipts estimates and projections ............................................................................................ 93
Receipts policy decisions over the forward estimates ................................................................. 93
Payments estimates and projections ........................................................................................... 94
Headline cash balance estimates ............................................................................................. 101
The Government’s balance sheet ............................................................................ 103
Gross debt estimates and projections ....................................................................................... 103
Net debt estimates and projections ........................................................................................... 104
Net financial worth and net worth estimates and projections .................................................... 105
Fiscal impacts of the net zero transformation ....................................................... 107
Physical Impacts of Climate Change ...................................................................... 107
Net zero spending ..................................................................................................... 108
Australia’s classification approach ............................................................................................ 108
The role of net zero enabling industries in emissions reduction ................................................ 110
New net zero spending measures ........................................................................... 113
Appendix A: Other fiscal aggregates ...................................................................... 116
Accrual aggregates ................................................................................................................... 116
Structural budget balance estimates ......................................................................................... 118
Statement 3: Fiscal Strategy and Outlook | Page 77
Statement 3: Fiscal Strategy and Outlook
The Government’s responsible economic management has delivered a surplus in 2022–23,
and a second surplus of $9.3 billion (0.3 per cent of GDP) is forecast in 2023–24 (Table 3.1).
This is an improvement in 2023–24 of $10.5 billion since MYEFO and $65.9 billion since the
PEFO.
This Government is continuing to support monetary policy, keeping pressure off inflation
by targeting a second surplus and returning over 96 per cent of tax upgrades to the budget
in 2023–24. Since the PEFO, 82 per cent of tax upgrades have been returned to the budget
over the forward estimates period.
A deficit of $28.3 billion (1.0 per cent of GDP) is forecast in 2024–25. The larger deficit is
driven by the Government’s cost-of-living relief and addressing unavoidable spending
including the extension of funding for terminating health measures and frontline services.
The upgrades to receipts in this Budget are much smaller than recent budget updates, at
around a fifth of the average of the previous three Budgets. This Budget sees tax receipts,
excluding GST and policy decisions, increasing by $8.2 billion in 2024–25 and $27.0 billion
over the forward estimates.
Real payments growth has been limited since coming to government and over the forward
estimates period to 1.4 per cent and 2.1 per cent between 2024–25 and 2027–28, compared to
around 3.2 per cent over the past 30 years. The Government has identified $32.2 billion in
budget improvements in this Budget, bringing the total to $104.8 billion since coming to
government.
The underlying cash balance is projected to improve over the medium term. Gross debt as
a share of the economy is projected to be lower than at MYEFO and PEFO in every year of
the forward estimates and medium term, helping to rebuild fiscal buffers to prepare for
future challenges.
Gross debt as a share of the economy is expected to peak one year earlier and
0.2 percentage points lower than projected in MYEFO. By 30 June 2034, gross debt is
31.5 per cent of GDP, 0.6 percentage points lower than projected at MYEFO. Gross debt is
projected to be $183.0 billion lower at 30 June 2025 than at PEFO, and these improvements
save around $80 billion in interest costs over the decade.
| Budget Paper No. 1
Page 78 | Statement 3: Fiscal Strategy and Outlook
Table 3.1: Australian Government general government sector budget aggregates
Actual
Estimates
Projections
2022-23
2023-24
2024-25
2025-26
2026-27
2027-28
Total(a)
2034-35
$b
$b
$b
$b
$b
$b
$b
% of GDP
Underlying cash balance
22.1
9.3
-28.3
-42.8
-26.7
-24.3
-112.8
Per cent of GDP
0.9
0.3
-1.0
-1.5
-0.9
-0.8
-0.1
Receipts
649.5
692.3
698.4
719.4
760.0
801.8
3,671.9
Per cent of GDP
25.3
25.8
25.3
25.1
25.1
25.2
26.2
Tax receipts
601.3
638.8
642.5
661.6
702.3
742.3
3,387.5
Per cent of GDP
23.5
23.8
23.3
23.1
23.2
23.3
24.5
Non-tax receipts
48.2
53.6
55.9
57.8
57.7
59.5
284.5
Per cent of GDP
1.9
2.0
2.0
2.0
1.9
1.9
1.7
Payments(b)
627.4
683.0
726.7
762.2
786.7
826.2
3,784.8
Per cent of GDP
24.5
25.4
26.4
26.6
26.0
26.0
26.3
Gross debt(c)
889.8
904.0
934.0
1,007.0
1,064.0
1,112.0
Per cent of GDP
34.7
33.7
33.9
35.1
35.2
34.9
30.2
Net debt(d)
491.0
499.9
552.5
615.5
660.0
697.5
Per cent of GDP
19.2
18.6
20.0
21.5
21.8
21.9
18.7
Net interest payments(e)
11.9
12.3
14.5
18.8
20.8
26.0
92.4
Per cent of GDP
0.5
0.5
0.5
0.7
0.7
0.8
1.1
a) Total is equal to the sum of amounts from 2023–24 to 2027–28.
b) Equivalent to cash payments for operating activities, purchases of non-financial assets and principal
payments of lease liabilities.
c) Gross debt measures the face value of Australian Government Securities (AGS) on issue.
d) Net debt is the sum of interest-bearing liabilities (which includes AGS on issue measured at market
value) less the sum of selected financial assets (cash and deposits, advances paid and investments,
loans and placements).
e) Net interest payments are equal to the difference between interest payments and interest receipts. The
increases in 2025–26 and 2027–28 primarily reflect Treasury Indexed Bonds maturing in those years.
Budget Paper No. 1 |
Statement 3: Fiscal Strategy and Outlook | Page 79
Economic and Fiscal Strategy
The Government’s Economic and Fiscal Strategy is making the economy and the budget
stronger, more resilient and more sustainable over the medium term (Box 3.1). The strategy
is consistent with the requirements of the Charter of Budget Honesty Act 1998, with progress
reviewed each budget update.
Box 3.1: The Government’s Economic and Fiscal Strategy
The Government’s Economic and Fiscal Strategy will make the economy more
resilient and put the budget on a more sustainable footing over time.
The Strategy is focused on the objectives of strong, inclusive and sustainable
economic growth, full employment, growing real wages, ensuring women’s
economic participation and equality, and improving living standards for all
Australians.
The Government will improve the budget position in a measured way, consistent
with the overarching goal of reducing gross debt as a share of the economy over
time. This approach enables fiscal policy to respond to changes in economic
conditions to support macroeconomic stability, including in times of high inflation.
These objectives will be achieved by investments that grow the economy and expand
productive capacity, and budget discipline that restrains spending growth and
enhances the quality of spending. The budget will be improved in a manner
consistent with the objective of maintaining full employment, while continuing to
deliver essential services.
Putting the budget on a more sustainable footing will ensure the Government has the
fiscal buffers to withstand economic shocks and better manage the fiscal pressures
from an ageing population and climate change.
These commitments will be underpinned by the following elements:
• Allowing tax receipts and income support to respond in line with changes in the
economy and directing the majority of improvements in tax receipts to budget
repair.
• Limiting growth in spending until gross debt as a share of GDP is on a
downwards trajectory, while growth prospects are sound and unemployment
is low.
• Improving the efficiency, quality and sustainability of spending.
• Focusing new spending on investments and reforms that build the capability of
our people, expand the productive capacity of our economy, and support action
on climate change.
• Delivering a tax system that funds government services in an efficient, fair and
sustainable way.
| Budget Paper No. 1
Page 80 | Statement 3: Fiscal Strategy and Outlook
Delivering on the Economic and Fiscal Strategy
This Budget delivers on the Government’s Economic and Fiscal Strategy by:
• Forecasting a $9.3 billion surplus in 2023–24 – this would be the first time a government
has delivered back-to-back surpluses in nearly two decades (Chart 3.1).
• Reducing debt as a share of the economy over time. Gross debt-to-GDP is projected to
peak at 35.2 per cent at 30 June 2027, before declining to 30.2 per cent at 30 June 2035
(Chart 3.2).
• Returning 96 per cent of tax receipt upgrades (excluding GST) to the budget in 2023–24,
keeping pressure off inflation.
• Returning 82 per cent of revenue upgrades to the budget since coming to government
over the forward estimates period.
• Repairing the budget through $27.9 billion in savings and spending reprioritisations
and $3.1 billion in improvements to the tax system.
– This brings total savings and spending reprioritisations to $77.4 billion and total
budget improvements to $104.8 billion since the PEFO.
• Limiting spending, with real payments growth since coming to government and over
the forward estimates period estimated to be 1.4 per cent.
– This compares to the 3.2 per cent average over the past 30 years.
Chart 3.1: Underlying cash balance
Chart 3.2: Gross debt
-8
-6
-4
-2
0
2
2014-15 2024-25 2034-35
Estimates
% of GDP
2024-25 Budget
Medium term
2023-24 MYEFO
20
30
40
2014-15 2024-25 2034-35
Medium term
Estimates
2024-25 Budget
2023-24 MYEFO
% of GDP
Source: Treasury.
Source: Australian Office of Financial Management,
Treasury.
Budget Paper No. 1 |
Statement 3: Fiscal Strategy and Outlook | Page 81
The Government is keeping the pressure off inflation and supporting monetary policy by
targeting a second consecutive surplus and continuing to bank the majority of revenue
upgrades in 2023–24 (Box 3.2). The Government is directly reducing inflation through
responsible cost of living measures. In 2024–25, extension of energy bill relief and increases
to rental assistance are estimated to directly reduce inflation by ½ of a percentage point and
are not expected to add to broader inflationary pressures.
Compared to the PEFO:
• The underlying cash balance has improved by a cumulative $214.7 billion over the six
years to 2027–28.
• Gross debt is lower every year of the projection period. At 30 June 2025, gross debt is
projected to be $183.0 billion (11.0 percentage points of GDP) lower than at the PEFO.
• The improvements to the Budget position over the 11 years to 2032–33 are expected to
save around $80 billion in interest payments over this period.
The Government’s responsible economic and fiscal management has meant Australia’s
fiscal position has improved by more than any other G20 country since 2021. Australia
remains one of only nine countries to retain a AAA credit rating from all three major credit
rating agencies.
| Budget Paper No. 1
Page 82 | Statement 3: Fiscal Strategy and Outlook
Box 3.2: Fiscal policy in a period of high inflation
In a high-inflation environment, fiscal policy can be used to reduce demand
pressures while providing targeted cost-of-living support to those in need. This can
help ease inflation and limit the adverse impact on household consumption and
welfare relative to monetary policy working alone (IMF 2023).
In Australia, fiscal policy has tightened rapidly. Budget balance metrics – such as the
underlying cash balance and net operating balance (as a per cent of GDP) – have
increased by around seven percentage points since their pandemic trough. This is
the fastest and largest tightening on record: typical improvements were around two
to three percentage points in the three years coming out of recessions (Chart 3.3).
Chart 3.3 Budget balance to GDP improvements in economic recoveries
-1
0
1
2
3
4
5
6
7
8
1970's 1980's 1990's GFC COVID-19
Ppt
Downturn
Source: Treasury.
Note: Cumulative underlying cash balance improvement over three years from the trough
following an economic downturn.
This tightening was possible because of the Government’s spending restraint,
through returning the majority of upward revisions to tax receipts to the budget and
keeping real spending growth low.
Continued on next page
Budget Paper No. 1 |
Statement 3: Fiscal Strategy and Outlook | Page 83
Box 3.2: Fiscal Policy in a Period of High Inflation (continued)
Economic strength, a resilient labour market and high commodity prices drove an
increase in personal income and company tax collections. This saw large upward
revisions to tax receipts as the Australian economy rebounded from the pandemic.
Returning 91 per cent of tax receipt upgrades to the budget in 2022–23 and 2023–24
has allowed these improvements in receipts to help moderate demand in the
economy. If the upgrades were instead spent, the underlying cash balance would be
around 3 per cent of GDP worse in 2023–24 (Chart 3.4).
Chart 3.4 Underlying cash balance scenario
-8
-6
-4
-2
0
2
2014-15 2017-18 2020-21 2023-24 2026-27
% of GDP
2024-25 Budget
Had no tax upgrades
been returned
Source: Treasury.
Spending restraint – including by not continuing to extend temporary pandemic
fiscal measures or replacing them with new spending measures – and structural
budget improvements further added to the fiscal tightening.
Within a tightening budget position, the Government provided responsible relief to
support households facing significant cost-of-living pressures. The impacts of high
but moderating inflation and higher interest rates put households under pressure. In
response, the Government undertook measures – including energy bill relief, child
care subsidies, and rent assistance – to support households to pay for essentials.
By tightening fiscal policy in aggregate and providing responsible relief in the
period of high inflation, the Government’s approach to fiscal policy has helped to
reduce inflation from its peak while reducing the burden of inflation on lower and
middle-income households.
| Budget Paper No. 1
Page 84 | Statement 3: Fiscal Strategy and Outlook
Fiscal outlook
Underlying cash balance estimates
The underlying cash balance is estimated to be a $9.3 billion surplus (0.3 per cent of GDP)
in 2023–24, an improvement of $10.5 billion compared to MYEFO (Table 3.2). This follows a
$22.1 billion surplus in 2022–23. This would be the first back-to-back surplus nearly two
decades. Australia’s fiscal position has improved by more than any other G20 country since
2021, according to IMF data (Box 3.3).
An underlying cash deficit of $28.3 billion (1.0 per cent of GDP) is forecast for 2024–25,
$9.5 billion lower since MYEFO. The underlying cash deficit is expected to increase in
2025–26 before declining to $24.3 billion (0.8 per cent of GDP) in 2027–28. Over the
five years to 2027–28, the underlying cash balance is lower by a cumulative $11.8 billion
since MYEFO.
Policy decisions since MYEFO have reduced the underlying cash balance by $24.4 billion
over five years to 2027–28. This includes $7.8 billion dollars in responsible cost-of-living
relief and $15.4 billion in unavoidable spending. Parameter and other variations since
MYEFO have improved the underlying cash balance by $12.6 billion over five years to
2027–28.
Addressing Unavoidable and Legacy Issues
Over five years to 2027–28, there is $15.4 billion in unavoidable spending, including to
extend terminating programs and continue to address legacy issues left by the former
Government. Investment in these critical areas ensures that we keep existing programs in
place to prevent any cuts to the services that Australians rely on. This includes funding to:
• address pressures at Services Australia, help stabilise claim processing performance and
continue emergency response capability, continue to operate, maintain and enhance
myGov, and improve safety for staff and customers.
• address unavoidable cost pressures for existing projects in the Infrastructure
Investment Program.
• extend terminating health programs and continue the COVID-19 response.
• support digital capability and sustainment of aged care systems.
• address underfunding at Home Affairs and the Australian Border Force, helping to
sustain operations and maintain capability to secure our borders.
Budget Paper No. 1 |
Statement 3: Fiscal Strategy and Outlook | Page 85
Box 3.3: International fiscal comparisons
The Government’s responsible budget management, where the proceeds from a
resilient labour market and elevated commodity prices have been returned to the
budget, has contributed to strong fiscal outcomes for Australia. Australia’s budget
balance as a share of GDP has continued to improve more quickly than in most
countries, and gross debt-to-GDP remains at comparatively low levels.
Australia’s general government fiscal deficit – which includes the fiscal positions of
state and local governments – is expected to have narrowed to 0.9 per cent of GDP
in 2023, from 6.5 per cent in 2021. This 5.6 percentage point improvement is much
larger than the advanced-economy average of 1.6 percentage points over the same
period (Chart 3.5). Australia had the second strongest fiscal balance in 2023 among
G20 countries, up from fourteenth in 2021.
Chart 3.5: Change in fiscal balance to GDP (2021 to 2023)
-1
0
1
2
3
4
5
6
Australia Canada United States United
Kingdom
Euro Area Advanced
Economies
New Zealand
Ppt
Source: International Monetary Fund.
Note: International Monetary Fund fiscal data are produced on a consistent basis across
countries. They are produced for calendar years and on a general government basis.
They are not directly comparable with fiscal aggregates reported elsewhere in the Budget.
Debt-to-GDP has fallen faster and earlier than the IMF projected at the height of
the pandemic. Between 2021 and 2023, Australia’s general government gross
debt-to-GDP fell by 6.1 percentage points. Australia’s gross debt as a share of GDP
has remained low compared to its international peers (Chart 3.6).
Continued on next page
| Budget Paper No. 1
Page 86 | Statement 3: Fiscal Strategy and Outlook
Box 3.3: International Fiscal Comparisons (continued)
The recent debt reduction is a welcome development. However, across the world,
government debt remains well above its pre-Global Financial Crisis levels. In
Australia, general government gross debt increased to a peak of 57 per cent in 2020.
The Government’s Economic and Fiscal Strategy focuses on reducing gross debt as
a share of the economy. The IMF projects Australia’s general government gross debt
to GDP to continue to fall to 44 per cent of GDP by 2029. This will ensure Australia
continues to have the fiscal space to respond to future economic shocks.
Chart 3.6: General government gross debt
0
30
60
90
120
150
2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 2021 2023
% of GDP
Range of comparable economies Australia
Global Financial Crisis
COVID-19
Source: International Monetary Fund.
Note: International Monetary Fund fiscal data are produced on a consistent basis across
countries. They are produced for calendar years and on a general government basis.
They are not directly comparable with fiscal aggregates reported elsewhere in the Budget.
The range has been calculated using a subset of comparable advanced economies:
Canada, the Euro Area, New Zealand, United Kingdom and United States.
Budget Paper No. 1 |
Statement 3: Fiscal Strategy and Outlook | Page 87
Table 3.2: Reconciliation of general government sector underlying cash balance
estimates
Estimates
2023–24
2024–25
2025–26
2026–27
2027–28
Total
$m
$m
$m
$m
$m
$m
2023–24 Budget underlying cash
balance
-13,918
-35,058
-36,627
-28,450
*
*
Per cent of GDP
-0.5
-1.3
-1.3
-1.0
*
Changes from 2023–24 Budget to
2023–24 MYEFO
Effect of policy decisions(a)
-650
-2,430
-1,025
-1,160
*
*
Effect of parameter and other variations
13,458
18,660
2,534
10,112
*
*
Total variations
12,808
16,230
1,509
8,952
*
*
2023–24 MYEFO underlying cash
balance(b)
-1,110
-18,828
-35,119
-19,498
-26,452
-101,007
Per cent of GDP
0.0
-0.7
-1.2
-0.6
-0.8
Changes from 2023–24 MYEFO
to 2024–25 Budget
Effect of policy decisions(a)(c)
Receipts
136
2,215
-1,000
1,989
4,725
8,064
Payments
298
11,724
9,304
5,243
5,934
32,503
Total policy decisions impact on
underlying cash balance
-162
-9,509
-10,304
-3,254
-1,209
-24,439
Effect of parameter and other variations(c)
Receipts
6,906
5,509
9,015
2,644
-298
23,776
Payments
-3,712
5,458
6,430
6,605
-3,614
11,167
Total parameter and other variations
impact on underlying cash balance
10,618
51
2,584
-3,961
3,316
12,609
2024–25 Budget underlying cash
balance
9,346
-28,286
-42,838
-26,713
-24,345
-112,837
Per cent of GDP
0.3
-1.0
-1.5
-0.9
-0.8
*Data is not available.
a) Excludes secondary impacts on public debt interest of policy decisions and offsets from the Contingency
Reserve for decisions taken.
b) 2027–28 as published in the medium-term projections, page 59 of the Mid-Year Economic and Fiscal
Outlook 2023–24.
c) A positive number for receipts improves the underlying cash balance, while a positive number for
payments worsens the underlying cash balance.
| Budget Paper No. 1
Page 88 | Statement 3: Fiscal Strategy and Outlook
Primary balance estimates
The primary cash balance adjusts the underlying cash balance to exclude interest payments
and interest receipts (as these are largely outside government control in the short term).
This provides a more representative measure of the Government’s fiscal decisions.
The primary balance is expected to be in surplus by $21.6 billion (0.8 per cent of GDP)
in 2023–24 and in deficit in 2024–25. In 2027–28, the primary balance is expected to return to
surplus, reflecting an improving underlying cash balance.
Since MYEFO, the primary balance has improved $10.1 billion in 2023–24 and deteriorated
by $9.9 billion in 2024–25. Movements in the primary balance over the forward estimates
period are broadly consistent with movements in the underlying cash balance.
The underlying cash balance is expected to improve more than the primary balance in
2023–24 because net interest payments (which are excluded from the primary balance
calculation) are lower than forecast at MYEFO.
Budget Paper No. 1 |
Statement 3: Fiscal Strategy and Outlook | Page 89
Medium-term projections
The medium-term fiscal outlook has slightly improved since the 2023–24 MYEFO. Modest
underlying cash deficits of less than 1 per cent of GDP are projected over the medium term.
• The underlying cash balance in 2033–34 is expected to be a deficit of 0.2 per cent of GDP,
a 0.1 percentage point improvement over that projected at MYEFO.
• The primary balance is expected to be in surplus from 2029–30. The primary surplus
in 2033–34 is expected to be 0.9 per cent of GDP, 0.1 percentage points higher than
projected at MYEFO.
• Gross debt-to-GDP is lower across the entire projection period compared to MYEFO.
By 30 June 2034, gross debt is expected to be 31.5 per cent of GDP, 0.6 percentage points
lower than projected at MYEFO.
Total receipts as a share of GDP are expected to increase from 25.2 per cent of GDP in
2027–28 to 26.2 per cent of GDP in 2034–35. Total payments as a share of GDP are expected
to increase from 26.0 per cent of GDP in 2027–28 to 26.3 per cent of GDP in 2034–35
(Chart 3.7).
Chart 3.7: Payments and receipts
20
22
24
26
28
30
32
1978-79 1985-86 1992-93 1999-00 2006-07 2013-14 2020-21 2027-28 2034-35
% of GDP
Total payments
Total receipts
Source: Treasury.
| Budget Paper No. 1
Page 90 | Statement 3: Fiscal Strategy and Outlook
Changes in the medium-term outlook since MYEFO
Receipts as a share of GDP are lower since MYEFO, including 0.1 percentage points lower
in 2033–34.
Payments are expected to be 0.3 percentage points of GDP lower than at MYEFO in
2033–34. Nominal GDP is also higher than at MYEFO, reducing receipts and payments as
a share of the economy.
Payments over the medium-term
The fastest-growing major payments over the medium term are interest on government
debt, the National Disability Insurance Scheme (NDIS), defence, health and aged care.
Growth in some of these payments has changed since MYEFO (Chart 3.8).
• Interest payments growth is expected to average 9.9 per cent per year over the
projections period (2024–25 to 2034–35) compared to 11.7 per cent at MYEFO (2023–24 to
2033–34).
• NDIS Commonwealth funded participant payments growth is expected to average
9.2 per cent per year over the projections period compared to 10.1 per cent at MYEFO.
This largely reflects the shifting of the end of the projection period to 2034–35, which
encompasses an additional year of moderation in scheme growth under the NDIS
Financial Sustainability Framework. The Government’s NDIS reforms are expected to
moderate growth in NDIS expenditure from 2024–25 in line with MYEFO projections.
• Defence payments growth is expected to average 6.6 per cent per year over the
projection period compared to 6.3 per cent at MYEFO. This reflects the introduction of
the 2024 National Defence Strategy, which will increase defence payments as a share of
GDP over the next decade (Box 3.4).
• Medical benefits payments growth is expected to be 5.7 per cent on average over the
projection period, broadly similar to the 5.9 per cent at MYEFO.
Budget Paper No. 1 |
Statement 3: Fiscal Strategy and Outlook | Page 91
Chart 3.8: Average annual growth in major payments 2024–25 to 2034–35
0
2
4
6
8
10
12
Aged Care Medical
Benefits
Hospitals Defence NDIS Interest
%
2024-25 Budget 2023-24 MYEFO
Source: Treasury.
Note: Shows major payments that are growing faster than nominal GDP over the projection period.
Interest refers to interest payments on Australian Government Securities. NDIS refers to the
Australian Government’s contribution to payments for NDIS participant supports. Growth rate for
the 2023–24 MYEFO is from 2023–24 to 2033–34. Growth rate for the 2024–25 Budget is from
2024–25 to 2034–35. Growth rates are consistent with parameters in current intergovernmental
agreements.
| Budget Paper No. 1
Page 92 | Statement 3: Fiscal Strategy and Outlook
Box 3.4: Investing in our national defence
The Government is investing an additional $50.3 billion over the next decade,
through the 2024 National Defence Strategy (NDS) to meet Australia’s strategic
needs. Defence’s Integrated Investment Program has been rebuilt as part of the NDS
to accelerate delivery of capability priorities, including the expansion of the Royal
Australian Navy’s surface combatant fleet. Defence funding will be higher in every
year of the forward estimates and over the medium term compared to MYEFO and
the PEFO (Chart 3.9). Total investment in defence will amount to $765 billion across
2024–25 to 2033–34.
The Government is reforming the Department of Defence’s capability acquisition
system to deliver capability more quickly while maximising value for money,
transparency, and appropriate assurance mechanisms to support implementation of
the NDS.
These investments and reforms will shift the Australian Defence Force to an
integrated and focused force, strengthen cooperation with international partners,
and enhance our capacity to address the complex strategic circumstances we face.
Chart 3.9: Defence payments at selected Budget updates
40
50
60
70
80
90
100
110
2021-22 2023-24 2025-26 2027-28 2029-30 2031-32 2033-34
$billion
2024-25 Budget 2023-24 MYEFO 2022 PEFO
Source: Treasury.
Note: MYEFO figure does not include the provision made for the Defence Strategic Review at
the 2023–24 Budget.
Budget Paper No. 1 |
Statement 3: Fiscal Strategy and Outlook | Page 93
Receipts estimates and projections
Total receipts are expected to decrease from 25.8 per cent of GDP in 2023–24 to 25.2 per cent
of GDP in 2027–28. This largely reflects changes in tax receipts, which are expected to
decrease from 23.8 per cent of GDP to 23.3 per cent of GDP over this period (Chart 3.10).
Chart 3.10: Total receipts
21
22
23
24
25
26
27
2014-15 2018-19 2022-23 2026-27 2030-31 2034-35
% of GDP
2024-25 Budget
2023-24 MYEFO
Estimates
Medium term
Note: dashed lines
indicate tax receipts
Source: Treasury.
Receipts policy decisions over the forward estimates
Policy decisions in this Budget have increased total receipts by $2.2 billion in 2024–25 since
MYEFO, and by $8.1 billion over five years to 2027–28.
Policy decisions since MYEFO have increased tax receipts by $4.9 billion over five years to
2027–28.
Key tax receipt measures include:
• delivering a tax cut for all 13.6 million Australian taxpayers from 1 July 2024. This
measure is estimated to decrease receipts by $1.3 billion over the five years to 2027–28
• extending the ATO’s Tax Avoidance Taskforce, Shadow Economy Compliance Program
and Personal Income Tax Compliance Program. These measures are estimated to
increase receipts by $4.5 billion over the five years to 2027–28, partially offset by an
associated increase in payments of $1.8 billion, including GST payments to the states
and territories of $0.4 billion
• strengthening the integrity of the foreign resident capital gains tax regime. This measure
is estimated to increase receipts by $600 million over the five years to 2027–28, partially
offset by an associated increase in payments of $8.0 million.
| Budget Paper No. 1
Page 94 | Statement 3: Fiscal Strategy and Outlook
Since MYEFO, policy decisions are expected to increase non-tax receipts by $0.5 billion in
2024–25 and by $3.2 billion over the five years to 2027–28.
Further details of Government policy decisions are provided in Budget Paper No. 2,
Budget Measures 2024–25.
Receipts parameter and other variations over the forward estimates
Parameter and other variations have increased total receipts since MYEFO by $6.9 billion in
2023–24, $5.5 billion in 2024–25 and by $23.8 billion over five years to 2027–28 (Table 3.3).
The increase in total receipts due to parameter and other variations primarily reflects tax
receipts, which have been revised up by $7.3 billion in 2024–25 and by $21.1 billion over
five years to 2027–28.
This Budget sees tax receipts excluding GST and policy decisions, increasing since MYEFO
by $8.2 billion in 2024–25 and $27.0 billion over the forward estimates period. Higher
employment and continuing strength in the labour market is a key driver of upgrades,
accounting for $21.6 billion of the net $27.0 billion upgrade to tax receipts since MYEFO.
Higher corporate profits make a broadly similar contribution to the upgrade to tax receipts.
These have been partly offset by a weaker than expected outlook for tobacco excise and
superannuation fund earnings.
Since MYEFO, parameter and other variations are expected to decrease non-tax receipts by
$1.8 billion in 2024–25 and increase non-tax receipts by $5.6 billion over the five years to
2027–28. This movement is partially driven by the Commonwealth Superannuation
Corporation reprofiling the transfer of funded benefits to the Consolidated Revenue Fund,
higher earnings from the Future Fund and Australian Government Investment Funds, and
higher interest on cash deposits.
Further information on expected receipts is provided in Statement 5: Revenue. Analysis of
the sensitivity of the receipts estimates to changes in the economic outlook is provided in
Statement 8: Forecasting Performance and Sensitivity Analysis.
Payments estimates and projections
Since MYEFO, total projected payments have decreased by $3.4 billion in 2023–24 and
increased by $43.7 billion over five years to 2027–28. Real payments growth since coming to
government and over the forward estimates period is expected to be 1.4 per cent per year.
Payments due to parameter and other variations have been revised down by $3.7 billion in
2023–24, largely arising from delays in payments as a result of capacity constraints.
Payments as a share of GDP are lower from 2027–28 and in every year of the medium term
compared to MYEFO. By 2034–35, payments are projected to be 26.3 per cent of GDP
(Chart 3.11).
Budget Paper No. 1 |
Statement 3: Fiscal Strategy and Outlook | Page 95
Chart 3.11: Total payments
23
25
27
29
31
33
2014-15 2018-19 2022-23 2026-27 2030-31 2034-35
% of GDP
2024-25 Budget
2023-24 MYEFO
Estimates
Medium term
Source: Treasury.
Payment policy decisions over the forward estimates
New policy decisions since MYEFO have increased total payments by $11.7 billion in
2024–25 and by $32.5 billion over five years from 2023–24 to 2027–28.
Major policy decisions since MYEFO that have increased payments include:
• the delivery of the 2024 National Defence Strategy and Integrated Investment Program,
which is expected to increase payments by $5.7 billion over four years from 2024–25
• the extension and expansion of the Energy Bill Relief Fund to provide cost of living
relief to all Australian households and eligible small businesses, which is expected to
increase payments by $3.5 billion over three years from 2023–24
• funding for new and amended listing on the Pharmaceutical Benefits Scheme, which is
expected to increase payments by $3.4 billion over five years from 2023–24
• funding towards priority road and rail infrastructure projects, consistent with the
Government’s more integrated, strategic and sustainable approach to infrastructure
investment, which is expected to increase payments by $2.9 billion over five years from
2023–24
• funding to improve the way Services Australia delivers services to the Australian
community, by maintaining frontline staff, enhancing safety and security at Services
Australia centres and sustaining and enhancing the myGov platform, which is expected
to increase payments by $2.8 billion over five years from 2023–24
| Budget Paper No. 1
Page 96 | Statement 3: Fiscal Strategy and Outlook
• the delivery of the Government’s Future Made in Australia agenda, which makes it
easier to invest in Australia and promotes investment in key priority industries,
including Australia’s plan to become a renewable energy superpower, and investing in
new digital capabilities, which is expected to increase payments by $2.6 billion over
five years from 2023–24
• funding to continue aged care reforms, including in response to the Royal Commission
into Aged Care Quality and Safety, which is expected to increase payments by
$2.2 billion over five years from 2023–24
• increases to the maximum rates of Commonwealth Rent Assistance by 10 per cent to
help address rental affordability challenges for recipients, which is expected to increase
payments by $1.9 billion over five years from 2023–24
• increased investment in housing infrastructure to build more homes sooner, and
support for social housing and homelessness services by states and territories under a
new National Agreement on Social Housing and Homelessness, which is expected to
increase payments by $1.5 billion over seven years from 2023–24
• funding to strengthen Medicare by supporting earlier discharge from hospital for older
Australians, improving access to essential services, modernising Australia’s digital
health infrastructure, and ensuring the integrity of Medicare, which is expected to
increase payments by $1.1 billion over five years from 2023–24
• strengthening of Australia’s government-funded Paid Parental Leave scheme to
improve women’s retirement outcomes, which is expected to increase payments by
$1.1 billion over five years from 2023–24
• funding for the first stage of reforms to Australia’s tertiary education system to boost
equity and access to higher education, progress tertiary harmonisation and drive future
productivity growth, which is expected to increase payments by $667.6 million over
five years from 2023–24
Major policy decisions since MYEFO that have decreased payments include:
• moderating the growth in NDIS participant support payments by $14.4 billion over four
years from 2024–25, through the NDIS legislative reforms being undertaken by the
Government as part of the National Disability Insurance Scheme – Getting the NDIS back on
track measure, which will offset the expected increase in expenditure on supports for
NDIS participants from 2024–25 based on the revised projections from the NDIS
Actuary (see payment parameter and other variations below)
• further reducing spending on consultants, contractors and labour hire, will achieve a
savings of $1.0 billion over four years from 2024–25
• funding for additional activities to strengthen the payment and accuracy of the Child
Care Subsidy program, will achieve savings of $440.7 million over four years from
2024–25.
Budget Paper No. 1 |
Statement 3: Fiscal Strategy and Outlook | Page 97
Payment parameter and other variations over the forward estimates
Parameter and other variations since MYEFO have increased payments by $5.5 billion in
2024–25 and by $11.2 billion over five years from 2023–24 to 2027–28.
This is primarily driven by higher estimates for payments related to the NDIS and for
payments to veterans under the Military Rehabilitation Compensation Acts as the
Government delivers on its commitment to clear the claims backlog. Offsetting this
increase, in part, are an estimated decrease in GST payments to the states, a decrease in
payments related to the Medical Benefits program, and lower expected recipient numbers
for the Financial Support for Carers and Student Payments programs, reflecting continued
strong labour market performance.
Major increases in payments from parameter and other variations since MYEFO include:
• payments related to the NDIS were estimated to increase by $1.3 billion in 2023–24 and
$15.9 billion over five years from 2023–24 to 2027–28 based on revised projections from
the NDIS Actuary showing increased expenditure on supports for NDIS participants, as
well as other accounting adjustments. The NDIS legislative reforms being undertaken
by the Government as part of the National Disability Insurance Scheme – Getting the NDIS
back on track measure are expected to offset the increase projected by the NDIS Actuary
and moderate this additional growth in NDIS payments by $14.4 billion over four years
from 2024–25. Taken together, payments related to the NDIS are expected to increase by
$1.5 billion over five years from 2023–24 to 2027–28 and will ensure the NDIS remains
on track to achieve the NDIS Sustainability Framework agreed by National Cabinet
from 1 July 2026.
• payments related to the Military Rehabilitation Compensation Acts – Income Support
and Compensation program are expected to increase by $892.7 million in 2024–25 and
$6.5 billion over five years from 2023–24 to 2027–28, largely due to more claims being
processed because of increased staffing levels that the Government has agreed to in
order to deliver on its commitment to clear the backlog, which results in increased
payments to veterans.
• payments related to National Partnership Payments – Natural Disaster Relief are
expected to increase by $814.0 million in 2024–25 and $3.9 billion over five years from
2023–24 to 2027–28, largely due to higher-than-expected spending related to past
disaster events including New South Wales flooding events between March 2021 and
September 2022 and flooding associated with Tropical Cyclone Jasper in
December 2023.
• payments related to the Child Care Subsidy are expected to increase by $621.1 million in
2024–25 and $3.2 billion over five years from 2023–24 to 2027–28, largely reflecting
additional support flowing to families due to the higher costs of providing care.
| Budget Paper No. 1
Page 98 | Statement 3: Fiscal Strategy and Outlook
• payments related to Job Seeker Income Support are expected to increase by
$496.6 million in 2024–25 and $2.7 billion over five years from 2023–24 to 2027–28,
largely due to upward revisions to the expected number of recipients and average
payment rates driven by changes to the composition of payment recipients.
• payments related to the Research and Development Tax Incentive are expected to
increase by $499.0 million in 2024–25 and $2.6 billion over five years from 2023–24 to
2027–28. This is due to increases in the overall number and value of expected claims,
with higher-than-expected growth in claims by companies in the ‘Professional, Scientific
and Technical Services’ sector.
• payments related to Defence Force Superannuation Benefits payments are expected to
increase by $414.9 million in 2024–25 and $2.1 billion over five years from 2023–24 to
2027–28, largely reflecting changes to invalidity payment projections by the actuary for
the Military Superannuation and Benefits Scheme and to align the accounting treatment
of Defence superannuation schemes with whole-of-government arrangements.
• payments relating to Non Government Schools are expected to increase by
$136.7 million in 2024–25 and $1.7 billion over five years from 2023–24 to 2027–28,
primarily due to revisions to enrolment projections.
• payments related to Public Sector Superannuation Benefits are expected to increase by
$325.7 million in 2024–25 and $1.6 billion over five years from 2023–24 to 2027–28,
largely reflecting Consumer Price Index (CPI) outcomes.
• payments relating to Government Schools are expected to increase by $209.0 million in
2024–25 and $1.1 billion over five years from 2023–24 to 2027–28, largely reflecting an
increase in the number of students eligible to attract a ‘student with a disability’
loading.
Major decreases in payments from parameter and other variations since MYEFO include:
• payments related to the provision of GST to the states and territories (including
Horizontal Fiscal Equalisation transition payments) are expected to decrease by
$987.8 million in 2024–25 and $3.5 billion over five years from 2023–24 to 2027–28.
The decline in payments is a result of a decline in GST receipts, driven by lower
discretionary consumption.
• payments related to the Medical Benefits Program are expected to decrease by
$390.0 million in 2024–25 and $1.3 billion over five years from 2023–24 to 2027–28,
largely reflecting lower-than-projected demand for medical services.
• payments relating to some road transport projects under the Infrastructure Investment
Program are expected to decrease by $513.5 million in 2024–25 and $1.2 billion over
five years from 2023–24 to 2027–28, to align with revised project delivery schedules and
construction market conditions. This decrease is more than offset by decisions which
have increased funding over the forward estimates by $1.3 billion.
Budget Paper No. 1 |
Statement 3: Fiscal Strategy and Outlook | Page 99
• payments related to Financial Support for Carers are expected to decrease by
$122.4 million in 2024–25 and $1.1 billion over five years from 2023–24 to 2027–28,
largely due to lower-than-expected recipient numbers, reflecting continued strong
labour market performance.
• payments related to Student Payments are expected to decrease by $193.3 million in
2024–25 and $903.2 million over five years from 2023–24 to 2027–28, largely due to a
decrease in student numbers and average payment rates, reflecting continued strong
labour market performance.
• payments related to Parents Income Support are expected to decrease by $134.8 million
in 2024–25 and $639.5 million over five years from 2023–24 to 2027–28, largely due to
lower-than-expected growth in recipient numbers reflecting a decline in recipients with
a youngest child aged under 7 years old and a slightly lower-than-expected number of
parents taking up the expanded Parenting Payment (Single).
• payments related to Paid Parental Leave are expected to decrease by $92.1 million in
2024–25 and $521.3 million over five years from 2023–24 to 2027–28, largely reflecting a
reduction in expected recipient numbers driven by lower-than-expected births.
Consistent with past budgets, the underlying cash balance has been improved by regular
draw down of the conservative bias allowance. Details in Statement 6: Expenses and Net
Capital Investment.
| Budget Paper No. 1
Page 100 | Statement 3: Fiscal Strategy and Outlook
Table 3.3: Reconciliation of general government sector payments estimates
(a)
Estimates
2023-24
2024-25
2025-26
2026-27
2027-28
Total
$m
$m
$m
$m
$m
$m
2023-24 Budget payments
682,060
706,296
737,549
763,569
*
*
Changes from 2023-24 Budget to
2023-24 MYEFO
Effect of policy decisions(b)
1,100
2,686
1,112
1,567
*
*
Effect of parameter and other variations
3,216
568
7,795
9,739
*
*
Total variations
4,316
3,254
8,908
11,306
*
*
2023-24 MYEFO payments(c)
686,376
709,549
746,457
774,875
823,836
3,741,094
Changes from 2023-24 MYEFO
to 2024-25 Budget
Effect of policy decisions(b)
298
11,724
9,304
5,243
5,934
32,503
Effect of parameter and other variations
-3,712
5,458
6,430
6,605
-3,614
11,167
Total economic parameter variations
1,612
-2,160
-4,241
-4,097
*
*
Unemployment benefits
437
354
-237
45
*
*
Prices and wages
-375
-1,456
-1,781
-1,417
*
*
Interest and exchange rates
-144
-130
-133
-133
*
*
GST payments to the States
1,694
-928
-2,090
-2,591
*
*
Interest payments on AGS
943
929
-1,996
143
*
*
Program specific parameter variations
1,991
7,980
12,950
12,999
*
*
Other variations(d)
-8,259
-1,291
-283
-2,440
*
*
Total variations
-3,414
17,182
15,735
11,847
2,320
43,670
2024-25 Budget payments
682,961
726,732
762,192
786,722
826,157
3,784,764
*Data is not available.
a) A positive number for payments worsens the underlying cash balance.
b) Excludes secondary impacts on public debt interest of policy decisions and offsets from the Contingency
Reserve for decisions taken.
c) 2027–28 as published in the medium-term projections, page 60 of the Mid-Year Economic and Fiscal
Outlook 2023–24.
d) Includes changes in the conservative bias allowance component in the Contingency Reserve and
impacts of changes in program payments for a range of reasons including movement of funds and
re-profiling.
Budget Paper No. 1 |
Statement 3: Fiscal Strategy and Outlook | Page 101
Headline cash balance estimates
The headline cash balance adjusts the underlying cash balance to include net cash flows
from investments in financial assets for policy purposes. This includes Specialist
Investment Vehicles which invest in projects that deliver public value and a financial return
to taxpayers. For example, Clean Energy Finance Corporation loans reduce the headline
cash balance but not the underlying cash balance. Table 3.4 provides details of differences
between the underlying and headline cash balance estimates.
A headline cash deficit of $47.2 billion is estimated in 2024–25, compared to an estimated
deficit of $32.9 billion in MYEFO. The lower headline cash balance compared to MYEFO is
primarily driven by the change in the underlying cash balance. The headline cash balance
moderates to an estimated deficit of $42.0 billion (1.3 per cent of GDP) in 2027–28.
Estimates for total net cash outflows from investments in financial assets for policy
purposes increased by $11.6 billion over four years from 2023–24 to 2026–27 compared to
MYEFO. This is primarily driven by additional equity and a loan provided to Snowy
Hydro Limited and an increase in concessional finance for social and affordable housing
projects from Housing Australia.
Net cash flows from student loans are expected to improve by $1.5 billion over the four
years to 2026–27 compared to MYEFO. This largely reflects increased voluntary loan
repayment forecasts, partially offset by the lower repayments resulting from reduced
indexation under the 2024–25 Budget measure Australian Universities Accord – tertiary
education system reforms.
| Budget Paper No. 1
Page 102 | Statement 3: Fiscal Strategy and Outlook
Table 3.4: Reconciliation of general government sector underlying and headline
cash balance estimates
Estimates
2023-24
2024-25
2025-26
2026-27
2027-28
Total
$m
$m
$m
$m
$m
$m
2024-25 Budget underlying
cash balance
9,346
-28,286
-42,838
-26,713
-24,345
-112,837
plus Net cash flows from
investments in financial
assets for policy purposes(a)
Student loans
-1,626
-2,723
-3,511
-3,982
-4,393
-16,235
NBN loan(b)
5,500
0
0
0
0
5,500
NBN investment
-771
-1,227
-97
0
0
-2,095
Snowy Hydro Limited loan
0
-150
-1,450
-1,450
-1,450
-4,500
Snowy Hydro Limited investment
-277
-1,625
-975
0
0
-2,877
Australian apprenticeship
support loans(c)
-112
-112
-102
-97
-95
-518
CEFC loans and investments
-799
-2,371
-5,097
-5,627
-5,419
-19,313
Northern Australia
Infrastructure Facility
-762
-615
-747
-1,087
-940
-4,151
NRFC loans and investments
-50
-524
-1,076
-2,505
-3,050
-7,205
Australian Business
Securitisation Fund
63
-482
-151
-101
-102
-773
Structured Finance
Support Fund
178
122
55
0
0
355
Drought and rural assistance
loans
-161
-302
-249
147
163
-402
Official Development Assistance
- Multilateral Replenishment
-135
-142
-195
-170
-186
-829
Home Equity Access Scheme
-141
-197
-255
-318
-368
-1,277
Housing Australia(d)
-134
-2,848
-1,517
-1,800
-170
-6,470
National Interest Account
loans and investments
-469
-911
-991
-365
78
-2,658
COVID-19 Support for
Indonesia – loan
100
100
100
100
100
500
Financial Assistance to
Papua New Guinea – loan
-474
141
141
141
141
89
Net other(e)
-2,808
-5,050
-4,814
-3,016
-1,985
-17,674
Total net cash flows from
investments in financial
assets for policy purposes
-2,879
-18,916
-20,932
-20,130
-17,676
-80,532
2024-25 Budget headline
cash balance
6,467
-47,202
-63,770
-46,843
-42,022
-193,369
a) A positive number denotes a cash inflow; a negative number denotes a cash outflow.
b) The loan from the Government to NBN Co is due to be repaid in full by 30 June 2024.
c) In January 2024, trade support loans were renamed Australian apprenticeship support loans.
d) In October 2023, the National Housing Finance and Investment Corporation was renamed
Housing Australia.
e) Net other includes amounts that have not been itemised for commercial-in-confidence reasons.
Budget Paper No. 1 |
Statement 3: Fiscal Strategy and Outlook | Page 103
The Government’s balance sheet
The balance sheet measures the value of the Government’s assets and liabilities. Changes in
the balance sheet reflect movements in the underlying cash balance, additional balance
sheet commitments, and market valuation effects including from changes in yields.
Different balance sheet metrics measure different groupings of assets and liabilities.
• Gross debt measures the face value of Australian Government Securities (AGS) on
issue. This is the amount that the Government pays back to investors at maturity,
independent of fluctuations in market prices.
• Net debt is measured at market value and incorporates specific financial assets and
liabilities and provides a broader measure of the financial obligations of
the Government than gross debt.
• Net financial worth is the sum of all financial assets less all financial liabilities.
The assets of the Future Fund and the public sector superannuation liability that the
Future Fund will finance are included in net financial worth.
• Net worth is the sum of all assets less all liabilities. It includes non–financial assets such
as buildings and plant, equipment, and infrastructure.
Further information on definitions is available in Statement 10: Australian Government Budget
Financial Statements.
Gross debt estimates and projections
The Government’s responsible budget management is lowering debt as a share of the
economy compared to MYEFO and the PEFO in every year of the forward estimates period
and medium term.
Gross debt is estimated to be 33.7 per cent of GDP ($904.0 billion) at 30 June 2024,
0.3 percentage points lower than the estimate of 34.0 per cent of GDP ($909.0 billion) at
MYEFO. This primarily reflects the 2023–24 underlying cash surplus and lower yields on
debt. The gross debt-to-GDP position also benefits from upgrades to nominal GDP.
In line with the Economic and Fiscal Strategy, the Government is on track to stabilise and
reduce gross debt as a share of the economy. Gross debt is now projected to peak at
35.2 per cent of GDP at 30 June 2027, 0.2 percentage points lower and one year earlier than
the peak at MYEFO. Gross debt is then projected to decline to 30.2 per cent at 30 June 2035.
Over the forward estimates period, bond yields are assumed to remain fixed at a recent
average of daily spot rates at the time of the budget update. Since MYEFO, the assumed
weighted average cost of borrowing for future issuance of Treasury Bonds has decreased
from 4.7 to 4.2 per cent. This remains significantly above the 2.2 per cent at the PEFO.
| Budget Paper No. 1
Page 104 | Statement 3: Fiscal Strategy and Outlook
Information on the impact of movements in yields on the underlying cash balance and
gross debt is provided in Statement 8: Forecasting Performance and Sensitivity Analysis.
Total interest payments are estimated to be 0.9 per cent of GDP in 2024–25 before rising to
1.3 per cent of GDP by 2034–35.
Further information on government debt, yield assumptions and interest payments are
provided in Statement 7: Debt Statement.
Net debt estimates and projections
Net debt is estimated to be 20.0 per cent of GDP ($552.5 billion) at 30 June 2025 (Table 3.5);
slightly higher than the estimate of 19.5 per cent of GDP ($533.3 billion) at MYEFO.
The increase since MYEFO primarily reflects the increase in the market value of existing
debt resulting from lower yields on government debt. Yields have fallen since MYEFO,
making the fixed income stream from existing bonds relatively more attractive to investors.
This increases the market value of existing bonds and hence net debt.
Net debt remains higher than estimated at MYEFO over the entire projection period. Net
debt is projected to be 18.7 per cent of GDP at 30 June 2035 (Chart 3.12).
Chart 3.12: Net debt
10
15
20
25
30
2014-15 2018-19 2022-23 2026-27 2030-31 2034-35
% of GDP
2023-24 MYEFO
2024-25 Budget
Medium term
Estimates
Source: Treasury.
Further information on gross debt and net debt estimates across the forward estimates
period is provided in Statement 7: Debt Statement.
Budget Paper No. 1 |
Statement 3: Fiscal Strategy and Outlook | Page 105
Net financial worth and net worth estimates and projections
Net financial worth is estimated to be minus 27.7 per cent of GDP (minus $764.5 billion) at
30 June 2025 (Table 3.5), compared with the estimate of minus 26.9 per cent of GDP (minus
$733.6 billion) at MYEFO.
Net financial worth is projected to deteriorate to minus 27.9 per cent of GDP at 30 June 2028
before improving to minus 20.6 per cent of GDP at 30 June 2035 (Chart 3.13).
Chart 3.13 Net financial worth
-50
-40
-30
-20
-10
2014-15 2018-19 2022-23 2026-27 2030-31 2034-35
% of GDP
Medium term
Estimates
2024-25 Budget
2023-24 MYEFO
Source: Treasury.
Net worth is estimated to be minus 19.8 per cent of GDP (minus $545.1 billion) at
30 June 2025 (Table 3.5), compared with the estimate of minus 18.7 per cent of GDP
(minus $510.3 billion) at MYEFO.
Net worth is projected to deteriorate to minus 20.7 per cent of GDP at 30 June 2026 before
improving over the medium term.
The reduction in net worth and net financial worth over the forward estimates period
relative to MYEFO largely reflects an increase in the market value of existing debt due to
lower bond yields and an upward revision to the value of the Government’s unfunded
superannuation liability.
Net worth and net financial worth as a share of the economy increase over the medium
term as debt-to-GDP is reduced.
| Budget Paper No. 1
Page 106 | Statement 3: Fiscal Strategy and Outlook
Table 3.5: Australian Government general government sector balance sheet
aggregate
Actual
Estimates
2022-23
2023-24
2024-25
2025-26
2026-27
2027-28
$b
$b
$b
$b
$b
$b
Financial assets
585.5
614.2
618.2
650.6
685.1
717.5
Per cent of GDP
22.8
22.9
22.4
22.7
22.7
22.5
Non-financial assets
204.9
211.7
219.4
226.5
234.6
245.7
Per cent of GDP
8.0
7.9
8.0
7.9
7.8
7.7
Total assets
790.4
825.9
837.6
877.1
919.6
963.2
Per cent of GDP
30.8
30.8
30.4
30.6
30.4
30.3
Total liabilities
1,328.8
1,334.6
1,382.7
1,470.2
1,541.8
1,606.2
Per cent of GDP
51.8
49.7
50.1
51.2
51.0
50.5
Net worth
-538.4
-508.6
-545.1
-593.1
-622.1
-643.0
Per cent of GDP
-21.0
-18.9
-19.8
-20.7
-20.6
-20.2
Net financial worth(a)
-743.3
-720.3
-764.5
-819.6
-856.7
-888.7
Per cent of GDP
-29.0
-26.8
-27.7
-28.6
-28.3
-27.9
Gross debt(b)
889.8
904.0
934.0
1,007.0
1,064.0
1,112.0
Per cent of GDP
34.7
33.7
33.9
35.1
35.2
34.9
Net debt(c)
491.0
499.9
552.5
615.5
660.0
697.5
Per cent of GDP
19.2
18.6
20.0
21.5
21.8
21.9
Total interest payments
18.9
22.7
23.8
27.5
29.8
35.6
Per cent of GDP
0.7
0.8
0.9
1.0
1.0
1.1
Net interest payments(d)
11.9
12.3
14.5
18.8
20.8
26.0
Per cent of GDP
0.5
0.5
0.5
0.7
0.7
0.8
a) Net financial worth equals total financial assets minus total liabilities.
b) Gross debt measures the face value of Australian Government Securities (AGS) on issue.
c) Net debt is the sum of interest-bearing liabilities (which includes AGS on issue measured at market
value) less the sum of selected financial assets (cash and deposits, advances paid and investments,
loans and placements).
d) Net interest payments are equal to the difference between interest payments and interest receipts. The
increases in 2025–26 and 2027–28 primarily reflect Treasury Indexed Bonds maturing in those years.
Budget Paper No. 1 |
Statement 3: Fiscal Strategy and Outlook | Page 107
Fiscal impacts of the net zero transformation
Climate change and global climate action will have profound impacts on the economy,
reshaping Australia’s industry mix and requiring effective mitigation and adaptation to
manage climate impacts like more severe bushfires and floods. At the same time, the
renewable energy economic transformation is well underway. It will continue to drive
down energy costs and has the potential to help traditional and emerging industries
compete internationally. Other sectors are also transforming as demand from domestic
consumers and export destinations shifts to more sustainable products.
This net zero transformation presents opportunities for Australia’s economy, regions,
industries, and communities. Achieving Australia’s emissions reduction commitments and
realising the opportunities that accompany the transition will require significant
investment by governments and the private sector.
Uncertainty about the physical impacts of climate change and the global transition to net
zero emissions poses risks to the fiscal outlook. The global energy transition will bring new
opportunities. Industries and jobs emerging from the net zero transformation will impact
the structure of the economy and, in turn, the tax base. At the same time, the physical
impacts of climate change and the associated cost for communities, business and
government remain uncertain.
The 2024–25 Budget continues the practice introduced in the October 2022–23 and
May 2023–24 Budgets of transparently reporting new climate-related spending, and
builds on these budgets by further reporting on new spending that enables the net zero
transformation. In the 2024–25 Budget there is $5.0 billion in net zero spending
commitments over the forward estimates period and $24.3 billion over the medium term.
This is in addition to the $4.6 billion in new climate-related spending announced in the
May 2023–24 Budget and the historic $24.9 billion in new climate-related spending
announced in the October 2022–23 Budget.
The Government’s approach to reporting climate-related spending is informed by the
climate reporting practices of international peers and is presented within the context of
international best practice, as well as contributing to work underway to strengthen
transparency in future budgets.
Physical Impacts of Climate Change
Global warming continues to change Australia’s weather and climate, and over the course
of this century this will drive changes in Australia’s economy – with respect to both its size
and structure. This includes impacts on human health, biodiversity, the location and
movement of populations, the types of structures we live in, and the way we work.
Rising temperatures will also present new economic challenges, impacting labour
productivity, capital investment, and demand for our exports. As shown in the 2023
Intergenerational Report (IGR), rising temperatures are expected to result in reductions in
labour productivity and hours worked, particularly for employees who work outdoors
| Budget Paper No. 1
Page 108 | Statement 3: Fiscal Strategy and Outlook
such as in agriculture, construction and manufacturing. Agricultural yields are expected to
decline with climate change. The increased frequency and severity of natural disasters will
also lead to reductions in output through disruptions to economic activity and destruction
of property and infrastructure.
Effective adaptation and investment in resilience can reduce the impacts of some climate
change-related disruptions. However, the extent of economic disruption will increase
significantly with greater temperature increases. This means mitigating further climate
change through effective global action by way of decarbonisation has significant economic
value to Australia.
Net zero spending
The Government is committed to improving the transparency of public money committed
to climate action. It recognises the importance of identifying, disclosing, and tracking net
zero spending in improving Australia’s response to climate change and aligning with
international efforts. Accounting for net zero spending comprehensively is challenging as it
cuts across many portfolios, ranging from energy to health. Existing budget systems also do
not readily facilitate reporting net zero spending on established programs. For this reason,
reporting of net zero spending focuses on new measures.
Australia’s classification approach
The October 2022–23 and 2023–24 Budgets report climate-related measures up until
June 2030. This Budget builds on this approach by extending the reporting period to over
the forward estimates period and medium term, and additionally reporting investments in
Strengthening net zero industries and skills (Box 3.5).
The Government’s action on climate change is not limited to the four categories used in the
previous two budgets, but also includes measures that enable net zero industries of the
future. The new category of Strengthening net zero industries and skills highlights plans to
transform Australia into a renewable energy superpower and other measures associated
with the transformation of the economy to net zero by 2050.
These changes reflect the government’s focus on developing a Net Zero Plan which
considers the role all sectors will play in reducing emissions and transforming Australia’s
economy.
This reporting framework maintains alignment with international best practice and recent
budgets. It will continue to evolve over time as the Government works with and learns
from reporting entities and partners around the world. Australian Government Green
Bonds will contribute to financing measures within the first and third categories of Box 3.5.
The reporting of climate-related categories in the budget process is complementary to the
Australian Government Green Bond Framework, and to allocation and impacts reporting
under this Framework, which aligns with international best practice in green bond
financing.
Budget Paper No. 1 |
Statement 3: Fiscal Strategy and Outlook | Page 109
Box 3.5: Defining and categorising net zero spending
The Government is currently investing in the net zero transformation in five ways:
• Reducing emissions in Australia’s energy system and broader economy.
• Strengthening net zero industries and skills.
• Adapting to climate change and improving climate and disaster resilience
(spending to support Australia manage the physical impacts of climate change).
• International climate leadership (spending to support how we engage through
international fora and with other jurisdictions).
• Building Australian Government climate capability (spending on the capabilities
of Government to ensure it effectively delivers on its objectives and to enable a
national approach on climate change).
These categories provide a simple to understand framework for why each measure
has been classified as contributing to net zero action. These categories are expected
to evolve over time as Australia’s approach to net zero budget transparency
matures. Policies may contribute to multiple net zero or non-net zero objectives;
spending is classified into the most appropriate category based on its primary
purpose. Some policies may contribute indirectly to net zero objectives; these have
not been included in the current approach.
In addition to direct funding towards programs, net zero spending may also include
balance sheet and tax expenditure items. For example, a tax concession does not
require an appropriation of funds, but reflects foregone revenue, and is classified as
spending for this purpose.
Indirect benefit example
Health system funding supports responses to the health effects of climate change,
such as more extreme heat days. It also supports services for existing health
conditions. There are different ways the spending could be classified, the whole
amount, none, or a proportion could be classified as net zero spending.
In this Budget, spending with only an indirect contribution to net zero action is
excluded. If there is a specific program in health related to climate impacts, that
would be counted (for example the 2022–23 October Budget measure: National
Health and Climate Strategy).
| Budget Paper No. 1
Page 110 | Statement 3: Fiscal Strategy and Outlook
Table 3.6
Australian Net Zero
Action Category
Australian Definition
Reducing emissions in
Australia’s energy
system and broader
economy
Spending that supports emissions reduction within Australia.
Example: New Vehicle Efficiency Standard Implementation
Strengthening net zero
industries and skills
Spending that enables emissions reduction through strengthening workforce,
critical supply chains or enabling decarbonisation
Example: Future Made in Australia – Workforce and Trade Partnerships for
Renewable Energy Superpower Industries
Adapting to climate
change and improving
climate and disaster
resilience
Spending that supports better management of the physical impacts of climate
change including adaptation, improving climate resilience, and reducing our
vulnerability.
Example: Future Drought Fund – better support for farmers and communities
to manage drought and adapt to climate change
International climate
leadership
Spending that relates to the above categories but is primarily targeted
overseas. Including international partnerships and involvement in forums and
initiatives.
Example: Australia’s International Climate Change Engagement
Building
Australian Government
climate capability
Spending that enables the Government to better act on climate change and
the net zero transformation, supporting the categories above.
Example: Net Zero in Government Operations – Emissions Data Platform
The role of net zero enabling industries in emissions reduction
Delivering net zero requires significant action to produce renewable energy and sustainable
fuels, and reduce emissions from heavy industry, buildings and agriculture. Australia’s
abundant renewable energy resources will also support the once-in-a-generation
opportunity to reposition the economy for future prosperity by supporting global
decarbonisation. Achieving these changes at pace requires investing in secure and resilient
net zero supply chains and a skilled workforce.
The Government is investing in these industries to prepare the economy for a net zero
transformation. Targeted investments to ensure a resilient clean energy manufacturing
supply chain and expanding the supply of scarce inputs, such as critical minerals, are
essential to enable the net zero transformation. Moreover, investments to prepare the
workforce for clean industries will also give Australia an enduring comparative advantage
domestically and globally.
The Government’s focus on these industries reflects the fact that Australia’s exports will be
increasingly comprised of low carbon products. Over 97 per cent of Australia’s trading
partners have set net zero targets. Australia is expected to be competitive in products that
have renewable energy as an input, reflecting the low cost and growing abundance of our
renewable electricity supply. This means Australia’s net zero industrial transformation can
also support major trading partners to reduce their emissions, making Australia an
indispensable part of global net zero supply chains.
Budget Paper No. 1 |
Statement 3: Fiscal Strategy and Outlook | Page 111
For instance, exports of critical minerals, renewable hydrogen and green metals could
reduce global emissions significantly. In this way, pursuing Australia’s industrial net zero
opportunities could position Australia to make an outsized contribution to global climate
mitigation and build resilience to changes in trade patterns due to a shift away from
emissions-intensive resources.
The 2023–24 Budget identified $40 billion of industrial and energy commitments related to
the Government’s renewable energy superpower ambitions. In addition to that spending, a
further $3.0 billion was announced in the 2023–24 MYEFO. This Budget contains $3.6 over
the forward estimates period and $22.5 billion over the medium term in new spending on
these new industries.
The emissions-reduction measures that are part of the Governments overall investment to
establish Australia as a renewable energy superpower contribute to a broader set of
climate-related spending, which includes measures that are related to adaptation,
international engagement and public sector climate capability. Box 3.6 below explains the
complementary scope of renewable energy and other net zero spending.
| Budget Paper No. 1
Page 112 | Statement 3: Fiscal Strategy and Outlook
Box 3.6 Investing in our plan to become a Renewable Energy Superpower
Australia’s ambition to become a Renewable Energy Superpower will require
investment into low emission industries and their underlying enablers that play an
indirect yet important role in the net zero transformation. In particular:
• Critical minerals are essential for many low emissions technologies, including
electric vehicles, solar panels, wind turbines and batteries. Investment will allow
a sovereign supply chain resilient to external shocks.
• Low emissions fuels will be key to propelling clean industry and decarbonising
hard to abate sectors and the broader economy.
• Decarbonising Australia’s exports will assist global efforts to reduce emissions.
Spending towards measures that are directly related to climate change overlaps with
the Government’s investments to become a renewable energy superpower.
However, these figures relate to a different yet complementary scope of activities, as
highlighted in the figure below.
Of the five categories in Australia’s climate reporting framework, items in the
emissions reduction and enabling net zero industries categories contribute to the
estimate of Australia’s investment in becoming a renewable energy superpower.
Figure 3.1 Net Zero Spending Sub-Categories
Budget Paper No. 1 |
Statement 3: Fiscal Strategy and Outlook | Page 113
New net zero spending measures
Table 3.7 sets out $5.0 billion in net zero spending commitments over the forward estimates
period and $24.3 billion over the medium term. This is in addition to climate-related
spending of $4.6 billion (to 2030) committed in the 2023–24 Budget and the $24.9 billion
(to 2030) committed in the 2022–23 October Budget.
Classification of spending is informed by the net zero spending framework defined in
Table 3.6 above. The total commitment includes spending, balance sheet and tax
expenditure measures and therefore presents a broader view than the impact on the
underlying cash balance.
Reporting new net zero spending measures supports transparency around the fiscal
impacts of climate change and the net zero transformation. However, it does not provide
a complete summary of climate action. Only measures that entail funding commitments or
foregone revenue (such as tax concessions) are captured. Therefore, measures without
spending, such as regulatory reforms to the Safeguard Mechanism, are not captured.
Measures that may contribute to climate action but have a different primary purpose are
not included.
Australia’s approach to reporting net zero spending commitments is a separate and
independent framework to the established functional expense tables in Budget Statement 6:
Expenses and Net Capital Investment, which aligns with international standards. These cannot
be combined for analysis of government spending.
This summary focuses specifically on new net zero spending commitments in this Budget.
The Government is developing an approach to presenting transparent spending
information on existing spending commitments. Over time, this will provide a more
holistic view of the total amount of Government spending, not just what is new in each
budget.
| Budget Paper No. 1
Page 114 | Statement 3: Fiscal Strategy and Outlook
Table 3.7 – New measures
Total
1
Forward Estimates
($m)
Medium Term
($m)
Reducing Emissions in Australia’s energy system and
broader economy
834.80
952.10
New Vehicle Efficiency Standard Implementation
2
551.0
629.0
Agriculture and Land Sectors – low emissions future
56.0
64.8
Improving the Australian Carbon Credit Unit Scheme
3
48.0
48.0
Boosting Consumer Energy Resources
4
(component of
(Harnessing the Energy Transition to Benefit Consumers)
27.7
32.6
Future Made in Australia – Promoting Sustainable
Finance Markets
5
17.3
38.7
Future Made in Australia – Strengthening Approvals Processes
6
134.8
139.0
Strengthening net zero industries and skills
2,751.9
21,577.0
Future Made in Australia – Making Australia a Renewable
Energy Superpower
7,8
1,881.9
19,705.4
Net Zero Economy
9
399.1
1015.9
Resourcing Australia’s Prosperity (component of Future
Made in Australia – Investing in Innovation, Science and
Digital Capabilities)
200.3
566.1
Future Made in Australia – Workforce and Trade Partnerships
for Renewable Energy Superpower Industries
10
204.5
223.5
Future Made in Australia – Attracting Investment in
Key Industries
11
66.1
66.1
Adapting to climate change and improving climate
and disaster resilience
1,150.1
1,507.7
Australian Antarctic Program – additional funding
12
290.5
498.3
Sustaining Water Functions
262.2
262.2
National Water Grid Fund – responsible investment in water
infrastructure for the regions
13
150.8
174.6
Murray-Darling Basin Plan – continuing delivery
14
48.5
48.5
Tourism Reef Protection Initiative – continuing delivery
15
5.0
5.0
Future Drought Fund – better support for farmers and
communities to manage drought and adapt to climate change
393.1
519.1
International climate leadership
226.2
226.6
Australia’s International Climate Change Engagement
16
76.2
76.6
International Climate Finance
17
150.0
150.0
Building Australian Government climate capability
2.1
3.3
Net Zero in Government Operations – Emissions Data Platform
(component of Finance Portfolio – additional resourcing)
18
2.1
3.3
Total Net Zero Spending
4,965.10
24,266.70
Budget Paper No. 1 |
Statement 3: Fiscal Strategy and Outlook | Page 115
1 This table summarises the Government’s key net zero spending commitments in this Budget
over the medium term, and presents a broader view than the impact on the underlying cash
balance. Some measures extend beyond the end of the medium term or include both initial
and ongoing funding to the end of the medium term. Figures align with the timeframes for
measures reported in Budget Paper No. 2, but may differ in some instances due to exclusions
described in footnotes. Measures may not add with measures in Budget Paper No. 2 due to
rounding. Figures do not account for the reallocation of funds from previous Budgets to
finance measures this Budget.
2 This measure contains $60.0 million for the installation of electric vehicle charging
infrastructure with funding redirected from the 2022–23 October Budget Measure titled
Powering Australia – Driving the Nation Fund – establishment. This measure also contains
$10.0 million for a national communications campaign with funding already provided for by
the Government.
3 Costs of this measure will be met from the Powering the Regions Fund.
4 Costs for this measure will be partially met from existing resources of the Department of
Climate Change, Energy, the Environment and Water.
5 The spending outlined in this measure for the purposes of this table excludes receipts
received by the Australian Securities and Investment Commission.
6 The spending outlined in this measure for the purposes of this table excludes funding for
cultural heritage reform and the foreign investment framework.
7 This measure includes tax concessions which do not require an appropriation of funds, but
reflect foregone revenue, and is classified as spending.
8 The cost of this measure will be partially met through funding from the Strategic
International Partnerships Investment Stream and from savings identified in the Department
of Industry, Science and Resources.
9 Costs of this measure will be partially offset by a reduction in the Labour Market Support
Scheme.
10 Costs of this measure will be partially met through funding from the Strategic International
Partnerships Investment Stream and savings identified in the Department of Industry,
Science and Resources.
11 The spending outlined in this measure for the purposes of this table excludes funding for
independent statutory review of the Northern Australia Infrastructure Facility Act 2016.
12 Costs of this measure will be partially met from a reprioritisation of the Macquarie Island
Research Station Modernisation Project.
13 Costs of new water infrastructure projects in this measure will be met by reallocating existing
funding within the National Water Grid Fund and funding allocated to improve water
security for remote First Nations communities under the 2023–24 Budget measure titled
Closing the Gap – further investment.
14 Costs of this measure will be met from funding within the Water for the Environment Special
Account and Sustainable Rural Water Use and Infrastructure Program.
15 Costs of this measure will be met from a reprioritisation of funding from the 2022–23 March
Budget measure titled Strengthening the Great Barrier Reef through Stewardship and
Leadership.
16 Costs of this measure will be offset by redirecting funding from savings identified in the
Strategic International Partnerships Investment Stream.
17 Costs of this measure will be partially met from within the existing resourcing of the
Department of Foreign Affairs and Trade.
18 Costs of this measure will be partially met from within the existing resourcing of the
Department of Finance.
| Budget Paper No. 1
Page 116 | Statement 3: Fiscal Strategy and Outlook
Appendix A: Other fiscal aggregates
Accrual aggregates
Accrual accounting records income and costs at the time they are incurred. Cash
accounting records income and costs at time of associated actual cash flow. Differences in
estimates arise where there is a difference between the timing of an activity and the
associated cash flow.
Net operating balance estimates
The net operating balance is an accrual measure, reflecting revenue minus expenses.
It excludes the fiscal impact of the Australian Government’s net new capital expenditure.
The net operating balance is expected to be a surplus of $15.8 billion (0.6 per cent of GDP)
in 2023–24 (Table 3.8). It is then expected to be a deficit of $23.0 billion (0.8 per cent of GDP)
in 2024–25, compared to an expected deficit of $15.7 billion in MYEFO.
Fiscal balance
The fiscal balance is the accrual equivalent of the underlying cash balance and equals the
net operating balance plus net new capital investment.
The fiscal balance is expected to be a surplus of $8.1 billion (0.3 per cent of GDP) in 2023–24
(Table 3.8). It is then expected to be a deficit of $29.3 billion (1.1 per cent of GDP) in 2024–25,
compared to an expected deficit of $24.8 billion in MYEFO.
Table 3.8: Australian Government general government sector accrual aggregates
Actual
Estimates
2022-23
2023-24
2024-25
2025-26
2026-27
2027-28
Total(a)
$b
$b
$b
$b
$b
$b
$b
Revenue
668.4
706.9
711.5
732.7
776.2
819.6
3,747.0
Per cent of GDP
26.1
26.3
25.8
25.5
25.7
25.8
Expenses
637.0
691.1
734.5
767.3
793.8
829.8
3,816.4
Per cent of GDP
24.8
25.7
26.6
26.7
26.3
26.1
Net operating balance
31.4
15.8
-23.0
-34.5
-17.5
-10.1
-69.4
Per cent of GDP
1.2
0.6
-0.8
-1.2
-0.6
-0.3
Net capital investment
9.4
7.8
6.3
8.1
9.0
11.9
43.0
Per cent of GDP
0.4
0.3
0.2
0.3
0.3
0.4
Fiscal balance
21.9
8.1
-29.3
-42.6
-26.5
-22.0
-112.4
Per cent of GDP
0.9
0.3
-1.1
-1.5
-0.9
-0.7
a) Total is equal to the sum of amounts from 2023–24 to 2027–28.
Budget Paper No. 1 |
Statement 3: Fiscal Strategy and Outlook | Page 117
Table 3.9 provides a reconciliation of fiscal balance estimates, including the impact of policy
decisions and parameter and other variations on revenue and expenses since MYEFO. The
drivers of movements in the fiscal balance estimates are largely the same as for the
underlying cash balance.
Table 3.9: Reconciliation of general government sector fiscal balance estimates
Estimates
2023-24
2024-25
2025-26
2026-27
2027-28
Total
$m
$m
$m
$m
$m
$m
2023-24 Budget fiscal balance
-14,144
-45,278
-35,035
-32,813
*
*
Per cent of GDP
-0.5
-1.7
-1.3
-1.1
*
Changes from 2023-24 Budget to
2023-24 MYEFO
Effect of policy decisions(a)
-1,012
-2,488
-781
-823
*
*
Effect of parameter and other variations
17,577
22,992
2,842
10,770
*
*
Total variations
16,565
20,503
2,061
9,947
*
*
2023-24 MYEFO fiscal balance
2,421
-24,775
-32,974
-22,866
*
*
Per cent of GDP
0.1
-0.9
-1.2
-0.8
*
Changes from 2023-24 MYEFO
to 2024-25 Budget
Effect of policy decisions(a)(b)
Revenue
54
2,267
-956
3,366
5,972
10,702
Expenses
292
12,049
7,893
4,523
1,923
26,680
Net capital investment
12
1,587
1,843
1,028
3,980
8,449
Total policy decisions impact on fiscal balance
-250
-11,369
-10,691
-2,186
69
-24,427
Effect of parameter and other variations(b)
Revenue
6,201
8,945
7,652
2,521
*
*
Expenses
1,472
6,480
7,453
5,705
*
*
Net capital investment
-1,153
-4,362
-862
-1,722
*
*
Total parameter and other variations impact on
fiscal balance
5,882
6,827
1,061
-1,461
*
*
2024-25 Budget fiscal balance
8,053
-29,316
-42,604
-26,514
-22,026
-112,408
Per cent of GDP
0.3
-1.1
-1.5
-0.9
-0.7
*Data is not available.
a) Excludes secondary impacts on public debt interest of policy decisions and offsets from the Contingency
Reserve for decisions taken.
b) A positive number for revenue improves the fiscal balance, while a positive number for expenses and net
capital investment worsens the fiscal balance.
| Budget Paper No. 1
Page 118 | Statement 3: Fiscal Strategy and Outlook
Revenue estimates
Revenue is the accrual accounting equivalent of cash-based receipts. Changes in revenue
are generally driven by the same factors as receipts. Revenue amounts can be higher or
lower than the cash equivalents as they include amounts that a taxpayer is liable to pay but
has not paid. The differences between the accrual and cash amounts generally reflect
timing differences.
Total revenue since MYEFO has been revised up by $11.2 billion in 2024–25 and by
$30.0 billion over four years from 2023–24 to 2026–27.
Expense estimates
Expenses are the accrual accounting equivalent of cash-based payments.
Total expenses since MYEFO have been revised up by $18.5 billion in 2024–25 and by
$45.9 billion over four years from 2023–24 to 2026–27.
Movements in expenses over the forward estimates period are broadly consistent with
movements in cash payments. The key exceptions include:
• the NDIS program, where there is an expected time lag between the receipt of
reasonable and necessary support services and the lodgement of claims relating to
those services
• superannuation benefits programs (civilian and military), where there is a timing
difference with the expense accruing during employment and cash payments occurring
during retirement
• purchases of nonfinancial assets, which are included in cash payments but not in
accrual expenses. The expense estimates include depreciation of non-financial assets
rather than recognising the impact at the time of purchase.
Detailed information on expenses can be found in Statement 6: Expenses and Net Capital
Investment.
Structural budget balance estimates
The structural budget balance estimate adjusts the underlying cash balance to remove the
estimated effects of cyclical factors that have a temporary impact on receipts and payments.
These factors include deviations in commodity prices and economic activity from their
long-run levels. The structural budget balance can provide insight into the sustainability of
fiscal settings.
The structural balance is estimated rather than observed, so it is sensitive to the
assumptions and parameters that underpin it. Commodity price volatility has increased the
uncertainty around the estimate.
Budget Paper No. 1 |
Statement 3: Fiscal Strategy and Outlook | Page 119
The estimated structural budget balance has been revised up in 2023–24 but is lower in
most years over the forward estimates period compared to MYEFO (Chart 3.14). These
changes largely reflect revisions to the underlying cash balance.
The contribution of cyclical factors to the underlying cash balance is estimated to remain
positive in 2023–24 and 2024–25. The smaller contribution in 2023–24 compared to MYEFO
in large part reflects revisions to the terms of trade (see Budget Statement 2: Economic Outlook
for more information on developments in commodity prices and the terms of trade).
Over the medium term, the structural budget balance is projected to improve gradually
towards balance.
Chart 3.14: Structural budget balance
-8
-6
-4
-2
0
2
4
2014-15 2018-19 2022-23 2026-27 2030-31 2034-35
% of GDP
Structural budget balance Cyclical factors
Temporary fiscal measures Underlying cash balance
Estimates
Medium term
Source: Treasury.
Note: The approach separating the budgetary impact of cyclical factors from structural measures follows
the methodology detailed in Treasury Working Paper 2013–01. Cyclical factors measure the
estimated impact on the underlying cash balance from automatic stabilisers and cyclical
movements in asset and commodity prices. Temporary fiscal measures comprise direct economic
and health support measures initiated between the onset of the COVID-19 pandemic and the
2022–23 October Budget. Underspends in these direct economic and health support measures are
not captured in the derivation of the structural budget balance, which may result in an improved
structural budget balance estimate.
Statement 4: Meeting Australia's Housing Challenge | Page 121
Statement 4:
Meeting Australia’s Housing Challenge
Australia has a housing shortage. There are not enough homes being built in the right areas
to meet the needs of our communities. This statement focuses on the reasons for the current
undersupply of housing, how it affects affordability, and the changes required to more
quickly unlock supply to meet the housing needs of all Australians. It also sets out how the
Government’s policy responds to these drivers of undersupply.
The Government is responding to build more homes for Australia. It has a $32 billion plan,
including $6.2 billion of new initiatives in this Budget. It represents a long-term response to
a complex structural challenge.
Australia’s housing supply is low by international standards. Australia has among the
lowest number of homes as a proportion of the population in the OECD. Undersupply is a
key factor that has driven increases in rents, mortgage repayments and house prices.
Australia’s housing system has been too slow to respond to demand. The causes of this are
multifaceted, complex and affect all stages of the housing construction process, including
all levels of government and industry. Planning and zoning and land release practices are
often slow and are not effectively factoring in urgent need for housing in suburban areas.
Industry’s capacity to add new supply has been hampered by a lack of essential
infrastructure in greenfield developments, a critical shortage of skilled labour and falling
productivity in the sector. At the same time, there has been a long-term, chronic
under-investment in social housing.
Higher interest rates have added to Australians’ cost of living, particularly through higher
mortgage repayments. Supply chain bottlenecks flowing from the COVID-19 pandemic and
higher costs of construction and finance have contributed to making new housing supply
more expensive, limiting how quickly homes can be built.
Fixing supply and improving affordability will require concerted, cooperative and
substantive efforts from all levels of government. The Government has a plan to increase
supply, fund more social homes, better support renters, provide a pathway to home
ownership and double its dedicated funding for homelessness services.
In recognition of the national leadership needed to address Australia’s housing supply
challenges, the Government agreed with states, local government, industry and investors to
deliver 1.2 million new, well-located homes in the five years to 30 June 2029 through the
National Housing Accord (the Accord). This is being supported by $3 billion in incentive
payments to the states, and other investments. This substantial commitment would be the
equivalent of adding a city around the size of Brisbane to Australia’s housing supply.
The National Housing Supply and Affordability Council has found the target is suitably
ambitious to help galvanise stakeholders into action. But it can be achieved with early, and
sustained, policy effort from all levels of government. It requires a significant uplift in the
Page 122 | Statement 4: Meeting Australia's Housing Challenge
number of homes built in every state and territory. Governments will need to work quickly
to identify and clear roadblocks to new supply and ensure homebuyers and renters are able
to buy or rent new housing where they want to live.
Addressing undersupply requires more than continued expansion of housing in outer
suburbs. State, territory and local governments will need to focus on rebuilding the
‘missing middle’ in Australia’s cities – delivering more medium and high-density housing
where infrastructure, transport, jobs, education and community amenities already exist.
Regional areas need new approaches to supplying housing. This is needed to break the
cycle of housing shortages making it difficult to attract the skills and labour – including
construction labour – to support and sustain vital towns and regions.
As part of the Government’s commitment to this target, $1.5 billion will be made available
to the states and territories, including $1 billion through the Budget, to help clear
infrastructure bottlenecks delaying the construction of new housing. This support, coupled
with the work underway through National Cabinet’s Planning Reform Blueprint, provides
the mechanism for states and territories to address structural inefficiencies in the planning,
zoning and land release systems that prevent the market from responding more efficiently
to demand. The Government is also investing $88.8 million in the Budget to train more
construction workers to help build more homes more quickly.
The Government is supplementing this long-term structural reform with increased support
for those who need it most. Low vacancy rates and falling numbers of rental properties
have placed pressure on rental prices over time; while lower income earners have less
capacity to absorb higher prices. That is why the Government is increasing Commonwealth
Rent Assistance (CRA) as part of this Budget, in addition to the increase in last year’s
Budget. Because of these increases and indexation, maximum rates of CRA will be 40 per
cent higher than they were in May 2022 which will benefit up to 1 million households.
The Government has committed to an unprecedented program to support an increase in
the supply of social and affordable housing by around 55,000 homes through the Accord,
the Housing Australia Future Fund, the Social Housing Accelerator Payment and other
Housing Australia programs. New investment in this Budget includes $423.1 million in
additional funding offered for the new $9.3 billion five-year funding agreement to deliver
social housing and homelessness services. The Government has already helped more than
110,000 low- to middle-income Australians overcome the deposit hurdle to get into home
ownership and will help more through the expansion of the Home Guarantee Scheme and
the new Help to Buy program.
Collectively, the Government’s plan to meet Australia’s housing challenge goes to the heart
of problems with structural undersupply, underinvestment in social and affordable
housing, fairness for renters and barriers to home ownership.
Statement 4: Meeting Australia's Housing Challenge | Page 123
Statement contents
Statement 4: Meeting Australia’s Housing Challenge ........................................... 125
Australia has underinvested in housing for too long ............................................ 125
Australia has a housing shortage – we have too few homes for those who need them ............ 125
Australia’s level of housing supply is low by international standards ........................................ 127
A lack of supply is making it harder for people to buy or rent .................................................... 127
Investment by governments in social housing has declined over decades ............................... 131
Affordability pressures are high .............................................................................. 135
Supply shortages contribute to affordability pressures .............................................................. 135
Long term decline in affordability .............................................................................................. 136
Affordability challenges have productivity, health and social inclusion implications .................. 139
Barriers to the construction of new homes need to be addressed ..................... 140
Faster planning and zoning approval processes can help unlock supply .................................. 142
Planning and zoning processes should focus on ensuring housing is delivered where
it is needed .............................................................................................................................. 142
Action to make construction cheaper will also help more homes be built faster ........................ 144
The Government’s plan to meet Australia’s housing challenge .......................... 149
Kickstarting construction of more homes .................................................................................. 150
Deliver the biggest investment in social and affordable housing in a decade ........................... 151
Provide more support to renters ................................................................................................ 153
Help Australians buy their own homes ...................................................................................... 154
Double dedicated homelessness funding and provide shelter for people in crisis .................... 155
Australian Government housing measures since May 2022 ................................ 156
Budget Paper No. 1 |
Statement 4: Meeting Australia's Housing Challenge | Page 125
Statement 4: Meeting Australia’s Housing
Challenge
Australia has underinvested in housing for too long
Box 4.1. Government’s plan to correct Australia’s housing
underinvestment
The Government has committed to $32 billion in new commitments including $6.2
billion in this Budget, to address historic underinvestment in the Australian housing
system.
Actions under the Government’s plan include:
• A target for 1.2 million new, well-located homes backed by funding for the states
to clear the bottlenecks and red tape preventing new homes from being built.
• Funding 40,000 new social and affordable homes.
• Increasing support to renters by 40 per cent.
• Helping more Australians into home ownership.
• Requiring universities to build more student accommodation.
Australia has a housing shortage – we have too few homes for those who
need them
Australia’s housing system has been unable to build enough new housing stock to keep up
with the needs of our population. This has caused a growing supply deficit, resulting in
worsening affordability for both renters and first-home buyers. Concerted action and
national leadership are needed to increase investment in housing and improve supply.
Additional supply is necessary to accommodate our population. However, lags between
increased demand for housing and additional supply of dwellings can create acute
pressures for households. This can include a tighter rental market and upward pressure on
rents.
Between 1993 and 2011, steady rates of housing construction were able to meet the needs of
a growing population which increased by 27 per cent over the same period. From 2014 to
2018 strong growth in medium-high density dwellings contributed significantly to supply,
with low interest rates encouraging a significant pick up in investor activity (Chart 4.1).
Supporting the housing market to respond more flexibly to changes in demand – including
well-located medium-high density housing – will help address Australia’s housing supply
shortage and meet the needs of current and future generations.
| Budget Paper No. 1
Page 126 | Statement 4: Meeting Australia's Housing Challenge
Chart 4.1: New private dwelling completions, by type
0
75
150
225
1992-93 1997-98 2002-03 2007-08 2012-13 2017-18 2022-23
'000
Houses
Medium-high density
Source: ABS Building Activity
Note: Data are original.
Budget Paper No. 1 |
Statement 4: Meeting Australia's Housing Challenge | Page 127
Australia’s level of housing supply is low by international standards
Chart 4.2 shows Australia’s housing supply relative to other OECD countries. While
differences across OECD countries reflect a range of factors including differences in age
structure, population growth, cultural norms, and the size and quality of the housing stock,
Australia has fewer dwellings per 1,000 people than the OECD average.
According to the OECD, Australia’s level of housing supply was at 403 per 1,000 people
in 2011. This increased to 420 per 1,000 people in 2022. However, this increase in supply
was insufficient to keep pace with international peers, falling from around 92 per cent of
the OECD average in 2011 to 90 per cent of the OECD average by 2022.
Australia lags behind other countries like Canada, the US and the UK (England) in terms of
dwellings per 1,000 people.
Chart 4.2: Dwellings per 1,000 people, Australia and OECD average
0
200
400
600
Costa Rica
Chile
Colombia
Luxembourg
New Zealand
Iceland
Poland
Slovenia
Slovak Republic
Ireland
Australia
Canada
United States
UK (England)
Netherlands
OECD
Hungary
Türkiye
Belgium
Japan
Norway
Denmark
Czechia
Germany
Lithuania
Switzerland
Estonia
Austria
Spain
Latvia
Finland
Portugal
France
Italy
Dw ellings per 1,000 people
2011
2022
Source: OECD, Treasury
Note: Greece, Israel, Mexico, Sweden and the Republic of Korea (OECD members) are not included in
this analysis due to missing data points. 2011 data is either from 2011 or nearest available year
and 2022 data is either from 2022 or latest available year.
A lack of supply is making it harder for people to buy or rent
A shortage of housing stock is making it difficult to find a property to buy or rent. The
number of homes being offered for sale has fallen since 2015 (Chart 4.3), while the number
of homes for rent has been falling since early 2020 (Chart 4.4).
| Budget Paper No. 1
Page 128 | Statement 4: Meeting Australia's Housing Challenge
Chart 4.3: Total national established
property market listings
100
150
200
250
Nov-11 Nov-15 Nov-19 Nov-23
'000
Listings
5-year average
Chart 4.4: Total national rental market
listings
50
100
150
200
Nov-11 Nov-17 Nov-23
Listings
5-year average
'000
Source: CoreLogic
1
, Treasury
Note: Listings are the total monthly volume of
properties available. Listings line is a
3-month rolling average. Average line is
a 5-year rolling average.
Source: CoreLogic, Treasury
Note: Listings are the total monthly volume of
rental properties available. Listings line is
a 3-month rolling average. Average line
is a 5-year rolling average.
The rental vacancy rate is well below the rate considered to reflect a balanced rental market
of around 3 per cent (Chart 4.5). In some parts of the country, including some capital cities,
it is as low as 0.5 per cent.
2
—
1
This publication contains data, analytics, statistics, results and other information licensed to
us by RP Data Pty Ltd trading as CoreLogic Asia Pacific (CoreLogic Data) © Copyright 2024.
RP Data Pty Ltd trading as CoreLogic Asia Pacific (CoreLogic) and its licensors are the sole
and exclusive owners of all rights, title and interest (including intellectual property rights)
subsisting in the CoreLogic Data reproduced in this publication. All rights reserved. The
CoreLogic Data provided in this publication is of a general nature and should not be
construed as specific advice or relied upon in lieu of appropriate professional advice. While
CoreLogic uses commercially reasonable efforts to ensure the CoreLogic Data is current,
CoreLogic does not warrant the accuracy, currency or completeness of the CoreLogic Data
and to the full extent permitted by law excludes all loss or damage howsoever arising
(including through negligence) in connection with the CoreLogic Data.
2
CoreLogic Data.
Budget Paper No. 1 |
Statement 4: Meeting Australia's Housing Challenge | Page 129
Chart 4.5: National dwelling rental vacancy rate
1
2
3
4
5
Nov-11 Nov-13 Nov-15 Nov-17 Nov-19 Nov-21 Nov-23
%
Average
Vacancy rate
Source: CoreLogic, Treasury
Note: 3-month rolling average.
| Budget Paper No. 1
Page 130 | Statement 4: Meeting Australia's Housing Challenge
Box 4.2. Government actions to increase market housing supply
More homes need to be built in the places that households need them, including
close to places of work and education for families, workers and students This
requires careful planning and better collaboration with non-government partners to
meet the changing needs of our communities.
Australia’s growing international education sector requires adequate supply of
purpose-built student accommodation to ensure its ongoing sustainability. To
deliver more accommodation for students and to reduce pressure on the private
rental market, the Government will work with the higher education sector to
develop regulations that will require universities to increase their supply of student
accommodation.
The Government is also developing the National Housing and Homelessness Plan
(the Plan). The Plan will be a 10-year strategy and outline how all levels of
government can work together with the private and the community sector to deliver
the short-, medium- and long-term actions needed.
The Plan will build on the Accord, where the Government is working with states
and territories, local governments, industry and investors to deliver 1.2 million new,
well-located dwellings in the five years from 1 July 2024.
New homes are needed in every state and territory – not just in the major population
centres that attract most of the population growth. That is why the Government is
offering $3 billon in incentive payments through the New Homes Bonus to be shared
amongst all states and territories to reach their share of the 1.2 million target.
The Government will provide state, territory and local governments with payments
to fund the enabling infrastructure (water and sewage connections, roads and
footpaths) needed to develop new homes through the $1.5 billion Housing Support
Program.
Budget Paper No. 1 |
Statement 4: Meeting Australia's Housing Challenge | Page 131
Investment by governments in social housing has declined over decades
In addition to low levels of aggregate housing stock, rates of construction of social housing
(which includes both public housing and community housing) have also fallen steadily.
Public housing is defined by the Australian Institute of Health and Welfare (AIHW) as
rental housing that state and territory governments provide and manage, and is a subset of
social housing. Social housing is rental housing fully or partly funded by government,
owned or managed by community organisations or governments, and includes public
housing, state owned and managed Indigenous housing, community housing and
Indigenous community housing.
3
Public housing completions (Chart 4.6) and the share of
social housing stock as a proportion of the total stock has declined for the last three decades
(Chart 4.7). Research notes that since 1996, the level of social housing construction has not
been enough to keep pace with sales and demolitions of existing social housing stock.
4
Since 1958, the Australian Government has provided rent assistance which helps people on
income support payments with the cost of rental housing. As an income supplement,
Commonwealth Rent Assistance is able to respond to recipients’ needs in a timely way, can
adapt as their needs change over time, supports housing choice, and can help meet the cost
of increases in rent.
5
The National Housing Supply and Affordability Council suggests that
renter households receiving Commonwealth Rent Assistance have seen improved
affordability in recent years.
6
In March 2024, Commonwealth Rent Assistance helped
reduce the percentage of recipient households experiencing rental stress by around
31 percentage points.
7
—
3
Australian Institute of Health and Welfare (n.d.), ‘Housing assistance glossary‘, accessed 6
May 2024.
4
Pawson, H., Milligan, V., & Yates, J. (2020), Housing Policy in Australia: A Case for System
Reform, Palgrave Macmillan, p. 95.
5
Productivity Commission (2022), ‘In need of repair: the National Housing and Homelessness
Agreement’, p. 18.
6
National Housing Supply and Affordability Council (2024), ‘State of the Housing System
2024‘, p. 107.
7
In this context, rental stress is defined as spending more than 30 per cent of gross income on
rent. Commonwealth Rent Assistance data sourced from Department of Social Services
administrative data.
| Budget Paper No. 1
Page 132 | Statement 4: Meeting Australia's Housing Challenge
Chart 4.6: Public housing
completions
Chart 4.7: Social housing stock as a
share of housing stock
0
10
20
1957 1979 2001 2023
'000
0
2
4
6
1981 1991 2001 2011 2021
Public housing
Com munity housing
%
Source: ABS Building Activity, Treasury
Source: National Housing Supply and
Affordability Council analysis of ABS
Census data, Treasury
Notes: Social housing as a share of occupied
private dwellings (excludes visitor-only
and other non-classifiable households
from 2006 onwards).
Budget Paper No. 1 |
Statement 4: Meeting Australia's Housing Challenge | Page 133
Box 4.3 Government actions to increase social and affordable housing
The Government is tackling housing stress for lower income households, with
investments expected to support around 55,000 new social and affordable homes,
increasing the stock of social and affordable housing by over 12 per cent. This will be
achieved through:
• The $10 billion Housing Australia Future Fund (HAFF), which seeks to deliver
30,000 new social and affordable homes over its first five years, including homes
for women and children impacted by family and domestic violence.
• The National Housing Accord, under which the Australian Government will
deliver 10,000 affordable homes, to be matched by states and territories.
• Additional concessional financing for community housing providers and other
charities to support the HAFF and Accord of $1.9 billion.
• The $2 billion Social Housing Accelerator Payment, which will fund 4,000 new
and refurbished social homes.
• Expanding the Affordable Housing Bond Aggregator by increasing Housing
Australia’s liability cap to $10 billion from $5.5 billion.
• Providing an additional $1 billion to the National Housing Infrastructure Facility,
targeted toward crisis and transitional accommodation for women and children
fleeing domestic violence, and youth.
Chart 4.8 shows how these measures, coupled with Housing Australia’s existing
programs, will affect the level of social and affordable housing.
continued on next page
| Budget Paper No. 1
Page 134 | Statement 4: Meeting Australia's Housing Challenge
Box 4.3 Government actions to increase social and affordable housing
(continued)
Chart 4.8 Social and affordable housing stock levels and impact of
Government’s investment
360
400
440
480
520
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2029
'000
Projection
Source: AIHW, Treasury
Notes: This chart measures social housing stock levels from 2012 to 2022 using data from AIHW.
For the purposes of this analysis, Treasury is including State Owned and Managed
Indigenous Housing, Indigenous community housing, community housing and public
housing, in the count of social and affordable housing. This analysis may not include other
forms of affordable housing due to unavailable data. It is projected that the Australian
Government will help support around 55,000 new social and affordable homes between
May 2022 and 2029.
Budget Paper No. 1 |
Statement 4: Meeting Australia's Housing Challenge | Page 135
Affordability pressures are high
Supply shortages contribute to affordability pressures
The lag in housing supply responding to changes in population has contributed to rising
house prices and worsening affordability. Charts 4.9 and 4.10 show that nominal dwelling
prices and advertised rents have more than doubled since the mid-2000s.
Chart 4.9: Median nominal dwelling
values
Chart 4.10: Median nominal
advertised rents
0
300
600
900
Apr-84 Apr-04 Apr-24
$ '000
200
350
500
650
Apr-06 Apr-15 Apr-24
$
Source: CoreLogic
Note: Median monthly dwelling values are
reported for eight capital cities combined.
Source: CoreLogic
Note: Nominal dwelling rents are reported for
eight capital cities combined, 3-month
rolling average.
As a result of price pressures, an increasing share of household incomes is going towards
housing and housing services, particularly for lower-income rental households, with
marked growth since 2020 (Chart 4.11). For prospective homebuyers, the portion of income
needed to service a new loan has risen from an average of 29 per cent in 2020 to 46 per cent
in 2023. This is above the long-run average of 35.7 per cent and above the 30 per cent
threshold for mortgage stress (Chart 4.12).
| Budget Paper No. 1
Page 136 | Statement 4: Meeting Australia's Housing Challenge
Chart 4.11: Share of income to service
rent, by income and rent quartile
Chart 4.12: Share of income to
service new loan, dwellings
0
20
40
60
Mar-06 Mar-12 Mar-18 Mar-24
%
25th 50th 75th
20
35
50
Sep-01 Mar-09 Sep-16 Mar-24
%
Dw ellings
Long-run average
Source: CoreLogic, POLIS@ANU Centre for
Social Policy Research
Note: Income refers to median gross
disposable household income. Data is for
national dwellings, reported quarterly.
Households in a given income quartile
are matched to the equivalent rent
quartile.
Source: CoreLogic, POLIS@ANU Centre for
Social Policy Research
Note: Income refers to median gross
disposable household income.
Data is for national dwellings, reported
quarterly.
Long term decline in affordability
In the March quarter of 2002, the median house price was 4.9 times the median gross
disposal household income. By the March quarter of 2024, this had increased to 8.6 times
median gross annual income (Chart 4.13). The unit price-to-income ratio has not grown as
fast – reflecting recent growth in the supply of medium-high density housing and rising
land values, as medium-high density developments contain more dwellings per square
metre of land.
8
While there has been short term volatility, Australians are also taking longer
to save for a deposit, with the time taken to save a 20 per cent house deposit reaching
almost 11.4 years in the March quarter 2024, down from a historic peak of 12.1 years in
the March quarter 2022 (Chart 4.14). These factors have contributed to declining rates of
home ownership over time, and more people are now renting (Chart 4.15).
—
8
Daley, J & B, Coates (2018), ‘Reimagining the Australian dream‘, Grattan Institute, p. 17, 111.
Budget Paper No. 1 |
Statement 4: Meeting Australia's Housing Challenge | Page 137
Chart 4.13: Price-to-income ratio
Chart 4.14: Time to save for a house
deposit
4
6
8
10
Mar-02 Mar-13 Mar-24
Ratio
House
Unit
4
7
10
13
Mar-02 Mar-13 Mar-24
Years
Source: CoreLogic, POLIS@ANU Centre for
Social Policy Research
Note: Income refers to median annual gross
disposable household income. Data is
quarterly for combined capital regions.
Source: Source: CoreLogic, POLIS@ANU Centre
for Social Policy Research
Note: Income refers to median gross
disposable household income. Chart
assumes 20 per cent deposit. Data is
quarterly for combined capital regions.
Chart 4.15: Rates of Home Ownership
0
20
40
60
80
1994–95
2000–01
2009–10
2019–20
Owners and owners with a m ortgage
Renters
%
Source: ABS Housing Occupancy and Costs, Treasury
| Budget Paper No. 1
Page 138 | Statement 4: Meeting Australia's Housing Challenge
Box 4.4 Government actions to help renters and support more people into
home ownership
As prices have risen, more Australians are finding it difficult to pay their rent. This is
why the Government is stepping in to ease the burden while the housing system is
improved to bring on more supply over time.
As part of the Government’s broader responsible and affordable cost-of-living relief
package, Commonwealth Rent Assistance (CRA) will be increased by a further
10 per cent. Alongside the 15 per cent increase provided in September 2023 and
regular indexation, this will take maximum rates over 40 per cent higher than
in May 2022. Outside of regular indexation, the 2023–24 Budget and 2024–25 Budget
CRA increases are the first back-to-back increases to maximum rates of CRA in three
decades. This will help to address pressure in the rental market caused by low
vacancy rates and falling supply.
In recognition of the more challenging situation renters are facing, the Government
is also working with states and territories to strengthen renters’ rights through A
Better Deal for Renters. As part of this package, all levels of government have agreed
to implement a 9-point plan that includes:
• Developing a nationally consistent policy to implement a requirement for
genuine reasonable grounds for eviction.
• Moving towards limiting rent increases to once a year.
• Phasing in minimum rental standards.
In addition, the Government is introducing concessional tax treatment to encourage
the development of more build-to-rent accommodation to increase the supply of
rental properties and increase their affordability. The Government has also lowered
foreign investment application fees for new build-to-rent developments to further
encourage an increase in the supply of rental properties.
The Government is also helping more renters to transition to home ownership
through introducing legislation to establish the Help to Buy scheme. The Help to
Buy scheme will support up to 40,000 eligible households to purchase a home by
providing them an equity contribution of up to 40 per cent of the purchase price for
new homes and 30 per cent for existing homes. Together with the expanded Home
Guarantee Scheme, this will help more Australian households achieve home
ownership.
Budget Paper No. 1 |
Statement 4: Meeting Australia's Housing Challenge | Page 139
Affordability challenges have productivity, health and social inclusion
implications
A well-functioning housing system allows workers to be close to their employment,
reduces commute times and travel costs, and encourages labour force participation, social
mobility and cohesion.
A collective lack of investment in housing – both public and private – can result in a
housing system that entrenches adverse health and socio-economic outcomes. Unstable
housing prevents workers from finding meaningful employment and creates more
disruptions for children’s education. This is especially pronounced for children vulnerable
to socioeconomic inequality, living in disadvantaged neighbourhoods or being unable to
rely on intergenerational wealth transfers. Quality housing improves children’s
development and wellbeing, and can lead to better education outcomes, particularly for
those with intergenerational disadvantage.
9
An undersupplied and underinvested housing system creates more instances of
overcrowded and poor-quality dwellings, which Brackertz et al. (2019) identifies as
increasing the likelihood of developing chronic physical and mental health conditions, and
increasing the risk of domestic and family violence.
10
In 2022–23 around 38 per cent of all
specialist homelessness services clients had experienced family and domestic violence.
11
Increased housing supply and affordability in well-located areas can positively affect
wages and productivity by reducing barriers to job switching. Job switching rates in
Australia are low and have declined over the past 30 years.
12
Research suggests job
switchers are likely to move to more productive firms, with the average productivity gap
between origin and destination firms at 13.1 per cent. It can also enable workers to move to
a role which better matches their individual skillset.
13
These factors can influence aggregate
productivity as they allow firms with higher average productivity to increase output.
Workers are also more likely to realise wage gains when switching into a new role, which
can improve their standard of living.
14
—
9
Dockery, M, Ong, R, Colquhoun, S, Li, J & Kendall, G (2013), ‘Housing and children’s
development and wellbeing: evidence from Australian data‘, Final Report No. 201,
Australian Housing and Urban Research Institute Limited, p. 5.
10
Brackertz, N, Davidson, J, Borrowman, L & Roggenbuck, C (2019), ‘Overcrowding and
severe overcrowding: an analysis of literature, data, policies and programs‘, Australian
Housing and Urban Research Institute Limited, p 61, 67-68.
11
Australian Institute of Health and Welfare (n.d.), ‘Specialist Homelessness Services Annual
Report 2022-23‘, accessed 3 May 2024.
12
Wong, A (2024), ‘Climbing the wage ladder: linking job mobility and wages‘, e61 Institute.
13
Buckley, J (2023), ‘Productivity in motion: the role of job switching‘, e61 Institute.
14
Deutscher, N (2019), ‘Job-to-job transitions and the wages of Australian workers‘, Treasury
Working Paper 2019-7, Australian Government the Treasury; Wong, A (2024), ‘Climbing the
wage ladder: linking job mobility and wages‘, e61 Institute.
| Budget Paper No. 1
Page 140 | Statement 4: Meeting Australia's Housing Challenge
As Australia has shifted towards a service-based economy, many firms have set up offices
in central business districts. National Housing Supply and Affordability Council research
shows workers are living an increasingly further distance from their place of work,
associating this with a lack of affordable housing in cities.
15
An increase in well-located
housing in urban areas with access to public transport and amenities will make it easier for
workers to switch jobs to more productive firms and seek higher wages, and will improve
the productive capacity of the Australian economy. A lack of affordable housing in regional
areas can also undermine the ability of businesses to attract workers and represents lost
economic potential for regions.
Barriers to the construction of new homes need to be
addressed
Action is needed to improve housing system responsiveness
Australia’s housing system has been unable to sufficiently respond to demand. Housing
requires longer lead times to respond to price signals than many other goods and services.
On average, in 2022–23 a house in Australia took around nine months to build, while a
block of apartments took over 24 months to complete.
16
Structural factors influence the
speed at which new housing can be supplied, with planning and approvals to release land
necessary for construction to take place. These are often delayed, and timing can vary
significantly between state and territory jurisdictions. In addition, planning and zoning
processes, the capacity and productivity of the construction sector and expensive materials
costs can further slow the pace of housing construction.
—
15
National Housing Supply and Affordability Council (2024), ‘State of the Housing System
2024‘, p. 35-37.
16
Australian Bureau of Statistics (released 18 October 2023), ‘Building activity, average
dwelling completion times, Australia’, accessed 30 April 2024.
Budget Paper No. 1 |
Statement 4: Meeting Australia's Housing Challenge | Page 141
This relationship between supply and prices means that accelerating new supply will help
to lower prices and ease affordability pressures. This is supported by empirical research
which shows that:
17
• OECD countries that built more housing between 1990 to 2015 experienced lower
growth in real house prices;
18
• Adding an extra 50,000 homes a year for a decade could reduce house prices up to
20 per cent;
19
• A 1 per cent increase in the stock of dwellings could lower house prices by 2.5 per cent.
20
Rates of construction need to be accelerated
Rates of construction are reducing the capacity of the market to respond to increased
demand. Apartment, townhouse and detached house completion times increased
nationally by 39 per cent, 34 per cent and 42 per cent respectively over the 10-year period to
2022–23.
21
Most of this increase is concentrated over the pandemic period, however there
has been a relatively consistent upward trend in apartment construction times since 2018–
19.
Modelling from the National Housing Supply and Affordability Council shows Australia’s
existing unmet demand for housing will not be satisfied unless the responsiveness of
supply to demand is improved. Over the Council’s 6-year projection horizon, new market
demand is expected to exceed new market supply by around 39,000 dwellings.
22
While new
supply and new demand will roughly be in balance from the 2026–27 financial year
onwards, this suggests that without concerted action to reduce barriers to new supply,
Australia’s excess demand for housing will continue to go unmet.
—
17
This empirical research cannot be extrapolated to imply a price impact of the 1.2 million new
homes target under the National Housing Accord.
18
The Centre for Independent Studies (2021), ‘Submission to the Inquiry into Housing
Affordability and Supply in Australia‘, submission to the House of Representatives Standing
Committee on Tax and Revenue, p. 9; Productivity Commission (2022), ‘In need of repair: the
National Housing and Homelessness Agreement’, p. 462.
19
Daley, J & B, Coates (2018), ‘Reimagining the Australian dream‘, Grattan Institute, p. 3;
Productivity Commission (2022), ‘In need of repair: the National Housing and Homelessness
Agreement’, p. 462.
20
Saunders, T & Tulip, P (2019), ‘A model of the Australian housing market’, Research
Discussion Paper 2019-01, Reserve Bank of Australia, p .28. Productivity Commission (2022),
‘In need of repair: the National Housing and Homelessness Agreement’, p. 462.
21
Australian Bureau of Statistics (released 18 October 2023), ‘Building activity, average
dwelling completion times, Australia’, accessed 30 April 2024.
22
National Housing Supply and Affordability Council (2024), ‘State of the Housing System
2024‘, p. 88.
| Budget Paper No. 1
Page 142 | Statement 4: Meeting Australia's Housing Challenge
Faster planning and zoning approval processes can help unlock supply
Planning and zoning restrictions can limit the speed at which land is made available for
development. Development application processes grant approvals for land to be released
for development, often at the local government level. Delays in assessment timelines can
increase cost and uncertainty for developers.
23
For example, longer approval timeframes
may be indicative of aversion to new development in a particular area, particularly for
larger developments.
24
Average observed approval times for development application
decisions vary by state, with Victoria and New South Wales experiencing the longest
average approval wait times at 143.6 and 114 days respectively as at 8 May 2024.
25
Lengthy
approval timeframes can increase effective development times for new dwellings and limit
the responsiveness of housing supply to demand.
Planning and zoning processes should focus on ensuring housing is
delivered where it is needed
Planning and zoning restrictions divert additional housing away from well-located areas
where demand is greatest. Medium- to high-density housing in urbanised areas is
necessary to ensure Australia’s housing supply efficiently responds to demand. It offers a
more efficient use of construction sector resources, can better cater to household location
and amenity preferences and reduce demand pressures in inner-city locations.
Dense development in the ‘missing middle’ of major Australian cities, where households
can reside closer to jobs in areas with higher quality amenities and infrastructure, has been
limited by planning and zoning restrictions and slow release of infill land.
26
Using 2016
data, the gap between the cost of supplying a new apartment and its market value in
Sydney was $355,000 (68 per cent of costs), $97,000 in Melbourne (20 per cent of costs) and
$10,000 in Brisbane (2 per cent of costs).
27
These gaps are sustained by planning and zoning
restrictions, which force additional development outwards rather than where demand is
greatest. As a result, recent development has been concentrated in city fringes where
detached dwellings are more likely to be constructed, particularly in Melbourne and
Brisbane. All jurisdictions except the Australian Capital Territory have approved more
—
23
Productivity Commission (2022), ‘In need of repair: the National Housing and Homelessness
Agreement’, p. 525.
24
Productivity Commission (2022), ‘In need of repair: the National Housing and Homelessness
Agreement’, p. 468.
25
Department of Transport and Planning (n.d.), ‘Planning permit activity reporting‘, Victorian
Government, accessed 8 May 2024; New South Wales Government (n.d.), ‘NSW Planning
Performance Dashboard‘, accessed 27 April 2024.
26
Daley, J & B, Coates (2018), ‘Reimagining the Australian dream‘, Grattan Institute, p. 56.
27
Jenner, K & Tulip, P (2020), ‘The apartment shortage’, Research Discussion Paper 2020-04,
Reserve Bank of Australia, p. 5.
Budget Paper No. 1 |
Statement 4: Meeting Australia's Housing Challenge | Page 143
detached dwellings than townhouses and apartments over the five years to March 2024 as a
result.
28
Barriers to building homes in well-located areas not only reduce supply in areas of high
demand and increase commute times but make new and existing homes less affordable.
Building new homes in greenfield areas requires new infrastructure, which can add to the
time and cost of development. For example, infrastructure costs in some outer-urban parts
of Sydney are up to $75,000 higher per dwelling than for inner-city areas.
29
Rezoning urban areas to allow greater density can increase the supply of housing.
In 2016, Auckland Council upzoned around three quarters of its residential land to permit
higher maximum site coverage and height. This led to a significant increase in housing
permits and construction in the upzoned areas, particularly in locations close to transport
and employment opportunities, which contributed to Auckland rents for three bedroom
dwellings being 22 to 35 per cent lower than they otherwise would have been six years on
from the introduction of the policy.
30
It is also important that new medium-high density builds are constructed to a high quality,
to maintain consumer confidence and ensure demand for higher density housing.
—
28
Australian Bureau of Statistics (released May 2024), ‘Building approvals, Australia’, accessed
6 May 2024.
29
NSW Productivity Commission (2023), ‘Building more homes where infrastructure costs
less‘, p. 13.
30
Greenaway-McGrevy, R, & Jones, J. A. (2023), ‘Can zoning reform change urban
development patterns? Evidence from Auckland’, Working Paper No. 012, Economic Policy
Centre, The University of Auckland, p. 26.
| Budget Paper No. 1
Page 144 | Statement 4: Meeting Australia's Housing Challenge
Box 4.5 Government actions to reform the planning system
Planning and zoning decisions have a significant impact on the rate of land release
and where and how quickly new housing supply can be built.
To help the planning system more effectively facilitate the number of new homes
needed, National Cabinet has agreed the National Planning Reform Blueprint. The
Blueprint brings state and territory planning ministers together to progress 17
reforms to deliver more homes, including:
• Streamlining development approvals.
• Identifying well-located development ready land.
• Increasing housing density in target areas.
• Identifying how housing can be built faster on sites with development approval
but where development has not commenced (i.e. activating ‘zombie’ approvals).
• Ensuring that state, regional and local strategic plans reflect their share of the
national 1.2 million new homes target.
Action to make construction cheaper will also help more homes be
built faster
Global price shocks and supply constraints associated with COVID-19 have added to the
costs of construction. Materials input costs, as captured in Producer Price Index, increased
significantly over the pandemic, including for timber, concrete, and metal products.
Alongside elevated labour costs, these drove a sharp increase in the price of building a new
dwelling, as measured in the Consumer Price Index, which contributed to the sharp rise in
inflation (Chart 4.16). Although growth in construction costs for new dwellings have eased,
they continue to grow from an already elevated level.
Budget Paper No. 1 |
Statement 4: Meeting Australia's Housing Challenge | Page 145
Chart 4.16: Residential construction
costs and prices
Chart 4.17: Construction sector
vacancies as a proportion of
employment
80
110
140
170
Mar-08 Mar-16 Mar-24
Index
CPI new dwellings
PPI input to house
construction
0.0
1.5
3.0
4.5
Feb-10 Feb-17 Feb-24
%
Source: ABS Producer Price Index, ABS
Consumer Price Index
Source: ABS Job Vacancies, ABS Labour Force
Note: Dashed lines are pre-COVID long run
averages.
Labour shortages have also slowed the pace of construction. A shortage of skills and labour
in the construction sector has persisted since the pandemic given high demand and existing
shortages. Industry estimates suggest the construction sector is facing a shortfall of around
90,000 workers.
31
The most acute trade shortages in the first quarter of 2024 existed in
bricklaying, ceramic tiling, plastering, carpentry and roofing.
32
Construction sector job
vacancies have fallen considerably from the peak in 2022 but remain well above historical
averages (Chart 4.17).
These labour shortages can partially be explained by an increase in non-dwelling
construction activity, that has drawn on the supply of labour available for dwelling
construction. The rate of growth of investment in public infrastructure and non-dwelling
construction has increased significantly relative to residential construction activity
(Chart 4.18). At the same time as labour shortages have worsened, labour productivity in
the construction industry has not increased from the level it was in the early 2000s (Chart
4.19), while other sectors have seen significant productivity growth.
—
31
Master Builders Australia (2024),’2024-25 Pre-Budget submission: finding Australia’s missing
tradies: how to harness the skilled migrant workforce‘, accessed 29 April 2024.
32
Housing Industry Association (2023), ‘Access to skilled labour a barrier to 1.2 million new
homes‘, accessed 29 April 2024.
| Budget Paper No. 1
Page 146 | Statement 4: Meeting Australia's Housing Challenge
Growing costs and lengthening build times have reduced the ability of investors, builders,
and developers to add to the housing stock, despite the strong signal provided by market
conditions.
Chart 4.18: Construction related
investment expenditure
Chart 4.19: Labour productivity in the
construction sector
0
100
200
300
400
2000-01 2011-12 2022-23
$b
New non-dwelling construction
Public investment
Residential
80
90
100
110
120
1990-91 2006-07 2022-23
Index
Source: ABS National Accounts: National
Income, Expenditure and Product
Note: Public investment is total public
investment including infrastructure
related investment.
Source: ABS Estimates of Industry Multifactor
Productivity, Treasury
Box 4.6 Government actions to invest in more skilled construction workers
Capacity constraints in the construction sector are a key impediment to faster
delivery of new homes. According to industry, there has been a significant shortage
of construction workers in recent years, driven by a drop off in rates of skilled
migration during the COVID-19 pandemic and competition from infrastructure
projects. This has slowed the ability of builders to build more homes quickly and
driven up the price of labour.
The Government is responding to this challenge by investing $88.8 million to grow
the pipeline of construction workers through 20,000 additional fee-free TAFE and
pre-apprenticeship places. The Government will also provide $1.8 million to deliver
streamlined skills assessments for around 1,900 migrants from comparable counties
to work in Australia’s housing construction industry.
The HomeBuilder program provided grants of up to $25,000 to eligible owner-occupiers to
build or substantially renovate a home. HomeBuilder was intended to support confidence
in the residential construction sector and encourage consumers to proceed with purchases
Budget Paper No. 1 |
Statement 4: Meeting Australia's Housing Challenge | Page 147
or renovations that may have been delayed due to uncertainty caused by the COVID-19
pandemic.
While HomeBuilder, alongside low interest rates, increased investment in the residential
construction sector, it concentrated this demand in the detached sector (Chart 4.20). The
program brought forward investment demand ahead of what the detached sector was able
to sustainably build (Chart 4.21). The program added to inflation pressures in the sector by
placing additional pressure on constrained supply chains. It also contributed to national
land price growth of 14 per cent in 2021 and 22 per cent in 2022, alongside reduced
greenfield lot releases.
33
This demonstrates the potential risk to affordability presented by
programs which stimulate investment demand for housing without addressing supply
constraints.
Chart 4.20: Private sector residential
building approvals
Chart 4.21: Private sector residential
commencements
20
35
50
65
Mar-08 Mar-16 Mar-24
'000
Source: ABS Building Approvals, Treasury
Note: 3-month rolling average.
0
15
30
45
Dec-07 Dec-15 Dec-23
'000
Houses
Other residential
Source: ABS Building Activity
Productivity Commission research has suggested that for government programs assisting
households to purchase a home, the assistance is likely to be capitalised into house prices
when not accompanied with an increase in supply. This tends to benefit sellers and existing
owners, rather than buyers, which in turn further prices low- and middle-income
households out of owning their own home.
34
Any support for home ownership should be
specific and targeted.
—
33
Urban Development Institute of Australia (2024), ‘State of the land 2024: national residential
greenfield and apartment market study’, p. 6.
34
Productivity Commission (2022), ‘In need of repair: the National Housing and Homelessness
Agreement’, p. 381.
| Budget Paper No. 1
Page 148 | Statement 4: Meeting Australia's Housing Challenge
Box 4.7 Targets to increase supply: an alternative to demand stimulation
The initial target of 1 million new, well-located homes set in the Accord in
October 2022 aimed to deliver significant new housing supply above that needed to
keep pace with demand. Based on estimates at that time, it would have delivered
sufficient new homes to achieve this.
Higher interest rates were expected to dampen demand and slow the rate of new
household formation. This would have reduced the pressure on the construction
sector, allowing it to work through the large pipeline of work in progress that
developed through the COVID-19 pandemic due to labour force shortages, supply
chain challenges and demand stimulus.
However, the housing market remained resilient despite the changes in interest
rates, and demand remained high. In part, this was driven by a recovery in
population growth as Australia emerged from the pandemic and international
borders reopened and Australians demanding more space for housing to
accommodate new activities, such as working from home. This higher-than-expected
demand, combined with cost pressures and delays in the construction sector, has
contributed to worsening affordability for many Australians.
As a result, the Australian Government agreed with state and territory governments
to increase the target under the Accord to 1.2 million new, well-located homes. This
higher target will require additional policy reform to be met, but will ensure housing
supply grows quickly enough to meet the needs of our population. Housing supply
growth at this rate will enable more Australians to find the housing they want and
will reduce pressure on prices.
Changes to the supply side of the housing system required to meet this target will
have long term benefits beyond the period of the Accord target. They will ensure
Australia has a housing supply system responsive to demand as conditions change
over time.
Budget Paper No. 1 |
Statement 4: Meeting Australia's Housing Challenge | Page 149
The Government’s plan to meet Australia’s housing challenge
The challenges in Australia’s housing system are caused by complex structural factors that
have built up over time, and will take long term co-operative effort to address.
That is why the Government is working with all levels of government, industry and
investors to reform our housing system to make it fairer and more efficient; a system that
delivers more homes and offers more assistance to those who need it. Australia needs a
system more attuned to our future than our past.
The Government’s vision is ambitious and deliberately designed to provoke change in the
housing system. While change will take time, the Government is laying the foundations
and working across all parts of the system to improve affordability and fairness.
It is in this context that the Government has a plan to meet Australia’s housing challenge. It
seeks to:
• Kickstart construction of more homes by building infrastructure, training tradies, and
cutting planning hurdles.
• Deliver the biggest investment in social and affordable housing in over a decade.
• Provide more support for renters – including the biggest increase to rent assistance in
more than 30 years.
• Help Australians buy their own home.
• Double its dedicated homelessness funding and provide shelter for people in crisis –
including women and children fleeing domestic violence, veterans, and youth.
This plan is backed up by $32 billion in new commitments. It is backed by an
unprecedented level of cooperation with state, territories and local governments, industry
and investors through the National Housing Accord. Actions include:
• A target for 1.2 million new, well-located homes.
• Funding 40,000 new social and affordable homes.
• The first back-to-back increase in the maximum rates of Commonwealth Rent
Assistance outside of indexation changes in three decades.
• Helping more Australians into home ownership.
The development of the 10-year National Housing and Homelessness Plan (the Plan) is a
critical component of the Government’s housing strategy. It seeks to set a shared vision
from all levels of government and work with the private and community sector to address
housing challenges, including the need to deliver more housing supply.
| Budget Paper No. 1
Page 150 | Statement 4: Meeting Australia's Housing Challenge
Kickstarting construction of more homes
Correcting Australia’s housing shortage requires governments to create a policy
environment that better enables industry and investors to respond to demand. This means
getting the planning system right, fixing labour and skills shortages and providing the
infrastructure to enable more homes to come on-line faster and more economically. It
means creating the governance arrangements for these cross-jurisdictional issues to be
resolved effectively so communities can better hold their governments to account for the
homes they deliver.
The National Housing Accord, which creates a framework for inter-government
collaboration, is central to the Government’s plan to address the inter-jurisdictional factors
affecting supply. It brings together state, territory and local governments, along with
industry and investors to work cooperatively to increase the supply of new homes.
The Accord seeks to deliver 1.2 million new, well-located homes from 1 July 2024 to
30 June 2029. It will focus on developing strategies for the planning system to support more
homes, to make sure the right skills are available to build more homes and that investors
supply more finance to fund more homes. The target is aimed to deliver significant new
housing supply above that needed to keep pace with demand, to accommodate our
population and support a slow but steady decline in average household size.
Work under the National Housing Accord, including progress under its targets, is regularly
monitored by Treasurers through the Council on Federal Financial Relations.
Delivering the enabling infrastructure to support new developments can be costly, and in
some cases, uneconomical for private developers. That is why it can often act as a
bottleneck preventing new supply from coming on the market. To overcome this barrier to
new housing, the Housing Support Program will offer state and local governments
$500 million to develop the infrastructure required to enable new homes to be built (for
example, connecting sewerage and water and roads). This will be boosted by an additional
$1 billion made available in this Budget to states and territories to deliver enabling
infrastructure, taking the Government’s total investment in the Housing Support Program
to $1.5 billion.
The Australian Government has committed $3 billion in incentive payments to help deliver
the 1.2 million new homes target through the New Homes Bonus. This will give states and
territories greater financial capacity to fund changes to planning and zoning systems as
well as support the land release programs needed to reach the target.
Improving the planning system so it facilitates more homes will also be progressed through
the National Planning Reform Blueprint (the Blueprint). The Blueprint brings planning
ministers together to progress 17 reforms to deliver more homes. These include:
• Streamlining development approvals.
• Identifying well-located development ready land.
Budget Paper No. 1 |
Statement 4: Meeting Australia's Housing Challenge | Page 151
• Increasing density in target areas.
• Identifying how housing can be built faster on sites with development approval but
where development has not commenced (i.e. activating ‘zombie’ approvals).
• Ensuring that state, regional and local strategic plans reflect their share of the national
1.2 million new homes target.
Planning ministers will report on their progress in implementing the Blueprint twice a year
to National Cabinet.
The structural barriers to new homes will not be overcome unless the skills and labour
shortages are addressed. That is why the Government is investing $88.8 million to grow the
pipeline of construction workers through 20,000 additional fee-free TAFE and
pre-apprenticeship places. This is in addition to the more than 355,000 fee-free TAFE places
already delivered in 2023, of which 24,200 were in the construction sector. The Government
will also provide $1.8 million to deliver streamlined skills assessments for around 1,900
migrants from comparable countries to work in Australia’s housing construction industry.
The Government will implement regulatory requirements to ensure universities deliver
more purpose-built student accommodation (PBSA). This will increase the level of
housing supply and help to ensure that increases in international student numbers do not
put pressure on the domestic housing market. Following consultation with the sector, the
Government will set limits for how many international students can be enrolled by each
university based on factors including how much student accommodation they provide. The
Government will require universities to establish new, purpose-built student
accommodation should they wish to increase their international student enrolments above
their initial allocation. Any new accommodation built will be available to both local and
international students. This reform will build more student housing, reduce pressure on
house prices and rents in our cities and ensure universities continue to benefit from the
overseas student market.
Deliver the biggest investment in social and affordable housing in a
decade
The Government has been working to address the long-term decline in the delivery of
social and affordable housing and to increase support for vulnerable Australians, including
women and children leaving family and domestic violence. This would increase the stock
of social and affordable housing by over 12 per cent from 2022 levels. It is a significant
investment and would mean that the Government would be adding one new social and
affordable home for every eight currently available. This would also be the equivalent of
adding a city the size of Darwin to Australia’s housing stock.
| Budget Paper No. 1
Page 152 | Statement 4: Meeting Australia's Housing Challenge
The Government’s investment will help to overcome the liquidity challenges some
construction firms are facing because of the current cyclical downturn in residential
building approvals. It will also help to reduce demand at the lower end of the private rental
market, which will help to reduce the pressures that some other renters are feeling because
of the current low rental vacancy rates.
Central to the Government’s plan to deliver more social and affordable housing is the
$10 billion Housing Australia Future Fund (HAFF), which seeks to deliver 30,000 new
social and affordable homes over its first five years. Disbursements from the HAFF will
also be used to deliver the Government’s commitments to help address acute housing
needs. This includes $200 million for the repair, maintenance and improvement of housing
in remote Indigenous communities, $100 million for crisis and transitional housing options
for women and children impacted by family and domestic violence and for older women at
risk of homelessness, and $30 million for veterans who are experiencing or are at risk of
homelessness.
This will be supported by the National Housing Accord. In addition to the actions being
progressed to increase supply, the Government has agreed to deliver 10,000 affordable
homes under the National Housing Accord, which will be matched by states and territories.
This Budget provides additional concessional financing of up to $1.9 billion for
community housing providers and other charities to support delivery of new social and
affordable dwellings under the HAFF and the National Housing Accord.
The Government will supplement these initiatives by enhancing the programs
administered by Housing Australia that provide concessional financing arrangements to
facilitate the delivery of more social and affordable homes. This includes an additional
$1 billion for the National Housing Infrastructure Facility (NHIF), which will be targeted
towards crisis and transitional housing for women and children experiencing domestic
violence and youth. The NHIF provides concessional loans and grants for eligible housing
enabling infrastructure and social and affordable housing. This assistance is also part of the
Government’s plan to provide shelter for people in crisis.
The Government is also expanding the Affordable Housing Bond Aggregator by
increasing Housing Australia’s liability cap to $10 billion from $5.5 billion and lending an
additional $3 billion to Housing Australia to support ongoing delivery of the program.
These initiatives will be supplemented by existing Housing Australia programs that
provide concessional finance to support more social and affordable homes.
The Government has provided states and territories with $2 billion through the Social
Housing Accelerator Payment. It will deliver around 4,000 new and refurbished social
homes.
As part of the $4 billion, 10-year Northern Territory Homelands and Housing package, the
Australian and Northern Territory Governments are working towards a commitment to
halve overcrowding in the Northern Territory from 55 per cent to 23 per cent by 2034. The
Budget Paper No. 1 |
Statement 4: Meeting Australia's Housing Challenge | Page 153
investment package will deliver up to 270 homes each year and continue urgent repairs
and maintenance of existing housing and essential infrastructure on homelands.
The Government is also spending $7 million to support building and construction industry
firms to gain Work Health and Safety (WHS) accreditation and $6.2 million to support
building industry peak employer associations to assist their members in gaining the WHS
accreditation required to participate in Government-funded housing projects.
Provide more support to renters
While new housing supply is being brought online, affordability pressures are likely to
remain a challenge for many Australians who are renting or looking to rent. The
Government recognises that many renters are under pressure and that rising rents are
causing hardship for some Australians and pushing some into insecure housing
arrangements. The Government is committed to providing more support to the third of
Australians who rent. This is being delivered through greater levels of financial assistance,
working with states and territories to deliver stronger protections for renters and
facilitating the supply of new rental housing.
As part of the Government’s broader responsible and affordable cost-of-living relief
package, Commonwealth Rent Assistance (CRA) is increasing by 10 per cent in this
Budget. Taken alongside the increases in last year’s Budget and indexation, this will
increase the maximum rates of assistance by over 40 per cent. Outside of regular
indexation, the 2023–24 Budget and 2024–25 Budget CRA increases are the first
back-to-back increases to maximum rates of CRA in three decades. It is also higher than the
average increase in market rents in this period. It will provide eligible renters with greater
opportunities to participate in the private rental market.
Low rental vacancy rates are posing unique challenges for renters. In addition to being
harder to find a suitable place and placing upward pressures on prices, it limits tenants’
bargaining power with landlords. In recognition of these unique challenges, the
Government is working with states and territories to strengthen renters’ rights through the
Better Deal for Renters package. As part of this package, all levels of government have
agreed to implement a 9-point plan that includes:
• Developing a nationally consistent policy to implement a requirement for genuine
reasonable grounds for eviction.
• Moving towards limiting rent increases to once a year.
• Phasing in minimum rental standards.
In addition to the broader supply measures the Government is pursuing, the Government
has a plan to increase the supply of specialist rental accommodation. This will help to
moderate affordability pressures and introduced more equilibrium between renters and
landlords.
| Budget Paper No. 1
Page 154 | Statement 4: Meeting Australia's Housing Challenge
Build-to-rent accommodation is designed to be supplied exclusively to the rental market.
This model, which is much more common in overseas market, is less prevalent in Australia
where most new developments are build-to-sell properties (i.e. they are built and sold to
investors or owner-occupiers). To encourage more build-to-rent developments, the
Government will introduce legislation to offer concessional tax treatment for these
developments.
The build-to-rent incentives includes halving the managed investment trust withholding
tax rate from 30 per cent to 15 per cent and increasing the capital works tax deduction
(depreciation) rate from 2.5 to 4 per cent per year for newly constructed build-to-rent
properties. Analysis commissioned by the Property Council of Australia suggest this could
unlock 150,000 apartments over the next decade.
35
The Government has also lowered
foreign investment application fees for new Build to Rent developments and will also allow
foreign investors to purchase established Build to Rent developments and apply lower fees
to these applications, conditional on the property continuing to be operated as a Build to
Rent development.
Help Australians buy their own homes
The Government recognises that affordability pressures are being felt by people seeking to
transition from renting into home ownership. Rising house prices have led to rising
deposits. This means more Australians are renting for longer, increasing pressure on the
already constrained rental market. It is harder for people to save enough to clear the
deposit hurdle and seek the finance necessary to enter home ownership.
To help overcome this challenge, the Government offers potential home buyers the Home
Guarantee Scheme (the Scheme). It gives prospective home buyers support to purchase a
home sooner by reducing the deposit they need to save to buy a house. Participants can
access the Scheme with a deposit as little as 2 per cent. Around one in three first
homebuyers in 2022–23 were supported by the Scheme.
The First Home Guarantee component of the Scheme was heavily subscribed by teachers
(32 per cent of recipients), nurses (24 per cent of recipients) and social workers (19 per cent
of recipients).
Since May 2022, the Scheme has already supported more than 110,000 Australians into
home ownership and with an expansion to the eligibility of the Scheme this will continue to
grow.
But the Government wants more renters who wish to transition to home ownership to have
the opportunity to do so. That is why the government has introduced legislation to
establish Help to Buy. Help to Buy will support up to 40,000 eligible households to
purchase a home by providing them an equity contribution of up to 40 per cent of the
purchase price for new homes and 30 per cent for existing homes. Participants would also
—
35
EY (April 2023), ‘A new form of housing supply in Australia: build-to-rent housing’,
prepared for Property Council of Australia, p. 8
Budget Paper No. 1 |
Statement 4: Meeting Australia's Housing Challenge | Page 155
not be required to pay Lenders Mortgage Insurance, as the equity contribution and their
deposit would decrease the loan to value ratio to 80 per cent or below.
Double dedicated homelessness funding and provide shelter for people
in crisis
The Government is taking action to support people experiencing homelessness and help
people in crisis who are finding it difficult to access shelter and safety, including women
and children fleeing domestic violence, veterans, and youth.
The Government has included $9.3 billion in the Budget for a new National Agreement on
Social Housing and Homelessness with the states and territories. This includes a doubling
of the Australian Government’s dedicated homelessness funding to $400 million a year.
Further support will be provided through the additional $1 billion for the National
Housing Infrastructure Facility (NHIF), which will be targeted towards crisis and
transitional housing for women and children experiencing domestic violence and youth.
The NHIF provides concessional loans and grants for eligible housing enabling
infrastructure and social and affordable housing. This assistance is also part of the
Government’s plan to deliver more social and affordable homes.
The Safe Places program provides capital works grants to support the renovation, building
or purchase of new emergency accommodation for women and children experiencing
family and domestic violence. The Safe Places inclusion round grant opportunity will
provide up to 720 new safe places, bringing the total number of safe places to be delivered
by the program to around 1,480 across Australia. Projects are expected to commence from
mid–2024.
| Budget Paper No. 1
Page 156 | Statement 4: Meeting Australia's Housing Challenge
Australian Government housing measures since May 2022
Measure
Description
New Commitments
Impact
2024-25 Budget Measures
Removing barriers preventing new homes being built
Housing Support Program –
additional funding for enabling
infrastructure (linked to later
Housing Support Program
measure)
Additional funding for states and territories to deliver
more housing-enabling infrastructure.
$1 billion (in 2023-24)
Will support the supply of new homes
through delivering enabling infrastructure
earlier.
Skilling the construction
workforce to support housing
supply
Additional funding to develop the future construction
workforce, with a focus on additional training and
incentives.
$88.8 million (over
three years from
2024-25)
Will build the pipeline of critical skills in
the construction sector.
Increasing the availability of
purpose-built student
accommodation
As part of the response to the Australian
Universities Accord, the Government will work with
universities to increase the availability of student
housing, by limiting international student enrolments
based on factors including how much student
accommodation they provide.
$2.1 million over four
years from 2024-25
Will ensure better provision of student
accommodation and help reduce
pressure on local housing markets.
National Housing Accord –
Commonwealth land release
The Government will undertake feasibility studies on
a number of surplus Commonwealth-owned land
holdings to determine their suitability for release as
housing to support the 1.2 million new, well located
homes target under the Accord.
Nil
Subject to findings of the feasibility
studies, will support delivery of new
housing to meet the Accord’s housing
supply target.
Delivering more social and affordable homes for those who need them
National Agreement on Social
Housing and Homelessness
Under the new National Agreement on Social
Housing and Homelessness, the states and
territories will receive $9.3 billion over five years.
The new agreement provides $423.1 million in
additional funding.
$423.1 million (over
five years from
2024-25) in additional
funding.
Total funding of
$9.3 billion over
five years from
2024-25
The new agreement is outcomes-focused
and will enhance support for social
housing and homelessness services, in
conjunction with other investments by
both Commonwealth and state
governments.
Budget Paper No. 1 |
Statement 4: Meeting Australia's Housing Challenge
| Page 157
Statement 4: Meeting Australia's Housing Challenge
| Page 157
Measure
Description
New Commitments
Impact
Housing Australia Future Fund
and National Housing Accord –
additional finance – concessional
Commonwealth loans
Provide additional concessional financing of up to
$1.9 billion for community housing providers and
other charities to support the delivery of new homes
under the HAFF and Accord.
$1.9 billion (up to)
Will support delivery of the 40,000 social
and affordable homes the Government
committed to under the Housing Australia
Future Fund and Accord.
Capacity building support for the
social and affordable housing
sector
Support to build the capacity of Community Housing
Providers and Aboriginal and Torres Strait Islander
Community Controlled Housing Organisations to
enable them to better engage with available support
and improve their delivery of new housing
$2 million (over
three years from
2024-25)
Supports eligible organisations to better
engage with available support.
Expanding the Affordable Housing
Bond Aggregator to support
Community Housing Providers
Building on the previous increase, a $2.5 billion
increase in the liability cap on the Commonwealth
guarantee of Housing Australia’s liabilities to
$10 billion and a $3 billion increase in Housing
Australia’s line of credit.
Increased
Commonwealth
balance sheet support
for the lending
program
Continues Housing Australia’s support to
Community Housing Providers through
provision of low-cost financing.
10-year Northern Territory
Housing and Homelands
Agreement
10-year Agreement to fund delivery of housing and
property and tenancy management measures in
remote communities when the current one-year NT
Remote Housing FFA schedule expires.
$698.4 million (over
four years from
2024-25 and $2 billion
over ten years)
Deliver up to 270 houses a year to
reduce the proportion of overcrowded
dwellings.
Remote Housing Northern
Territory Federation Funding
Agreement
Deliver an additional 49 houses under the existing
Remote Housing Northern Territory Federation
Funding Agreement, in partnership with and jointly
funded by the Northern Territory Government,
delivering a total of 206 houses under the one-year
agreement
$20 million in 2023-24
Deliver an additional 49 houses in the
current financial year to reduce
overcrowding
Northern Territory Homelands
funding extension
Funding to continue the delivery of urgent repairs
and maintenance of existing housing and essential
infrastructure through an extension of the Northern
Territory Homelands Federation Funding Agreement
$120 million (over
three years from
2024-25)
Will enable an increase in housing supply
in remote homelands in the Northern
Territory.
Community-controlled housing
model development
Work to develop a sustainable
Community-controlled housing model.
$1 million (over
two years from
2024-25)
Will enable an increase in housing
supply.
Targeted assistance to residential
builders seeking WHS
accreditation
Provide targeted assistance to residential builders
seeking to obtain accreditation under the Work
Health and Safety Accreditation Scheme
$7 million (over three
years from 2023–24)
Increased availability of accredited
builders will support delivery of
Government-funded housing projects
| Budget Paper No. 1
Page 158 | Statement 4: Meeting Australia's Housing Challenge
Measure
Description
New Commitments
Impact
Grants to building industry peak
employer associations to assist
residential builders seeking WHS
accreditation
Support for building industry peak employer
associations to assist residential builders in
obtaining accreditation under the Work Health and
Safety Accreditation Scheme
$6.2 million (over two
years from 2024–25)
Increased availability of accredited
builders will support delivery of
Government-funded housing projects
Delivering more support to renters
Commonwealth Rent Assistance
– 10 per cent increase
An increase of 10 per cent in the maximum rates of
Commonwealth Rent Assistance, to be provided
from September 2024.
$1.9 billion (over
five years from 2023–
24)
This measure has an
ongoing cost.
Will provide additional payments to
nearly one million households to help
meet the costs of renting.
Other measures
Improved housing policy,
research and data
Additional support for the Australian Housing and
Urban Research Institute and for the Treasury to
continue its work supporting development of
evidence-based housing policy.
$20.8 million (over five
years from 2024-25)
Enables provision of evidence-based
policy advice to examine existing policies
and develop new interventions to
improve housing outcomes.
Other new measures since the May 2022 election
Removing barriers preventing new homes being built
National Housing Accord –
incentives to meet supply target
(New Homes Bonus)
A performance-based payment for states and
territories that exceed their share of the original
1 million well-located homes target agreed under
the National Housing Accord.
$3 billion (payable
after 2028-29)
Will support the delivery of an additional
200,000 homes above the initial National
Housing Accord target of 1 million
homes.
National Housing Accord –
Housing Support Program
Competitive funding program for local and state
governments for initiatives such as connecting
essential services, amenities to support new
housing development, or building planning
capability.
$500 million (over two
years from 2023-24)
Will support the supply of new homes.
National Housing Accord –
National Planning Reform
Blueprint
National Cabinet agreed to a National Planning
Reform Blueprint with planning, zoning, land release
and other measures to improve housing supply and
affordability.
Nil
Planning, zoning and land release reform
will enable an increase in the supply of
housing.
Budget Paper No. 1 |
Statement 4: Meeting Australia's Housing Challenge
| Page 159
Statement 4: Meeting Australia's Housing Challenge
| Page 159
Measure
Description
New Commitments
Impact
Delivering more social and affordable homes for those who need them
National Housing Accord –
affordable homes commitment
10,000 affordable homes over five years from 2024 –
states and territories will support the delivery of up to
an additional 10,000 affordable homes.
Original allocation of
$350 million, updated
to an initial $72 million
a year by 2028–29,
indexed from 2029–
30.
Will support the delivery of up to 20,000
new affordable homes.
National Housing Infrastructure
Facility (NHIF)*
Since November 2022, the NHIF can support new
social or affordable housing projects. In
September 2023, the Government committed an
additional $1 billion in federal funding which will
support housing for women and children
experiencing domestic violence and youths.
$1 billion (from
2023-24)
Expanding the role of the NHIF will
support the supply of new affordable
and social homes. The additional
$1 billion will support additional housing
for women and children leaving
domestic violence; and youth.
Social Housing Accelerator
A one-off payment to states and territories to
permanently increase the stock of social housing
across the country.
$2 billion (in 2022-23)
Will support the delivery of around
4,000 new and refurbished social
homes.
Housing Australia Future Fund
The Government established the $10 billion Housing
Australia Future Fund (HAFF) to provide a
sustainable funding source to increase the supply of
social and affordable housing and to address other
acute housing needs.
$10 billion
Will support the delivery of 30,000
social and affordable homes over five
years and will provide $330 million to
address acute housing needs.
Affordable Housing Bond
Aggregator
The cap on the Government guarantee of Housing
Australia’s liabilities was increased by $2 billion to
$7.5 billion in the 2023-24 Budget to provide lower
cost and longer-term finance to community housing
providers through the Affordable Housing Bond
Aggregator. These loans can be used to acquire,
construct, or maintain social and affordable housing,
as well as to refinance existing debt.
Increased
Commonwealth
balance sheet support
for the lending
program
Will support the ongoing delivery of the
program to provide long-term and
low-cost finance to community housing
providers.
National Housing and
Homelessness Agreement –
Transitional Funding
The 1-year extension to the National Housing and
Homelessness Agreement provides around
$1.7 billion to states and territories to 30 June 2024.
This includes additional funding of $67.5 million in
2023 24 to support states to meet the homelessness
challenges identified in the 2021 Census.
$67.5 million (for
2023-24)
The National Housing and
Homelessness Agreement contributes
to improving access to affordable, safe
and sustainable housing across the
housing spectrum, including to prevent
and address homelessness, and to
support social and economic
participation.
| Budget Paper No. 1
Page 160 | Statement 4: Meeting Australia's Housing Challenge
Measure
Description
New Commitments
Impact
Northern Territory Remote
Housing Partnership
A 1-year partnership over 2023–24 with the Northern
Territory Government to accelerate building of new
remote housing to reduce overcrowding.
$111.7 million (for
2023-24)
Will increase housing supply in remote
communities in the Northern Territory
and support the delivery of 157 homes
Restoring funding for Homelands
For housing and essential infrastructure in the
Northern Territory Homelands, delivered through a
new federal financial agreement with the Northern
Territory Government.
$100 million (over
two years from
2022-23)
Will enable an increase in housing
supply in remote homelands in the
Northern Territory.
Delivering more support to renters
Commonwealth Rent Assistance –
15 per cent increase
An increase to the maximum rates of
Commonwealth Rent Assistance, payable from
September 2023.
$2.7 billion (over
5 years from 2022-23)
This measure has an
ongoing cost.
Benefits around 1 million households.
A Better Deal for Renters
National Cabinet agreed to A Better Deal for Renters
to harmonise and strengthen renters’ rights across
Australia.
Nil
A Better Deal for Renters will make a
tangible impact on the rights of the
almost one-third of Australians who
rent.
Build to Rent tax incentives
Tax incentives to encourage more Build to Rent
developments. Includes halving the managed
investment trust withholding tax rate from
30 per cent to 15 per cent and increasing the capital
works tax deduction (depreciation) rate from 2.5 to
4 per cent a year for newly constructed Build to Rent
properties.
$34.3 million (over five
years from 2022-23)
Will incentivise Build to Rent
developments to increase the supply of
rental housing in Australia. Analysis
commissioned by the Property Council
of Australia suggests this could unlock
150,000 apartments over the next
decade.
Foreign investment in Build to
Rent
The Government has lowered foreign investment
application fees for new Build to Rent developments.
The Government will also allow foreign investors to
purchase established Build to Rent developments
and apply lower fees to these applications,
conditional on the property continuing to be operated
as a Build to Rent development.
Nil
Additional foreign investment in Build to
Rent developments will encourage the
construction of Build to Rent
developments.
Budget Paper No. 1 |
Statement 4: Meeting Australia's Housing Challenge
| Page 161
Statement 4: Meeting Australia's Housing Challenge
| Page 161
Measure
Description
New Commitments
Impact
Helping low- and middle-income Australians into home ownership
Help to Buy
Help to Buy will assist people on low to moderate
incomes to purchase a home with an equity
contribution from the Government of up to 40% for
new homes and 30% for existing homes.
$5.5 billion (from
2024-25)
Will assist up to 40,000 Australian
households to purchase a home.
Home Guarantee Scheme
As part of the Home Guarantee Scheme, the
Government has introduced the Regional First Home
Buyer Guarantee and broadened eligibility criteria to
support eligible citizens and permanent residents to
purchase their first home, or their first property in
Australia for at least ten years.
Nil
The Home Guarantee scheme is
improving affordability of home
ownership for up to 50,000 Australian
households each year.
Double dedicated homelessness funding and provide shelter for people in crisis
National Agreement on Social
Housing and Homelessness*
Under the new National Agreement on Social
Housing and Homelessness, the states and
territories will receive $9.3 billion over five years. The
new agreement provides $423.1 million in additional
funding.
$423.1 million (over
five years from
2024-25) in additional
funding.
Total funding of
$9.3 billion over five
years from 2024-25
The new agreement is
outcomes-focused and will enhance
support for social housing and
homelessness services, in conjunction
with other investments by both
Commonwealth and state
governments.
National Housing Infrastructure
Facility (NHIF)*
Since November 2022, the NHIF can support new
social or affordable housing projects. In
September 2023, the Government committed an
additional $1 billion in federal funding which will
support housing for women and children
experiencing domestic violence and youths.
$1 billion (from
2023-24)
Expanding the role of the NHIF will
support the supply of new affordable
and social homes. The additional
$1 billion will support additional housing
for housing for women and children
leaving domestic violence; and youth.
| Budget Paper No. 1
Page 162 | Statement 4: Meeting Australia's Housing Challenge
Measure
Description
New Commitments
Impact
Other measures
National Housing and
Homelessness Plan
The Government has committed funding for the
development, monitoring and evaluation of a
National Housing and Homelessness Plan. The
National Housing and Homelessness Plan is being
developed in association with states and territories,
industry bodies and not-for-profit organisations to
identify short, medium and long-term reforms to
improve housing and homelessness outcomes.
$38.6 million
The National Housing and Homeless
Plan will outline a shared vision to
inform future housing and
homelessness policy in Australia.
Note: Funding represents costs to
develop the Plan.
National Housing Supply and
Affordability Council
The National Housing Supply and Affordability
Council (the Council) has been established to
provide independent, evidence-based expert advice
to the Government on housing supply and
affordability matters.
$15.2 million (from
2022-23)
This measure has an
ongoing cost of
$4.4 million a year
from 2026-27.
The Council advises on national
housing policy matters at the request of
the Minister for Housing and on its own
initiative.
Improved support for
Commonwealth policy making –
Treasury funding
Funding to support development of dedicated
capability in the Treasury to better support delivery
of the Government’s housing agenda.
$2.3 million (in
2023-24)
Improved capacity to develop and
implement the Government’s ambitious
policy agenda.
*Note: these measures are also counted elsewhere in the table.
+
Statement 5: Revenue | Page 163
Statement 5:
Revenue
The upgrades to receipts in this Budget are much smaller than recent budget upgrades, at
around a fifth of the average of the previous three Budgets. This Budget sees tax receipts
excluding GST and policy decisions, increasing since MYEFO by $8.2 billion in 2024–25 and
$27.0 billion over the forward estimates period.
Higher employment and continuing strength in the labour market is a key driver of
upgrades, accounting for $21.6 billion of the net $27.0 billion upgrade to tax receipts since
MYEFO. Higher corporate profits make a broadly similar contribution to the upgrade to tax
receipts. These have been partly offset by a weaker than expected outlook for tobacco excise
and superannuation fund earnings.
The revenue outlook continues to be exposed to underlying economic risks. The global
economic outlook is uncertain, posing considerable risks for exports and global commodity
prices. There is also uncertainty around the responsiveness of household consumption and
the labour market to evolving economic conditions.
The Government has legislated tax cuts for all 13.6 million Australian taxpayers from
1 July 2024 to provide cost-of-living relief, return bracket creep and boost labour supply.
The Government is also implementing production tax incentives to accelerate investment in
Future Made in Australia priority industries and reforms to enhance tax system compliance
and integrity.
Policy decisions taken since MYEFO increase tax receipts by $1.7 billion in 2024–25 and
$4.9 billion over the five years from 2023–24 to 2027–28.
Statement 5: Revenue | Page 165
Statement contents
Overview .................................................................................................................... 167
Tax receipts outlook .................................................................................................................. 168
Variations in receipts estimates .............................................................................. 172
Tax receipts estimates .............................................................................................................. 172
Non–tax receipts estimates ....................................................................................................... 179
Variations in revenue estimates .............................................................................. 183
Appendix A: Tax Expenditures ................................................................................ 186
Statement 5: Revenue | Page 167
Statement 5: Revenue
Overview
Since MYEFO, tax receipts excluding GST and policy decisions have been revised up by
$27.0 billion over the five years from 2023–24 to 2027–28, mainly reflecting higher personal
income tax and company tax. The upgrades to receipts in this Budget are much smaller
than recent budget updates, at around a fifth of the average of the previous three Budgets.
Higher employment and continuing strength in the labour market is a key driver of
upgrades, accounting for $21.6 billion of the net $27.0 billion upgrade to tax receipts since
MYEFO. Higher corporate profits make a broadly similar contribution to the upgrade to tax
receipts. These have been partly offset by a weaker than expected outlook for tobacco excise
and superannuation fund earnings.
Policy decisions are expected to increase tax receipts by $4.9 billion over the five years
to 2027–28. An overview of key receipts measures is provided in this statement, with
detailed information on all receipts policy decisions in Budget Statement 1 and
Budget Paper No. 2.
Since MYEFO, non-tax receipts are expected to decrease by $1.3 billion in 2024–25 and
increase by $8.8 billion over the five years from 2023–24 to 2027–28.
Table 5.1: Australian Government general government receipts
 
Actual
Estimates
2022-23
2023-24
2024-25
2025-26
2026-27
2027-28
$b
$b
$b
$b
$b
$b
Total taxation receipts ($b)
601.3
638.8
642.5
661.6
702.3
742.3
Growth on previous year (%)
12.1
6.2
0.6
3.0
6.2
5.7
Per cent of GDP
23.5
23.8
23.3
23.1
23.2
23.3
 
 
Tax receipts excluding GST ($b)
520.0
553.1
555.0
569.4
604.5
639.0
Growth on previous year (%)
12.3
6.4
0.3
2.6
6.2
5.7
Per cent of GDP
20.3
20.6
20.1
19.8
20.0
20.1
Non-taxation receipts ($b)
48.2
53.6
55.9
57.8
57.7
59.5
Growth on previous year (%)
0.8
11.2
4.4
3.3
-0.1
3.1
Per cent of GDP
1.9
2.0
2.0
2.0
1.9
1.9
Total receipts ($b)
649.5
692.3
698.4
719.4
760.0
801.8
Growth on previous year (%)
11.1
6.6
0.9
3.0
5.7
5.5
Per cent of GDP
25.3
25.8
25.3
25.1
25.1
25.2
| Budget Paper No. 1
Page 168 | Statement 5: Revenue
Tax receipts outlook
Relative to MYEFO, tax receipts are forecast to be $9.0 billion (or 1.4 per cent) higher in
2024–25, and $26.0 billion (or 0.8 per cent) higher over the five years from 2023–24 to
2027–28. Over half of this upgrade is in the first two years of the forward estimates. This
upgrade reflects a stronger outlook for personal income tax and company tax, partly offset
by a weaker outlook for superannuation fund tax, tobacco excise and GST receipts. The
upgrade since MYEFO is driven by continuing strength in the labour market and corporate
profits.
Personal income taxes have been revised up by $8.0 billion in 2024–25 and $26.0 billion over
the five years from 2023–24 to 2027–28. This principally reflects strength in tax withholding
from salary and wages, supported by a higher level of employment. Relative to MYEFO
employment reaches a higher level sooner, with smaller expected upgrades by the end of
the forward estimates.
Company tax has been revised up by $5.5 billion in 2024–25 and $26.2 billion over the five
years from 2023–24 to 2027–28. Strong corporate profits, including from iron ore and coal
prices in late 2023 and the very early part of 2024 exceeding those assumed in MYEFO and
robust demand, contribute to an upgraded company tax outlook. The stronger company tax
outlook includes additional tax from resource companies that made significant payments
when lodging their tax returns last year, after previously being in a tax loss position, owing
to significant past investments.
Superannuation fund taxes have been revised down by $3.4 billion in 2024–25 and
$12.6 billion over the five years from 2023–24 to 2027–28 reflecting lower-than-expected
collections to date in 2023–24 and a weaker outlook for tax from earnings on investments.
Lower-than-expected collections of tobacco excise in 2023–24 coupled with a weaker
forecast level of tobacco consumption contribute to a downgrade to tobacco excise receipts
of $1.7 billion in 2024–25 and $12.5 billion over the five years from 2023–24 to 2027–28.
GST receipts have been revised down by $919.4 million in 2024–25 and $5.5 billion over the
five years from 2023–24 to 2027–28. This is consistent with the outlook for nominal
consumption subject to GST, which has been downgraded since MYEFO owing to weaker
discretionary consumption.
Policy decisions in this Budget focus on reforms to provide cost-of-living relief, support
investment, promote integrity and tackle fraud. Policy decisions taken since MYEFO
increase tax receipts by $1.7 billion in 2024–25 and $4.9 billion over the five years from
2023–24 to 2027–28. Key policy decisions include:
• Personal Income Tax – Cost of Living Tax Cuts
• Strengthening Tax Compliance – extending the Shadow Economy Compliance Program
• Strengthening Tax Compliance – extending the Tax Avoidance Taskforce
Budget Paper No. 1 |
Statement 5: Revenue | Page 169
• Strengthening the foreign resident capital gains tax regime
• Small Business Support – $20,000 instant asset write-off.
In addition to these measures the Government has announced production tax incentives to
accelerate investment in Future Made in Australia priority industries. While delivered
through the tax system, these tax credits are treated as expenses for budget purposes.
For more details on policy decisions, see Budget Statement 1 and Budget Paper No. 2.
| Budget Paper No. 1
Page 170 | Statement 5: Revenue
Box 5.1 Growth in incomes driving personal income tax
The resilient labour market, which has resulted in stronger wage and employment
growth, is contributing to a rise in personal income tax that is expected to be $67 billion
(26 per cent) higher on a receipts basis and $57 billion (20 per cent) on an income year
basis in 2024–25 than 2021–22. Two thirds of the increase in 2024–25 relative to 2021–22 is
driven by strong expected growth in incomes, while around a quarter is due to tax filer
population growth (Chart 5.1). The impact of bracket creep is much smaller, accounting
for less than 10 per cent of the forecast increase in 2024–25. Without the Government’s
cost-of-living tax cuts, increases in average tax rates including bracket creep would have
contributed to a third of the personal income tax increase in 2024–25 relative to 2021–22.
Growth in personal income tax is determined by the number of tax filers (driven by
growth in population and employment), income growth, increases in average tax rates
(often referred to as bracket creep) and changes in tax policy. Chart 5.1 decomposes the
growth in personal income tax into those components.
Chart 5.1: Drivers of growth in personal income tax compared to 2021–22
(income year basis)
0
10
20
30
40
50
60
70
80
90
2022-23 2023-24 2024-25
$b
Average income growth
Grow th in tax filer population
Bracket creep and policy changes
(dashed is bracket creep reduced by cost-of-living tax cuts)
Source: Treasury.
Note: Growth in the number of tax filers reflects a combination of population growth, labour force
participation and other economic factors that affect the number of individuals earning income. Growth in
average incomes includes the effect of growth in nominal wages and non-employment incomes, including
capital gains, business income and dividend income. Bracket creep reflects the increase in the average
tax rate due to income growth, as individuals pay a decreasing share of their income at lower marginal tax
rates, and includes the effect of policy changes.
The chart is prepared on an income year basis, which differs from tax receipts due to differences in when
tax is incurred compared to when paid.
Continued on next page
Budget Paper No. 1 |
Statement 5: Revenue | Page 171
Box 5.1 Growth in incomes driving personal income tax (continued)
Growth in average incomes is expected to be the largest driver of growth in personal
income tax, accounting for two thirds of the forecast rise in 2024–25. The average
income per tax filer is expected to increase from $71,000 in 2021–22 to $80,000 in
2024–25, which would contribute an additional $36 billion in income tax by 2024–25
with constant average tax rates. Growth in average incomes is broad-based over this
period for workers, business owners and retirees, with growth in incomes being
concentrated in salary and wages income, business income, and interest income.
Continuing employment and population growth, which increases the number of tax
filers, is expected to account for around a quarter of the forecast rise in personal
income taxes in 2024–25. The 6 per cent increase in tax filers, primarily from strong
employment growth, contributes a further $16 billion in income tax in 2024–25. The
vast majority of additional tax filers have been wage and salary earners.
Policy changes significantly reduce the effect of bracket creep in 2024–25, especially
the Government’s cost-of-living tax cuts that will deliver a tax cut to every
Australian taxpayer from 1 July 2024 and reduce the personal income tax take by
$23 billion in 2024–25. This policy change means, that despite continuing to forecast
strength in the labour market, personal income tax receipts are expected to be lower
in 2024–25 than in 2023–24.
| Budget Paper No. 1
Page 172 | Statement 5: Revenue
Variations in receipts estimates
Since MYEFO, total receipts have been revised up by $7.7 billion in 2024–25 and
$31.8 billion over the five years from 2023–24 to 2027–28. Table 5.2 reconciles the
2024–25 Budget estimates of total receipts with the 2023–24 Budget and MYEFO.
Table 5.2: Reconciliation of Australian Government general government receipts
estimates from the 2023–24 MYEFO and 2023–24 Budget
Estimates
 
 
2023-24
2024-25
2025-26
2026-27
2027-28
Total
 
$m
$m
$m
$m
$m
$m
Receipts at 2023-24 Budget
668,142
671,238
700,922
735,118
*
*
Changes from 2023-24 Budget
to 2023-24 MYEFO
Effect of policy decisions
450
255
87
407
*
*
Effect of parameter and other variations
16,674
19,228
10,329
19,851
*
*
Total variations
17,124
19,483
10,416
20,259
*
*
Receipts at 2023-24 MYEFO
685,266
690,721
711,339
755,377
797,385
3,640,087
Changes from 2023-24 MYEFO
to 2024-25 Budget
Effect of policy decisions
136
2,215
-1,000
1,989
4,725
8,064
Effect of parameter and other variations
6,906
5,509
9,015
2,644
-298
23,776
Total variations
7,042
7,725
8,015
4,633
4,427
31,840
Receipts at 2024-25 Budget
692,307
698,446
719,353
760,010
801,811
3,671,927
* Data is not available.
Since MYEFO, parameter and other variations have increased total receipts by $5.5 billion
in 2024–25 and $23.8 billion over the five years from 2023–24 to 2027–28. Policy decisions
increase total receipts by $2.2 billion in 2024–25 and $8.1 billion over the five years from
2023–24 to 2027–28 compared with MYEFO. The upgrade to the forecasts of total receipts
overwhelmingly reflects upgrades to the forecasts of tax receipts.
Tax receipts estimates
Relative to MYEFO, forecasts of tax receipts have been revised up by $9.0 billion in 2024–25
and by $26.0 billion over the five years from 2023–24 to 2027–28.
Table 5.3 reconciles the 2024–25 Budget estimates of tax receipts with the 2023–24 Budget
and MYEFO.
Budget Paper No. 1 |
Statement 5: Revenue | Page 173
Table 5.3: Reconciliation of Australian Government general government tax
receipts estimates from the 2023–24 MYEFO and 2023–24 Budget
Estimates
2023-24
2024-25
2025-26
2026-27
2027-28
Total
$m
$m
$m
$m
$m
$m
Tax receipts at 2023-24 Budget
616,275
614,332
647,846
680,743
*
*
Changes from 2023-24 Budget
to 2023-24 MYEFO
Effect of policy decisions
-7
-644
-902
-665
*
*
Effect of parameter and other variations
16,398
19,854
10,378
19,971
*
*
Total variations
16,391
19,210
9,476
19,306
*
*
Tax receipts at 2023-24 MYEFO
632,666
633,543
657,323
700,049
737,850
3,361,431
Changes from 2023-24 MYEFO
to 2024-25 Budget
Effect of policy decisions
-30
1,669
-1,699
1,161
3,808
4,909
Effect of parameter and other variations
6,114
7,330
5,959
1,068
640
21,111
Total variations
6,084
8,999
4,260
2,229
4,448
26,020
Tax receipts at 2024-25 Budget
638,750
642,542
661,583
702,278
742,299
3,387,451
* Data is not available.
Since MYEFO, parameter and other variations are expected to increase tax receipts by
$7.3 billion in 2024–25 and $21.1 billion over the five years from 2023–24 to 2027–28. Policy
decisions are estimated to increase tax receipts by $1.7 billion in 2024–25 and $4.9 billion
over the five years from 2023–24 to 2027–28 compared with MYEFO.
Chart 5.2: Revisions to total tax
receipts since 2023–24 MYEFO
Chart 5.3: Parameter and other
variations to total tax receipts since
2023–24 MYEFO
-2
0
2
4
6
8
10
2023-24 2024-25 2025-26 2026-27 2027-28
$b
Policy decisions
Parameter and other variations
Total variations
-10
-5
0
5
10
15
2023-24 2024-25 2025-26 2026-27 2027-28
$b
Other GST
Companies Individuals
Total
Source: Treasury.
Source: Treasury.
| Budget Paper No. 1
Page 174 | Statement 5: Revenue
Tax receipts forecasts are based on available information prior to each economic and fiscal
update. Growth in the key economic parameters that influence tax receipts is shown in
Table 5.4.
Table 5.4: Key economic parameters for tax receipts
(a)
Outcomes
Forecasts
2022-23
2023-24
2024-25
2025-26
2026-27
2027-28
Revenue parameters
Nominal gross domestic product
9.9
4 3/4
2 3/4
4
5 1/4
5 1/4
Change since 2023-24 MYEFO
1/2
1/2
- 1/2
1/4
Compensation of employees
(b)
10.1
7 1/2
4 1/4
4 1/4
4 1/2
5 1/4
Change since 2023-24 MYEFO
1/2
1/2
- 1/4
- 3/4
Corporate gross operating surplus
(c)
11.1
-1
-4 3/4
1/4
6
5 1/2
Change since 2023-24 MYEFO
2 1/4
3/4
-2 3/4
2
Non-farm gross mixed income
-1.7
2 1/4
8 3/4
6 1/2
6 1/2
6 1/2
Change since 2023-24 MYEFO
- 1/2
0
- 1/4
3/4
Property income
(d)
21.5
15 3/4
4
3 3/4
6
5 1/4
Change since 2023-24 MYEFO
1 3/4
-2
-2 1/2
3/4
Consumption subject to GST
14.4
2
3 3/4
5 1/4
5
4 3/4
Change since 2023-24 MYEFO
-1 1/2
- 3/4
1/4
0
a) Current prices, per cent change on previous year. Changes since 2023–24 MYEFO are percentage points.
b) Compensation of employees measures total remuneration earned by employees.
c) Corporate gross operating surplus is an Australian System of National Accounts measure of company
profits, gross of depreciation.
d) Property income measures income derived from rent, dividends and interest.
Source: ABS Australian National Accounts: National Income, Expenditure and Product; and Treasury.
Changes in the outlook for individual heads of revenue are explained in more detail below.
Individuals and other withholding taxes
Since MYEFO, total individuals and other withholding tax receipts have been revised up by
$8.0 billion in 2024–25 and $26.0 billion over the five years from 2023–24 to 2027–28.
Individuals and other withholding tax receipts are expected to fall in 2024–25 with delivery
of the Government’s cost-of-living tax cut for every Australian taxpayer.
Excluding new policy decisions, individuals and other withholding tax receipts have been
revised up by $6.7 billion in 2024–25 and $25.1 billion over the five years from 2023–24 to
2027–28.
Income tax withholding (predominantly tax on salary and wages) has been revised up by
$5.8 billion in 2024–25 and $21.6 billion over the five years from 2023–24 to 2027–28
excluding policy decisions. This reflects strength in year-to-date collections, which have
been supported by stronger-than-expected employment growth and a pick-up in wage
growth. In annual terms, the upgrade over the forward estimates peaks in 2025–26
consistent with the forecast moderation of employment growth.
Budget Paper No. 1 |
Statement 5: Revenue | Page 175
Net other individuals (gross other individuals less refunds) has been revised up by
$855.2 million in 2024–25 and up $3.5 billion over the five years from 2023–24 to 2027–28
excluding policy decisions. This largely reflects moderately higher than expected income on
tax returns that boosts receipts in the first part of the forward estimates. This is then
expected to unwind from 2025–26 in line with a weaker outlook for income flowing to
individuals from unincorporated businesses and investments.
New tax policy measures announced since MYEFO are expected to increase individuals
and other withholding tax receipts by $1.3 billion in 2024–25 and $857.7 million over the
five years from 2023–24 to 2027–28.
Fringe benefits tax
Since MYEFO, fringe benefits tax receipts have been revised up by $80.0 million in
2024–25 and $470.0 million over the five years from 2023–24 to 2027–28. This reflects
continuing strength in the labour market.
Company tax
Since MYEFO, company tax receipts have been revised up to be $5.5 billion higher in
2024–25 and $26.2 billion higher over the five years from 2023–24 to 2027–28.
Excluding new policy decisions, company tax has been revised up by $5.6 billion in
2024–25 and $23.8 billion over the five years from 2023–24 to 2027–28.
The upgrade across the forward estimates reflects strong corporate profits flowing through
to higher pay-as-you-go instalments. Mining company profits are relatively unchanged in
aggregate over the forward estimates, with higher commodity prices in the near term offset
by lower export volumes in all years. Despite this, the resources sector contributes to the
company tax upgrade due to large companies moving to a tax paying position after
exhausting prior year losses (see Box 5.2). Strength in company tax receipts in later years of
the forward estimates is also supported by an improved outlook for the non-mining sector.
New tax policy measures announced since MYEFO are expected to decrease company tax
receipts by $68.5 million in 2024–25 but increase company tax receipts by $2.4 billion over
the five years from 2023–24 to 2027–28.
| Budget Paper No. 1
Page 176 | Statement 5: Revenue
Box 5.2 Contribution to company income tax from the oil and gas sector
The mining sector is a significant contributor to company income tax (company tax);
estimated to contribute two-fifths of company tax payable in 2022–23. Mining sector
profits are closely tied to volatile commodity prices, which poses significant
challenges for forecasting near-term company tax receipts. After mining, the next
largest contribution to total company tax is from the finance industry.
Sustained high export prices, particularly in 2022, spiked income for mining
companies, which led to several large oil and gas extraction companies making large
company tax payments on 1 June 2023. In many cases, these companies had never
previously paid company tax, and were not expected to pay any tax in the near term.
Significant capital investments in liquified natural gas (LNG) projects in Australia
were made between 2010 and 2019. LNG projects are highly capital intensive due to
the requirements for processing and liquefaction in addition to field and pipeline
costs. As a result, LNG exporting companies accrued a significant stock of tax losses
that have been carried forward to offset income in later years, which has kept
company tax liabilities low (see Chart 5.4).
However, the unprecedented shock to the global LNG market from the war in Ukraine
caused total income for the oil and gas sector in 2022–23 to increase by 67 per cent. For
some large LNG exporting companies in 2022–23, elevated profits exceeded their stock
of company tax losses. These companies, who were previously expected to
individually enter the tax system over several years, now had significant company tax
liabilities for the 2022–23 income year (see Chart 5.5).
Oil and gas extraction companies
Chart 5.4: Total income, new
investment and company tax losses
0
50
100
150
200
250
2006-07 2014-15 2022-23
$b
Total income
Tax losses carried forward
New investment
Source: Treasury analysis of ATO data.
Chart 5.5: Company tax losses
deducted and company tax payable
0
5
10
15
20
25
2006-07 2014-15 2022-23
$b
Tax losses deducted
Tax payable
Source: Treasury analysis of ATO data.
continued on next page
Budget Paper No. 1 |
Statement 5: Revenue | Page 177
Box 5.2 Contribution to company income tax from the oil and gas sector
(continued)
Based on the current price outlook, these companies are expected to continue paying
company tax given their stock of tax losses has been exhausted, leading to a
sustained increase in the company tax base.
Some of these companies also operate projects subject to the Petroleum Resource
Rent Tax (PRRT) which imposes an additional tax on profits from the sale of offshore
petroleum products. The Government has introduced to Parliament further changes
to the PRRT to deliver a fairer return to the Australian community from the offshore
gas sector, including a cap on the use of deductions. These changes will ensure the
offshore LNG industry pays more tax, sooner, while providing industry and
investors policy certainty to allow the sufficient supply of domestic gas, and
ensuring Australia remains a reliable international energy supplier and investment
partner.
Superannuation fund taxes
Since MYEFO, superannuation fund tax receipts have been revised down by $3.4 billion in
2024–25 and $12.6 billion across the five years from 2023–24 to 2027–28. Excluding new
policy decisions, the downgrade is $3.4 billion in 2024–25 and $12.8 billion over the five
years from 2023–24 to 2027–28.
Superannuation fund taxes have been revised down in 2023–24 in line with weaker fund
earnings and higher-than-expected refunds. Weakness in tax from fund earnings is
expected to persist over the forward estimates, with an updated outlook for net foreign
income, capital gains and foreign exchange gains and losses contributing to the downgrade.
Strength in the labour market drives a partially offsetting improvement to superannuation
contributions taxes, although the extent of this improvement diminishes over the forward
estimates.
New tax policy measures announced since MYEFO are expected to have a negligible
increase to superannuation fund taxes receipts in 2024–25 but increase superannuation
fund taxes receipts by $177.0 million over the five years from 2023–24 to 2027–28.
Petroleum resource rent tax (PRRT)
Since MYEFO, PRRT receipts have been revised up by $400.0 million in 2024–25 and
revised down by $750.0 million over the five years from 2023–24 to 2027–28. The
downgrade over the forward estimates is driven by lower oil prices than assumed at
MYEFO.
The downgrade to PRRT receipts in 2023–24, and subsequent upgrade in 2024–25, reflects
the delay in the passage of legislation for the 2023–24 Budget measure Petroleum Resource
Rent Tax – Government Response to the Review of the PRRT Gas Transfer Pricing arrangement.
| Budget Paper No. 1
Page 178 | Statement 5: Revenue
The first tax payments from this measure are now expected in 2024–25 rather than 2023–24.
This is only a change in timing and does not change the total expected receipts from this
measure of $2.4 billion from 2023–24 to 2026–27.
Goods and services tax (GST)
Since MYEFO, GST receipts have been revised down by $919.4 million in 2024–25 and
$5.5 billion over the five years from 2023–24 to 2027–28.
Excluding new policy decisions, GST has been revised down by $914.4 million in 2024–25
and $5.9 billion over the five years from 2023–24 to 2027–28. GST receipts have been
upgraded in 2023–24 due to stronger-than-expected year-to-date collections. From 2024–25
the downgrade is driven by the lower outlook for nominal consumption subject to GST,
partially offset by higher nominal dwelling investment.
New tax policy measures announced since MYEFO are expected to decrease GST receipts
by $5.0 million in 2024–25 but increase GST receipts by $400.1 million over the five years
from 2023–24 to 2027–28.
Excise and customs duty
Since MYEFO, total excise and customs duty receipts have been revised down by
$1.8 billion in 2024–25 and $11.9 billion over the five years from 2023–24 to 2027–28.
Excluding new policy decisions, excise and customs duty receipts have been revised down
by $1.9 billion in 2024–25 and $11.5 billion over the five years from 2023–24 to 2027–28. This
overwhelmingly reflects the significant downward revision to tobacco excise receipts. This
revision is due to a combination of weaker-than-expected tobacco imports in 2023–24 and a
larger expected decline in tobacco consumption over the forward estimates.
Policy decisions are expected to increase excise and customs duty receipts by $123.3 million
in 2024–25 but decrease by $388.7 million over the five years from 2023–24 to 2027–28. This
is primarily lower fuel excise receipts due to the introduction of a New Vehicle Efficiency
Standard.
The 2024–25 Budget estimates continue to include provision for the Australia European
Union Free Trade Agreement, which has not been finalised. This provision is assumed to
impact customs duty receipts. No other Free Trade Agreements (FTAs) that are currently
under negotiation are expected to have a material impact on revenue over the forward
estimates. A full list of FTAs currently under negotiation is available on the Department of
Foreign Affairs and Trade website.
Other taxes
Other taxes encompass a range of sources of receipts, including visa application charges,
major bank levy, luxury car tax, wine equalisation tax and agricultural levies.
Budget Paper No. 1 |
Statement 5: Revenue | Page 179
Since MYEFO, other tax receipts have been revised up by $1.0 billion in 2024–25 and
$4.1 billion over the five years from 2023–24 to 2027–28. New tax policy measures
announced since MYEFO are expected to decrease other tax receipts by $57.4 million in
2024–25 and $76.4 million over the five years from 2023–24 to 2027–28.
Non–tax receipts estimates
Since MYEFO, non-tax receipts are expected to decrease by $1.3 billion in 2024–25 and
increase by $8.8 billion over the five years from 2023–24 to 2027–28.
Since MYEFO, parameter and other variations are expected to decrease non-tax receipts by
$1.8 billion in 2024–25 and increase non-tax receipts by $5.6 billion over the five years from
2023–24 to 2027–28. This movement is partially driven by the Commonwealth
Superannuation Corporation reprofiling the transfer of funded benefits to the Consolidated
Revenue Fund, earnings from the Future Fund and Australian Government Investment
Funds, and interest on cash deposits. In addition, non-tax receipts have been revised up by
$2.9 billion in 2027–28 to account for the difference between the medium-term projection
methodology at MYEFO and the forward estimate in this Budget. This increase in non-tax
receipts is partially offset by revised assumptions under the Unclaimed Superannuation
Monies program, reflecting less money in unclaimed superannuation accounts and greater
amounts being reunited with active superannuation funds.
Since MYEFO, policy decisions are expected to increase non-tax receipts by $0.5 billion in
2024–25, and by $3.2 billion over the five years from 2023–24 to 2027–28.
| Budget Paper No. 1
Page 180 | Statement 5: Revenue
Table 5.5: Reconciliation of 2023–24 general government (cash) receipts
Estimates
Change on MYEFO
MYEFO
Budget
$m
$m
$m
%
Individuals and other withholding taxes
Gross income tax withholding
291,600
296,000
4,400
1.5
Gross other individuals
73,700
76,100
2,400
3.3
less: Refunds
37,000
37,500
500
1.4
Total individuals and other withholding tax
328,300
334,600
6,300
1.9
Fringe benefits tax
4,270
4,360
90
2.1
Company tax
137,900
142,900
5,000
3.6
Superannuation fund taxes
15,710
11,660
-4,050
-25.8
Petroleum resource rent tax
2,000
1,150
-850
-42.5
Income taxation receipts
488,180
494,670
6,490
1.3
Goods and services tax
84,079
85,758
1,679
2.0
Wine equalisation tax
1,110
1,080
-30
-2.7
Luxury car tax
1,200
1,310
110
9.2
Excise and customs duty
Petrol
6,900
6,950
50
0.7
Diesel
16,130
16,160
30
0.2
Other fuel products
2,260
2,090
-170
-7.5
Tobacco
12,850
10,500
-2,350
-18.3
Beer
2,630
2,630
0
0.0
Spirits
3,370
3,340
-30
-0.9
Other alcoholic beverages(a)
1,680
1,680
0
0.0
Other customs duty
Textiles, clothing and footwear
180
160
-20
-11.1
Passenger motor vehicles
450
380
-70
-15.6
Other imports
1,500
1,490
-10
-0.7
less: Refunds and drawbacks
700
850
150
21.4
Total excise and customs duty
47,250
44,530
-2,720
-5.8
Major Bank Levy
1,600
1,630
30
1.9
Agricultural levies
598
620
22
3.7
Visa application charges
3,232
3,290
58
1.8
Other taxes
5,417
5,862
445
8.2
Indirect taxation receipts
144,486
144,080
-406
-0.3
Taxation receipts
632,666
638,750
6,084
1.0
Sales of goods and services
19,764
19,938
174
0.9
Interest received
8,862
10,404
1,542
17.4
Dividends and distributions
6,936
5,918
-1,018
-14.7
Other non-taxation receipts
17,038
17,297
259
1.5
Non-taxation receipts
52,600
53,557
958
1.8
Total receipts
685,266
692,307
7,042
1.0
Memorandum:
Total excise
29,990
29,940
-50
-0.2
Total customs duty
17,260
14,590
-2,670
-15.5
Capital gains tax(b)
25,000
26,400
1,400
5.6
a) ‘Other alcoholic beverages’ are those not exceeding 10 per cent by volume of alcohol (excluding beer,
brandy and wine).
b) ‘Capital gains tax’ is part of gross other individuals, company tax and superannuation fund taxes.
Budget Paper No. 1 |
Statement 5: Revenue | Page 181
Table 5.6: Reconciliation of 2024–25 general government (cash) receipts
Estimates
Change on MYEFO
MYEFO
Budget
$m
$m
$m
%
Individuals and other withholding taxes
Gross income tax withholding
283,800
290,300
6,500
2.3
Gross other individuals
73,800
76,800
3,000
4.1
less: Refunds
39,100
40,600
1,500
3.8
Total individuals and other withholding tax
318,500
326,500
8,000
2.5
Fringe benefits tax
4,130
4,210
80
1.9
Company tax
133,600
139,100
5,500
4.1
Superannuation fund taxes
23,160
19,810
-3,350
-14.5
Petroleum resource rent tax
2,250
2,650
400
17.8
Income taxation receipts
481,640
492,270
10,630
2.2
Goods and services tax
88,592
87,673
-919
-1.0
Wine equalisation tax
1,160
1,150
-10
-0.9
Luxury car tax
1,100
1,140
40
3.6
Excise and customs duty
Petrol
7,350
7,300
-50
-0.7
Diesel
17,140
17,390
250
1.5
Other fuel products
2,340
2,210
-130
-5.6
Tobacco
13,250
11,550
-1,700
-12.8
Beer
2,790
2,760
-30
-1.1
Spirits
3,580
3,590
10
0.3
Other alcoholic beverages(a)
1,770
1,750
-20
-1.1
Other customs duty
Textiles, clothing and footwear
190
170
-20
-10.5
Passenger motor vehicles
420
380
-40
-9.5
Other imports
1,530
1,530
0
0.0
less: Refunds and drawbacks
700
730
30
4.3
Total excise and customs duty
49,660
47,900
-1,760
-3.5
Major Bank Levy
1,660
1,720
60
3.6
Agricultural levies
634
623
-11
-1.7
Visa application charges
3,435
3,882
447
13.0
Other taxes
5,662
6,183
522
9.2
Indirect taxation receipts
151,903
150,272
-1,631
-1.1
Taxation receipts
633,543
642,542
8,999
1.4
Sales of goods and services
21,044
21,396
352
1.7
Interest received
7,899
9,275
1,376
17.4
Dividends and distributions
7,240
6,789
-451
-6.2
Other non-taxation receipts
20,995
18,444
-2,552
-12.2
Non-taxation receipts
57,179
55,904
-1,275
-2.2
Total receipts
690,721
698,446
7,725
1.1
Memorandum:
Total excise
31,810
31,870
60
0.2
Total customs duty
17,850
16,030
-1,820
-10.2
Capital gains tax(b)
22,900
23,600
700
3.1
a) ‘Other alcoholic beverages’ are those not exceeding 10 per cent by volume of alcohol (excluding beer,
brandy and wine).
b) ‘Capital gains tax’ is part of gross other individuals, company tax and superannuation fund taxes.
| Budget Paper No. 1
Page 182 | Statement 5: Revenue
Table 5.7: Australian Government general government (cash) receipts
Actual
Estimates
2022-23
2023-24
2024-25
2025-26
2026-27
2027-28
$m
$m
$m
$m
$m
$m
Individuals and other withholding taxes
Gross income tax withholding
269,264
296,000
290,300
304,900
323,200
345,400
Gross other individuals
69,407
76,100
76,800
80,300
83,800
91,700
less: Refunds
42,014
37,500
40,600
41,700
42,800
44,300
Total individuals and other withholding tax
296,658
334,600
326,500
343,500
364,200
392,800
Fringe benefits tax
4,009
4,360
4,210
4,120
4,170
4,380
Company tax
151,068
142,900
139,100
134,000
144,200
150,800
Superannuation fund taxes
10,406
11,660
19,810
21,360
24,210
23,060
Petroleum resource rent tax
2,287
1,150
2,650
2,050
1,850
1,750
Income taxation receipts
464,427
494,670
492,270
505,030
538,630
572,790
Goods and services tax
81,518
85,758
87,673
92,338
97,866
103,438
Wine equalisation tax
1,107
1,080
1,150
1,210
1,270
1,340
Luxury car tax
1,143
1,310
1,140
1,200
1,270
1,330
Excise and customs duty
Petrol
5,680
6,950
7,300
7,550
7,800
8,000
Diesel
13,091
16,160
17,390
17,750
18,620
19,320
Other fuel products
2,722
2,090
2,210
2,230
2,290
2,340
Tobacco
12,596
10,500
11,550
11,500
11,100
10,700
Beer
2,543
2,630
2,760
2,870
3,020
3,170
Spirits
3,348
3,340
3,590
3,770
3,970
4,170
Other alcoholic beverages(a)
1,610
1,680
1,750
1,810
1,910
2,010
Other customs duty
Textiles, clothing and footwear
199
160
170
170
190
150
Passenger motor vehicles
445
380
380
370
330
110
Other imports
1,519
1,490
1,530
1,590
1,650
900
less: Refunds and drawbacks
723
850
730
730
730
730
Total excise and customs duty
43,029
44,530
47,900
48,880
50,150
50,140
Major Bank Levy
1,525
1,630
1,720
1,780
1,860
1,960
Agricultural levies
666
620
623
645
641
650
Visa application charges
3,156
3,290
3,882
4,096
4,315
4,484
Other taxes
4,730
5,862
6,183
6,404
6,276
6,167
Indirect taxation receipts
136,873
144,080
150,272
156,553
163,648
169,509
Taxation receipts
601,300
638,750
642,542
661,583
702,278
742,299
Sales of goods and services
19,282
19,938
21,396
22,549
23,506
23,888
Interest received
7,009
10,404
9,275
8,705
9,051
9,591
Dividends and distributions
5,164
5,918
6,789
7,160
7,522
8,001
Other non-taxation receipts
16,722
17,297
18,444
19,357
17,652
18,034
Non-taxation receipts
48,177
53,557
55,904
57,770
57,732
59,513
Total receipts
649,477
692,307
698,446
719,353
760,010
801,811
Memorandum:
Total excise
26,022
29,940
31,870
32,670
34,120
35,350
Total customs duty
17,006
14,590
16,030
16,210
16,030
14,790
Capital gains tax(b)
31,700
26,400
23,600
23,800
24,800
26,100
a) ‘Other alcoholic beverages’ are those not exceeding 10 per cent by volume of alcohol (excluding beer,
brandy and wine).
b) ‘Capital gains tax’ is part of gross other individuals, company tax and superannuation fund taxes.
Budget Paper No. 1 |
Statement 5: Revenue | Page 183
Variations in revenue estimates
The revenue estimates are the accrual accounting equivalent of the cash-based receipts
estimates. Changes in revenue are generally driven by the same factors as receipts.
Revenues are usually higher than the cash equivalents because the amounts are generally
recognised when they are owed rather than when they are paid. The differences between
the accrual and cash amounts therefore generally reflect payment timing differences.
Table 5.8 provides a reconciliation of the 2024–25 Budget revenue estimates with those at
the 2023–24 Budget and MYEFO.
Table 5.8: Reconciliation of Australian Government general government revenue
estimates from the 2023–24 MYEFO and the 2023–24 Budget
Estimates
2023-24
2024-25
2025-26
2026-27
2027-28
Total
$m
$m
$m
$m
$m
$m
Revenue at 2023-24 Budget
680,372
677,333
713,738
748,237
*
*
Changes from 2023-24 Budget to
2023-24 MYEFO
Effect of policy decisions(a)
475
303
137
456
*
*
Effect of parameter and other variations
19,775
22,657
12,169
21,660
*
*
Total variations
20,250
22,960
12,306
22,116
*
*
Revenue at 2023-24 MYEFO
700,622
700,293
726,044
770,352
*
*
Changes from 2023-24 MYEFO
to 2024-25 Budget
Effect of policy decisions(a)
54
2,267
-956
3,366
5,972
10,702
Effect of parameter and other variations
6,201
8,945
7,652
2,521
*
*
Total variations
6,255
11,212
6,696
5,887
*
*
Revenue at 2024-25 Budget
706,877
711,505
732,740
776,239
819,628
3,746,989
* Data is not available.
a) Excludes secondary impacts on public debt interest of policy decisions and offsets from the
Contingency Reserve for decisions taken.
Since MYEFO, total revenue has been revised up by $11.2 billion in 2024–25 and by
$36.9 billion over the five years from 2023–24 to 2027–28.
The changes in the individual heads of revenue accrual estimates relative to MYEFO are
shown in Tables 5.9 and 5.10, for 2023–24 and 2024–25, respectively. For the 5-year accrual
table, the accrual equivalent of Table 5.7, see Budget Statement 10, Note 3.
Additional revenue and receipts historical tables are available online and can be accessed at
www.budget.gov.au.
| Budget Paper No. 1
Page 184 | Statement 5: Revenue
Table 5.9: Reconciliation of 2023–24 general government (accrual) revenue
Estimates
Change on MYEFO
MYEFO
Budget
$m
$m
$m
%
Individuals and other withholding taxes
Gross income tax withholding
295,000
299,400
4,400
1.5
Gross other individuals
78,600
81,500
2,900
3.7
less: Refunds
37,000
37,500
500
1.4
Total individuals and other withholding tax
336,600
343,400
6,800
2.0
Fringe benefits tax
4,190
4,280
90
2.1
Company tax
140,300
144,900
4,600
3.3
Superannuation fund taxes
15,740
11,780
-3,960
-25.2
Petroleum resource rent tax
2,380
1,430
-950
-39.9
Income taxation revenue
499,210
505,790
6,580
1.3
Goods and services tax
88,180
90,180
2,000
2.3
Wine equalisation tax
1,130
1,090
-40
-3.5
Luxury car tax
1,180
1,290
110
9.3
Excise and customs duty
Petrol
6,900
6,950
50
0.7
Diesel
16,180
16,210
30
0.2
Other fuel products
2,290
2,120
-170
-7.4
Tobacco
12,850
10,500
-2,350
-18.3
Beer
2,660
2,650
-10
-0.4
Spirits
3,400
3,370
-30
-0.9
Other alcoholic beverages(a)
1,680
1,680
0
0.0
Other customs duty
Textiles, clothing and footwear
180
160
-20
-11.1
Passenger motor vehicles
450
380
-70
-15.6
Other imports
1,500
1,490
-10
-0.7
less: Refunds and drawbacks
700
850
150
21.4
Total excise and customs duty
47,390
44,660
-2,730
-5.8
Major bank levy
1,620
1,660
40
2.5
Agricultural levies
598
618
19
3.3
Visa application charges
3,232
3,290
58
1.8
Other taxes
6,716
7,461
745
11.1
Indirect taxation revenue
150,046
150,249
203
0.1
Taxation revenue
649,256
656,039
6,783
1.0
Sales of goods and services
20,058
20,274
216
1.1
Interest
10,034
11,131
1,097
10.9
Dividends and distributions
6,866
5,798
-1,068
-15.6
Other non-taxation revenue
14,408
13,635
-773
-5.4
Non-taxation revenue
51,365
50,838
-527
-1.0
Total revenue
700,622
706,877
6,255
0.9
Memorandum:
Total excise
30,080
30,020
-60
-0.2
Total customs duty
17,310
14,640
-2,670
-15.4
Capital gains tax(b)
25,000
26,400
1,400
5.6
a) ‘Other alcoholic beverages’ are those not exceeding 10 per cent by volume of alcohol (excluding beer,
brandy and wine).
b) ‘Capital gains tax’ is part of gross other individuals, company tax and superannuation fund taxes.
Budget Paper No. 1 |
Statement 5: Revenue | Page 185
Table 5.10: Reconciliation of 2024–25 general government (accrual) revenue
Estimates
Change on MYEFO
MYEFO
Budget
$m
$m
$m
%
Individuals and other withholding taxes
Gross income tax withholding
287,100
293,700
6,600
2.3
Gross other individuals
78,800
82,500
3,700
4.7
less: Refunds
39,100
40,600
1,500
3.8
Total individuals and other withholding tax
326,800
335,600
8,800
2.7
Fringe benefits tax
4,050
4,130
80
2.0
Company tax
136,000
141,200
5,200
3.8
Superannuation fund taxes
23,190
19,830
-3,360
-14.5
Petroleum resource rent tax
2,290
2,590
300
13.1
Income taxation revenue
492,330
503,350
11,020
2.2
Goods and services tax
92,580
92,070
-510
-0.6
Wine equalisation tax
1,180
1,150
-30
-2.5
Luxury car tax
1,080
1,110
30
2.8
Excise and customs duty
Petrol
7,200
7,150
-50
-0.7
Diesel
16,790
17,040
250
1.5
Other fuel products
2,310
2,190
-120
-5.2
Tobacco
13,250
11,550
-1,700
-12.8
Beer
2,760
2,660
-100
-3.6
Spirits
3,580
3,590
10
0.3
Other alcoholic beverages(a)
1,770
1,750
-20
-1.1
Other customs duty
Textiles, clothing and footwear
190
170
-20
-10.5
Passenger motor vehicles
420
380
-40
-9.5
Other imports
1,530
1,530
0
0.0
less: Refunds and drawbacks
700
730
30
4.3
Total excise and customs duty
49,100
47,280
-1,820
-3.7
Major bank levy
1,680
1,740
60
3.6
Agricultural levies
634
627
-6
-1.0
Visa application charges
3,435
3,882
447
13.0
Other taxes
7,116
7,753
637
9.0
Indirect taxation revenue
156,805
155,612
-1,192
-0.8
Taxation revenue
649,135
658,962
9,828
1.5
Sales of goods and services
21,260
21,636
376
1.8
Interest
9,044
10,276
1,232
13.6
Dividends and distributions
7,269
6,815
-454
-6.3
Other non-taxation revenue
13,585
13,815
230
1.7
Non-taxation revenue
51,158
52,542
1,384
2.7
Total revenue
700,293
711,505
11,212
1.6
Memorandum:
Total excise
31,250
31,250
0
0.0
Total customs duty
17,850
16,030
-1,820
-10.2
Capital gains tax(b)
22,900
23,600
700
3.1
a) ‘Other alcoholic beverages’ are those not exceeding 10 per cent by volume of alcohol (excluding beer,
brandy and wine).
b) ‘Capital gains tax’ is part of gross other individuals, company tax and superannuation fund taxes.
| Budget Paper No. 1
Page 186 | Statement 5: Revenue
Appendix A: Tax Expenditures
This appendix contains an overview of Australian Government tax expenditures. Section 12
of the Charter of Budget Honesty Act 1998 requires the publication of an overview of
estimated tax expenditures.
The Government published the 2023–24 Tax Expenditures and Insights Statement (TEIS)
on 31 January 2024. The TEIS provides an estimate of the revenue forgone from tax
expenditures, along with distributional analysis on large tax expenditures and commonly
utilised features of the tax system.
Tax benchmarks represent a standard tax treatment that applies to similar taxpayers or
types of activities. Policy approaches can apply a tax treatment different from a standard
approach, which can give rise to positive or negative tax expenditures. The choice of
benchmark unavoidably involves some judgment.
Consistent with most OECD countries, estimates of tax expenditures reflect the extent to
which they are used, similar to Budget estimates of outlays on demand-driven expenditure
programs. This is known as the ‘revenue forgone’ approach which, in practice, involves
estimating the difference in revenue between the actual and benchmark tax treatments but,
importantly, assuming taxpayer behaviour is the same in each circumstance. Revenue
forgone estimates therefore do not indicate the revenue gain to the Budget if a specific tax
expenditure was abolished through policy change, as there may be significant changes in
taxpayer behaviour.
Care needs to be taken when comparing tax expenditures with direct expenditures as they
may measure different things. In addition, estimates from different editions of previously
released Statements are generally not directly comparable, because of changes or
modifications to—for example—benchmarks, individual tax expenditures, data used or
modelling methodology.
Table A.1 lists the largest measured tax expenditures for 2023–24 and several personal
deduction categories. It is derived from the 2023–24 TEIS and is based on economic
parameters as at the publication of MYEFO. It does not include the impact of policy
decisions, or changes in the economic outlook since then on tax expenditures. The TEIS is
not a statement of policy intent.
The 2023–24 TEIS also contains distributional analysis on some features of the tax system,
including deductions for individuals. The items in the deductions category are not tax
expenditures so they do not result in forgone revenue against the benchmark. However, the
difference between tax paid with the deduction and tax that would have been paid if the
deduction was not claimed has been included in Table A.1 for comparison purposes.
Budget Paper No. 1 |
Statement 5: Revenue | Page 187
Table A.1: Estimates of large measured tax expenditures and deductions
Benchmark
Code
Title
Revenue
forgone/
value of
deduction
2023-24*
($m)
Average
growth
2019-20
to
2022-23
(%)
Average
projected
growth
over FEs
(%)
Positive tax expenditures and deductions
Super
C2
Concessional taxation of employer
superannuation contributions
28,550
11.3
2.8
Deductions
Rental deductions
27,100
8.9
4.1
CGT
E8
Main residence exemption – discount component
25,000
33.8
-7.5
CGT
E7
Main residence exemption
22,500
33.6
-7.7
Super
C4
Concessional taxation of superannuation entity
earnings
20,050
17.7
-3.5
CGT
E15
Discount for individuals and trusts
19,050
39.8
-11.9
Deductions
Work-related expenses
10,800
7.5
2.8
Income
A26
Exemption for National Disability Insurance
Scheme amounts
10,480
35.6
13.4
GST
H25
Food
9,100
4.6
3.5
Income
B81
Accelerated depreciation for business entities
7,400
NA
NA
GST
H17
Health – medical and health services
5,400
8.9
5.8
GST
H2
Financial supplies – input taxed treatment
4,850
10.2
7.9
GST
H14
Education
4,100
5.1
4.2
Income
A57
Philanthropy – deduction for gifts to deductible gift
recipients
3,855
-4.4
-2.0
Income
B87
Simplified depreciation rules
3,800
165.3
NA
Income
A27
Exemption of Child Care Assistance payments
3,750
15.7
6.3
Income
B62
Lower tax rate for small companies
3,400
56.3
-3.1
Income
B24
Temporary loss carry-back for certain incorporated
entities
2,990
NA
NA
FBT
D15
Exemption for public benevolent institutions
(excluding hospitals)
2,700
6.5
2.3
Income
A20
Medicare levy exemption for residents with taxable
income below the low-income thresholds
2,650
4.2
0.9
Super
C6
Deductibility of life and total and permanent
disability insurance premiums provided inside of
superannuation
2,530
1.3
3.7
Income
B11
Exemption from interest withholding tax on certain
securities
2,180
-5.9
0.2
Income
B1
Local government bodies income tax exemption
1,960
5.0
2.3
Income
A24
Concessional taxation of non-superannuation
termination benefits
1,950
-8.7
NA
GST
H5
Child care services
1,920
10.4
6.4
Super
C3
Concessional taxation of personal superannuation
contributions
1,750
20.5
-5.1
Income
A39
Exemption of Family Tax Benefit payments
1,720
-7.7
4.8
FBT
D11
Exemption for public and not-for-profit hospitals
and public ambulance services
1,700
4.3
0.7
Other
F6
Concessional rate of excise levied on aviation
gasoline and aviation turbine fuel
1,620
10.5
7.3
Deductions
Cost of managing tax affairs and other deductions
1,600
4.6
0.0
* For deductions, ‘Revenue forgone’ refers to the reduction in tax in relation to the specified income year due
to the utilisation of deductions.
| Budget Paper No. 1
Page 188 | Statement 5: Revenue
Table A.1: Estimates of large measured tax expenditures and deductions
(continued)
Benchmark
Code
Title
Revenue
forgone/
value of
deduction
2023-24*
($m)
Average
growth
2019-20
to
2022-23
(%)
Average
projected
growth
over FEs
(%)
GST
H18
Health – residential care, community care and
other care services
1,600
6.2
5.9
Income
A18
Exemption of the Private Health Insurance Rebate
1,550
-2.2
2.5
Income
B82
Capital works expenditure deduction
1,450
1.7
1.6
Income
A38
Exemption of certain income support benefits,
pensions or allowances
1,400
-10.8
1.4
Super
C1
Concessional taxation of capital gains for
superannuation funds
1,300
7.1
2.7
GST
H3
Financial supplies – reduced input tax credits
1,200
10.1
7.8
GST
H6
Water, sewerage and drainage
1,190
1.8
2.9
FBT
D21
Application of statutory formula to value car
benefits
1,100
12.4
1.7
Income
B12
Exemption of inbound non-portfolio distributions
from income tax
1,060
1.9
-0.2
Income
B5
Reduced withholding tax under international tax
treaties
1,040
6.3
14.9
Negative tax expenditures
Other
F21
Customs duty
-2,160
8.8
-14.1
Other
F5
Luxury car tax
-1,180
23.4
2.1
Income
A21
Medicare levy surcharge
-1,070
24.1
8.1
* For deductions, ‘Revenue forgone’ refers to the reduction in tax in relation to the specified income year due
to the utilisation of deductions.
Statement 6: Expenses and Net Capital Investment | Page 189
Statement 6:
Expenses and Net Capital Investment
This Statement presents estimates of Australian Government general government sector
expenses and net capital investment, disaggregated into various functions of government,
on an accrual accounting basis. The Government also reports spending on an underlying
cash basis (including details about payments) in Statement 3: Fiscal Strategy and Outlook.
The Government is focused on responsible economic management, responding to the
challenges of today and investing in a better future. In this Budget, the Government is
investing to deal with unavoidable spending, easing cost-of-living pressures, building more
homes for Australians, investing in a Future Made in Australia, strengthening Medicare
and the care economy, and broadening opportunity and advancing equality.
General government sector expenses are expected to remain broadly stable as a proportion
of GDP over the period 2024–25 to 2027–28, reflecting the Government’s commitment to
provide support to ease cost-of-living pressures on businesses and households and build a
stronger foundation for sustainable economic growth. Total expenses are expected to be
26.6 per cent of GDP in 2024–25 and to remain around that level over the period 2024–25 to
2027–28.
Significant areas of expenditure in 2024–25 will be in the social security and welfare
(36.3 per cent of total expenses), health (15.3 per cent of total expenses), education
(7.2 per cent of total expenses) and defence (6.5 per cent of total expenses) functions.
Together, these functions account for approximately 65 per cent of all government expenses
in 2024–25.
Real growth in expenses over the period 2024–25 to 2027–28 is expected to average
2.0 per cent per year. The strongest real growth across the period 2024–25 to 2027–28 is
expected to occur in the defence (6.3 per cent) and social security and welfare (5.6 per cent)
functions.
Major expense trends over the period 2024–25 to 2027–28 include movements in the
following functions.
Social security and welfare: the increase in expenses is largely due to the Government’s
ongoing investment in assistance to people with disability, both through the National
Disability Insurance Scheme and the Disability Support pension, and through funding
under the Aged Care Services program. Expenses for services and payments, including
JobSeeker Payment and income support and compensation payments to veterans are
expected to increase over the period 2024–25 to 2027–28, as more recipients can more easily
access government services.
Page 190 | Statement 6: Expenses and Net Capital Investment
Defence: the increase in expenses reflects that under the 2024 National Defence Strategy and
the Integrated Investment Program, the Government will invest to accelerate the delivery of
defence capabilities to support an integrated, focused force that is better positioned to
safeguard Australia’s security and prosperity.
Education: the increase in expenses reflects the Government’s continued investment in
improving education outcomes and supporting schools, higher education, and vocational
education programs. Expenditure is driven by more funding to states and student
enrolment growth, including higher enrolment rates for ‘students with disability’, which
will drive expenses for schools. Increased funding for universities and vocational education
under the Australian Universities Accord and National Skills Agreement and the changes to
indexation arrangements for outstanding debt for student loans are also estimated to
increase expenses.
Mining, manufacturing and construction: the increase in expenses reflects the
Government’s continued investment in Australia’s mining, manufacturing and
construction industries. Expenses for the Research and Development Tax Incentive
continue to increase to support the research and development that is key to boosting the
competitiveness and productivity of industry.
Fuel and energy: the increase in expenses in 2024–25 for renewable energy investments
reflects the Government’s commitment to growing Australia’s renewable energy
capabilities through concessional loans made by the Clean Energy Finance Corporation
under Powering Australia – Rewiring the Nation. In the 2024–25 Budget, the Government is
also investing in the Future Made in Australia agenda which includes further Government
investments into renewable energy and technology, which will develop new clean energy
industries and supply chains and contribute to Australia’s efforts towards achieving a
global net zero economy. The Government is also extending and expanding the Energy Bill
Relief Fund to deliver cost-of-living relief to all Australian households and eligible
businesses.
Housing and community amenities: the Government is providing targeted upfront
investments into building more homes and liveable communities, and ensuring Australians
have safe, secure, and affordable homes. In the 2024–25 Budget, the Government is
providing further support through the new National Agreement on Social Housing and
Homelessness, enabling infrastructure through the Housing Support Program, and the
investments through the Housing Australia Future Fund.
Figures in the tables and text, and the analysis of trends, are presented in nominal terms,
except in circumstances where real values are explicitly stated.
Statement 6: Expenses and Net Capital Investment | Page 191
Statement contents
Overview .................................................................................................................... 193
Estimated expenses by function ............................................................................. 196
Program expenses .................................................................................................................... 198
Program payments .................................................................................................................... 199
General government sector expenses .................................................................... 200
General public services ............................................................................................................. 200
Defence .............................................................................................................................. 202
Public order and safety ............................................................................................................. 203
Education .............................................................................................................................. 204
Health .............................................................................................................................. 206
Social security and welfare ....................................................................................................... 209
Housing and community amenities ........................................................................................... 212
Recreation and culture .............................................................................................................. 214
Fuel and energy ........................................................................................................................ 216
Agriculture, forestry and fishing ................................................................................................. 217
Mining, manufacturing and construction .................................................................................... 218
Transport and communication ................................................................................................... 219
Other economic affairs .............................................................................................................. 220
Other purposes ......................................................................................................................... 223
General government net capital investment .......................................................... 227
Reconciliation of net capital investment since the 2023–24 Budget .......................................... 228
Net capital investment estimates by function ............................................................................ 229
Appendix A: Expense by function and sub-function ............................................ 231
Statement 6: Expenses and Net Capital Investment | Page 193
Statement 6: Expenses and Net
Capital Investment
Overview
Australian Government general government sector expenses are expected to increase from
$691.1 billion in 2023–24 to $829.8 billion in 2027–28, with expenses as a percentage of GDP
marginally decreasing over the period 2024–25 to 2027–28.
Spending in this Budget is focused on easing cost-of-living pressures for Australians,
investing in a Future Made in Australia, driving the energy transition, strengthening
Medicare and the care economy, and supporting Australians to meet their housing needs.
The Budget also addresses significant unavoidable spending pressures to ensure
Australians do not see a cut to the programs and services they rely on.
Table 6.1.1: Estimates of general government sector expenses
MYEFO
Revised
Estimates
2023-24
2023-24
2024-25
2025-26
2026-27
2027-28
Total expenses ($b)
689.3
691.1
734.5
767.3
793.8
829.8
Real growth on
previous year (%)(a)
3.6
4.2
3.4
1.4
1.1
2.0
Per cent of GDP
25.8
25.7
26.6
26.7
26.3
26.1
a) Real growth is calculated using the Consumer Price Index.
Average annual real growth in expenses over the period 2024–25 to 2027–28 is expected to
be 2.0 per cent, which shows the Government’s commitment to responsible and sustainable
economic and fiscal management.
As a percentage of GDP, total expenses are expected to be 26.6 per cent in 2024–25 and are
projected to marginally decrease over the period 2024–25 to 2027–28.
More detail about general government sector expenses can be seen at a program level for
the top 20 programs by expense in Table 6.3.1.
Table 6.1.2: Estimates of general government sector payments
MYEFO
Revised
Estimates
2023-24
2023-24
2024-25
2025-26
2026-27
2027-28
Total payments ($b)
686.4
683.0
726.7
762.2
786.7
826.2
Real growth on
previous year (%)(a)
4.7
4.5
3.6
1.8
0.8
2.4
Per cent of GDP
25.7
25.4
26.4
26.6
26.0
26.0
b) Real growth is calculated using the Consumer Price Index.
Payment estimates are the cash equivalent of the accrual-based expense estimates. Changes
in payments are generally driven by the same factors as expenses.
| Budget Paper No. 1
Page 194 | Statement 6: Expenses and Net Capital Investment
Government payments are expected to increase in both nominal and real terms over the
period 2024–25 to 2027–28, with average annual real growth estimated to be 2.2 per cent.
As a percentage of GDP, total payments are expected to be 26.4 per cent in 2024–25 and are
projected to marginally decrease over the period 2024–25 to 2027–28.
More detail about general government sector payments can be seen at a program level for
the top 20 programs by payment in Table 6.3.2 and in Statement 3: Fiscal Strategy and
Outlook.
Table 6.2 provides a reconciliation of expense estimates between the 2023–24 Budget and
the 2024–25 Budget.
Table 6.2: Reconciliation of expense estimates
Estimates
2023-24
2024-25
2025-26
2026-27
Total
$m
$m
$m
$m
$m
2023-24 Budget expenses
684,085
715,382
743,324
771,779
2,914,570
Changes from 2023-24 Budget to
2023-24 MYEFO
Effect of policy decisions(a)
1,262
2,597
781
1,242
5,881
Effect of parameter and other variations
3,959
-1,989
7,839
10,517
20,326
Total variations
5,220
608
8,620
11,759
26,207
2023-24 MYEFO expenses
689,306
715,990
751,944
783,537
2,940,777
Changes from 2023-24 MYEFO
to 2024-25 Budget
Effect of policy decisions(a)
292
12,049
7,893
4,523
24,757
Effect of economic parameter variations
Total economic parameter variations
1,747
-1,930
-3,999
-3,847
-8,030
Unemployment benefits
437
354
-237
45
599
Prices and wages
-364
-1,446
-1,763
-1,388
-4,961
Interest and exchange rates
-19
89
91
87
248
GST payments to the States
1,694
-928
-2,090
-2,591
-3,915
Public debt interest
143
-579
-96
-649
-1,181
Program specific parameter variations
6,777
7,454
10,919
10,560
35,710
Other variations
-7,195
1,535
630
-359
-5,388
Total variations
1,765
18,529
15,346
10,228
45,867
2024-25 Budget expenses
691,070
734,518
767,290
793,765
2,986,644
a) Excludes secondary impacts on public debt interest of policy decisions and offsets from the Contingency
Reserve for decisions taken.
In the 2024–25 Budget, policy decisions are estimated to increase expenses by $24.8 billion
over the four years from 2023–24 to 2026–27 compared with the 2023–24 MYEFO. The
majority of net policy decisions relate to unavoidable spending pressures, with the Budget
also investing in a wide range of programs, particularly measures to ease cost-of-living
pressures, build more homes for Australians, create a Future Made in Australia, strengthen
Medicare and the care economy, and broaden opportunity and advance equality.
Budget Paper No. 1 |
Statement 6: Expenses and Net Capital Investment | Page 195
Economic parameters are estimated to decrease expenses by $8.0 billion over the four years
from 2023–24 to 2026–27 compared with the 2023–24 MYEFO, reflecting lower projections
for prices and wages, and lower projections for GST payments to the states on account of
lower projections for consumption.
Program specific parameter variations are projected to increase expenses by $35.7 billion
over the four years from 2023–24 to 2026–27 compared with the 2023–24 MYEFO. This
includes major variations in the following programs:
• Expenses related to the National Disability Insurance Scheme (NDIS) are estimated to
increase by $11.1 billion over four years from 2023–24 to 2026–27 (and $4.5 billion in
2027–28), based on revised projections from the NDIS Actuary and adjustments related
to in-kind supports. The NDIS legislative reforms being undertaken by the Government
as part of the 2024–25 Budget measure National Disability Insurance Scheme – Getting the
NDIS back on track are expected to offset the increase projected by the NDIS Actuary,
moderate this additional growth in NDIS expenses from 2024–25, to keep NDIS
expenditure on track to achieve the NDIS Sustainability Framework from 1 July 2026.
• Expenses related to the Military Rehabilitation Compensation Act – Income Support
and Compensation are expected to increase by $5.7 billion over the four years from
2023–24 to 2026–27, largely due to more claims being processed because of increased
staffing levels that the Government has agreed to in order to deliver on its commitment
to clear the claims backlog.
• Expenses related to the Child Care Subsidy are expected to increase by $2.6 billion over
the four years from 2023–24 to 2026–27, largely reflecting additional support flowing to
families due to the higher costs of providing care.
• Expenses related to JobSeeker Income Support are expected to increase by $1.4 billion
over the four years from 2023–24 to 2026–27, largely due to upward revisions to the
expected number of recipients and average payment rates, driven by changes to the
composition of payment recipients.
Since the 2023–24 MYEFO, other variations (-$5.4 billion), variations associated with Public
Debt Interest (-$1.2 billion) and program specific parameter variations ($35.7 billion) have
increased expenses by $29.1 billion over the four years to 2026–27.
| Budget Paper No. 1
Page 196 | Statement 6: Expenses and Net Capital Investment
Estimated expenses by function
Estimates of general government sector expenses by function for the period 2023–24 to
2027–28 are set out in Table 6.3. The social security and welfare, health, education and
defence functions account for approximately 65 per cent of all government expenses in
2024–25 (see Box 6.1). Changes to the levels of expenditure within these functions
significantly affect total government spending. Further details of spending trends in all
functions are set out under individual function headings.
Table 6.3: Estimates of expenses by function
(a)
Estimates
2023-24
2024-25
2025-26
2026-27
2027-28
$m
$m
$m
$m
$m
General public services
31,442
32,395
30,595
31,068
31,838
Defence
45,128
47,986
50,046
51,339
55,102
Public order and safety
7,960
8,421
6,993
6,832
6,756
Education
49,099
53,046
53,220
55,093
56,925
Health
107,416
112,693
115,913
118,512
122,801
Social security and welfare
252,342
266,693
282,057
290,665
304,093
Housing and community amenities
7,955
9,999
8,831
7,072
5,629
Recreation and culture
5,050
5,372
5,472
5,423
5,604
Fuel and energy
13,273
20,121
13,908
13,794
13,825
Agriculture, forestry and fishing
4,068
4,317
4,079
3,949
3,294
Mining, manufacturing and construction
5,968
5,511
5,563
5,776
6,172
Transport and communication
14,928
16,769
16,717
16,375
14,656
Other economic affairs
14,011
13,386
12,214
11,733
11,512
Other purposes
132,430
137,810
161,683
176,135
191,549
Total expenses
691,070
734,518
767,290
793,765
829,755
a) The functions are based on an international standard classification of functions of government that is
incorporated into the Government Finance Statistics (GFS) reporting framework.
Budget Paper No. 1 |
Statement 6: Expenses and Net Capital Investment | Page 197
Box 6.1: Where does government spending go in 2024–25?
Government spending provides a wide range of services to the community. The
most significant component of government spending relates to social security and
welfare, with over one third of total expenses providing support to the aged, families
with children, people with disabilities, veterans, carers and unemployed people.
Around a seventh of government expenses occur in health, including spending on
the Medicare Benefits Schedule and the Pharmaceutical Benefits Scheme.
The Government also provides significant investment in education, supporting
government and non-government schools, as well as higher education and
vocational education and training.
Defence is another significant component of government expenditure, providing
capability to the Australian Defence Force to protect Australia’s security and defend
our national interests.
Chart 6.1: Expenses by function in 2024–25
Social security
and w elfare
36.3%
Other purposes
18.8%
Health
15.3%
Education
7.2%
Defence
6.5%
General public
services
4.4%
All other functions
11.4%
The estimates presented in the chart above are explained in greater detail under each
function in the following pages.
| Budget Paper No. 1
Page 198 | Statement 6: Expenses and Net Capital Investment
Program expenses
The top 20 expense programs in the 2024–25 financial year are presented in Table 6.3.1.
These programs represent more than two thirds of total expenses in 2024–25.
Table 6.3.1: Top 20 programs by expense
Estimates
2023-24
2024-25
2025-26
2026-27
2027-28
Program(a)
Function
$m
$m
$m
$m
$m
Revenue assistance to the
States and Territories
Other purposes
92,107
94,412
99,241
104,771
109,243
Support for Seniors
SSW
59,160
61,672
64,459
67,163
70,025
National Disability Insurance
Scheme(b)
SSW
44,322
48,752
52,318
56,458
60,746
Aged Care Services
SSW
32,321
36,150
37,863
40,061
43,558
Medical Benefits
Health
29,763
31,983
33,915
35,497
37,344
Assistance to the States for
Healthcare Services
Health
27,853
30,149
32,187
34,229
36,454
Commonwealth Debt
Management
Other purposes
22,547
24,107
28,269
32,432
35,744
Financial Support for People
with Disability
SSW
21,165
22,003
22,855
23,657
24,765
Pharmaceutical Benefits
Health
19,009
19,543
19,760
19,545
19,717
Non-Government Schools
National Support
Education
18,116
18,726
19,497
20,275
21,051
Support for Families
SSW
16,626
17,261
17,655
18,031
18,304
Job Seeker Income Support
SSW
14,737
16,100
16,562
16,760
16,298
Child Care Subsidy
SSW
13,914
14,531
15,113
15,996
16,899
Financial Support for Carers
SSW
11,141
11,670
12,177
12,639
13,251
Government Schools National
Support
Education
11,099
11,474
11,889
12,322
12,782
Fuel Tax Credits Scheme
Fuel and energy
9,857
10,184
10,561
11,309
12,115
Public Sector Superannuation -
Other purposes;
Benefits(c)
General public
services
9,809
10,095
10,264
10,440
10,582
Defence Force Superannuation -
Other purposes;
Benefits(c)
General public
9,807
9,830
10,274
10,782
11,309
services
Army Capabilities
Defence
9,014
9,207
9,863
10,382
10,688
National Partnership Payments -
Transport and
Road Transport
communication
8,175
8,984
9,551
8,815
8,082
Sub-total
480,541
506,833
534,273
561,563
588,955
Other programs
210,530
227,685
233,017
232,202
240,800
Total expenses
691,070
734,518
767,290
793,765
829,755
a) The entry for each program includes eliminations for inter-agency transactions within that program.
b) This program is a combination of agency costs, support for participants and administered expenses.
c) This program is a combination of superannuation nominal interest and accrual expenses.
Budget Paper No. 1 |
Statement 6: Expenses and Net Capital Investment | Page 199
Program payments
The top 20 payment programs in the 2024–25 financial year are presented in Table 6.3.2.
Although broadly similar to the top 20 expense programs, there are some differences in the
timing of reporting between payments and expenses, and the reported payment figures
include expenditure capital investment but exclude depreciation.
Table 6.3.2: Top 20 programs by payment
Estimates
2023-24
2024-25
2025-26
2026-27
2027-28
Program(a)
Function
$m
$m
$m
$m
$m
Revenue assistance to the
States and Territories
Other purposes
91,604
94,544
99,251
104,780
109,239
Support for Seniors
SSW
58,901
61,737
64,570
67,372
70,252
National Disability Insurance
Scheme(b)
SSW
42,902
47,985
51,767
55,861
60,111
Aged Care Services
SSW
32,305
36,134
37,848
40,046
43,542
Medical Benefits
Health
29,692
31,951
33,910
35,474
37,319
Assistance to the States for
Healthcare Services
Health
27,853
30,149
32,187
34,229
36,454
Commonwealth Debt
Management
Other purposes
20,967
22,364
26,052
28,339
34,057
Financial Support for People
with Disability
SSW
21,098
22,070
22,937
23,755
24,820
Pharmaceutical Benefits
Health
18,989
19,527
19,759
19,550
19,712
Non-Government Schools
National Support
Education
18,116
18,726
19,497
20,275
21,051
Support for Families
SSW
16,869
17,599
17,956
18,361
18,549
Job Seeker Income Support
SSW
14,845
16,286
16,777
16,965
16,535
Child Care Subsidy
SSW
13,738
14,444
15,262
15,988
16,818
Financial Support for Carers
SSW
11,093
11,688
12,207
12,679
13,224
Government Schools National
Support
Education
11,113
11,476
11,891
12,324
12,783
Army Capabilities
Defence
11,380
11,147
12,553
13,200
14,085
Navy Capabilities
Defence
10,466
10,414
11,310
12,470
12,551
Fuel Tax Credits Scheme
Fuel and energy
9,704
10,133
10,484
11,196
11,994
Public Sector Superannuation -
General public
Benefits
services
9,427
10,000
10,353
10,753
11,175
Air Force Capabilities
Defence
9,750
9,032
9,651
10,352
10,939
Sub-total
480,810
507,406
536,220
563,969
595,209
Other programs
202,151
219,326
225,971
222,754
230,948
Total payments
682,961
726,732
762,192
786,722
826,157
a) The entry for each program includes eliminations for inter-agency transactions within that program.
b) This program is a combination of agency costs, support for participants and administered expenses.
| Budget Paper No. 1
Page 200 | Statement 6: Expenses and Net Capital Investment
General government sector expenses
General public services
The general public services function includes expenses to support the organisation and
operation of government. These expenses include those relating to the Parliament, the
Governor-General, the conduct of elections, the collection of taxes and management of
public funds and debt, assistance to developing countries to reduce poverty and achieve
sustainable development (particularly countries in the Pacific region), contributions to
international organisations, and foreign affairs.
The general public services function also includes expenses related to research in areas not
otherwise connected with a specific function (including research undertaken by the
Commonwealth Scientific and Industrial Research Organisation, the Australian Nuclear
Science and Technology Organisation, the Australian Institute of Marine Science, and the
Australian Research Council), those associated with overall economic and statistical
services, as well as government superannuation benefits (excluding nominal interest
expenses on unfunded liabilities, which are included under the nominal superannuation
interest sub-function in the other purposes function).
Table 6.4: Summary of expenses – general public services
Sub-function
Estimates
2023-24
2024-25
2025-26
2026-27
2027-28
$m
$m
$m
$m
$m
Legislative and executive affairs
2,052
2,216
1,676
1,633
1,840
Financial and fiscal affairs
10,378
10,227
10,070
10,081
9,814
Foreign affairs and economic aid(a)
7,282
8,730
7,667
8,105
8,632
General research(b)
4,063
4,485
4,378
4,232
4,276
General services
1,260
1,253
1,221
1,235
1,268
Government superannuation benefits
6,407
5,485
5,584
5,782
6,008
Total general public services
31,442
32,395
30,595
31,068
31,838
a) A further breakdown of the foreign affairs and economic aid sub function is provided in Table 6.4.1.
b) A further breakdown of the general research sub function is provided in Table 6.4.2.
Total general public services expenses are estimated to decrease by 1.7 per cent over the
period from 2024–25 to 2027–28.
The largest movement in expenses for the general public services function is an expected
increase for government superannuation benefits, with other significant movements in
spending on legislative and executive affairs, general research and foreign affairs and
economic aid. The remaining sub-functions are expected to remain broadly stable over the
period 2024–25 to 2027–28.
Legislative and executive affairs expenses largely reflect the maintenance of parliamentary
functions and personnel, and the expenditure profile of the Australian Electoral
Commission. The decrease in expenses from 2024–25 reflects the reduction in estimated
Australian Electoral Commission expenses following the federal election in 2024–25.
Budget Paper No. 1 |
Statement 6: Expenses and Net Capital Investment | Page 201
Financial and fiscal affairs expenses are expected to decrease, reflecting the termination of
a number of Australian Taxation Office programs. In the 2024–25 Budget, the Government
is extending several terminating ATO compliance programs, to ensure multinationals,
businesses and individuals are paying the right amount of tax in Australia.
Foreign affairs and economic aid expenses are expected to fluctuate over the period from
2024–25 to 2027–28. This largely reflects the payment cycles of Australia’s contributions
under funding arrangements for multilateral funds, with a significant increase in expenses
for Official Development Assistance in 2024–25, in line with previously agreed
arrangements. Government decisions in the 2024–25 Budget to continue and expand
programs supporting Southeast Asia, build on relationships in the Pacific, and
strengthening the capability of the Department of Foreign Affairs and Trade, are also
expected to contribute to growth in expenses across the period 2025–26 to 2027–28.
Table 6.4.1 sets out the major components of the foreign affairs and economic aid
sub-function.
Table 6.4.1: Trends in the major components of the foreign affairs and economic
aid sub-function expense
Component(a)
Estimates
2023-24
2024-25
2025-26
2026-27
2027-28
$m
$m
$m
$m
$m
Foreign aid(b)
4,080
5,222
4,229
4,531
5,080
Diplomacy(c)
1,494
1,645
1,689
1,725
1,733
Payments to international organisations
459
460
460
460
460
Passport services
390
394
307
351
350
International police assistance
259
280
281
300
322
International agriculture research and
development
127
129
126
129
132
Consular services
146
160
145
151
151
Finance and insurance services for
Australian exporters and investors
171
258
245
293
257
Other
156
183
184
164
146
Total
7,282
8,730
7,667
8,105
8,632
a) The entry for each component includes eliminations for inter-agency transactions within that component.
b) The foreign aid figures reflect aid spending by the Department of Foreign Affairs and Trade in accrual
terms. This differs from the international measure of aid reporting, Official Development Assistance
(ODA), which is in cash terms. Aid spending by other entities is usually reflected in other sub-functions.
c) Diplomacy includes departmental expenditure for the Department of Foreign Affairs and Trade’s
operations, security and IT, overseas property and international climate change engagement.
General research expenses are expected to decrease over the period 2024–25 to 2027–28,
attributable to fluctuations in funding allocated to research infrastructure programs, and
the reprioritisation of funding to realign investment with Government priorities in the
Industry portfolio.
Table 6.4.2 sets out the major components of the general research sub-function.
| Budget Paper No. 1
Page 202 | Statement 6: Expenses and Net Capital Investment
Table 6.4.2: Trends in the major components of general research sub-function
expense
Component(a)
Estimates
2023-24
2024-25
2025-26
2026-27
2027-28
$m
$m
$m
$m
$m
Research – science services and
innovation fund
1,620
1,537
1,563
1,575
1,575
Discovery – research and research
training
525
630
630
648
666
Science and technology solutions
473
495
525
527
541
Linkage – cross sector research
partnerships
329
398
407
435
447
Supporting science and
commercialisation
361
480
325
290
304
Research capacity
581
781
755
584
565
Other
174
164
173
173
179
Total
4,063
4,485
4,378
4,232
4,276
a) The entry for each component includes eliminations for inter-agency transactions within that component.
Expenses for general services are largely incurred by the Department of Finance,
Australian Public Service Commission, and Comcare. General services expenses are
estimated to remain broadly stable over the period 2024–25 to 2027–28. The variation in the
expenses profile over the period 2024–25 to 2027–28 largely reflects the impact of insurance
claims expenditure and terminating departmental funding measures.
The higher estimated expenses in 2023–24 for government superannuation benefits
primarily reflects the use of different discount rates. In accordance with accounting
standards, superannuation expenses for 2023–24 are calculated using the long-term
government bond rate that best matched each individual scheme’s duration of liabilities at
the start of the financial year. These rates are between 4.0 and 4.4 per cent per year. In
preparing the latest Long Term Cost Reports, the scheme actuaries have determined that a
discount rate of 5.0 per cent should be applied to the 2024–25 Budget year and forward
estimates as per usual practice.
Defence
The defence function includes expenses incurred by the Department of Defence (Defence)
and other agencies that support National Defence. Defence expenses support:
• Australian military operations; and
• National Defence, through strategic policy advice and the delivery of capabilities to
achieve an integrated and focused force, harnessing effects across the maritime, land,
air, space, and cyber domains.
Budget Paper No. 1 |
Statement 6: Expenses and Net Capital Investment | Page 203
The defence function does not include expenses incurred by the Department of Veterans’
Affairs, superannuation payments to retired military personnel, related nominal
superannuation interest, and housing assistance provided through Defence Housing
Australia. These expenses are reported in the social security and welfare, general public
services, other purposes, and housing and community amenities functions, respectively.
Table 6.5: Summary of expenses – defence
Sub-function
Estimates
2023-24
2024-25
2025-26
2026-27
2027-28
$m
$m
$m
$m
$m
Defence
45,128
47,986
50,046
51,339
55,102
Total defence
45,128
47,986
50,046
51,339
55,102
Total expenses for the defence sub-function are estimated to increase by 14.8 per cent over
the period 2024–25 to 2027–28. This change reflects the funding required to deliver Defence
capabilities to support an integrated, focused force that is positioned to safeguard
Australia’s security and prosperity.
Underpinned by the 2024 National Defence Strategy and Integrated Investment Program, the
Government will adopt a whole-of-government and whole-of-nation approach to
protecting our economic connection to the world, upholding the global rules-based order,
maintaining a favourable regional strategic balance, and contributing to the collective
security of the Indo-Pacific.
In the 2024–25 Budget, the Government is delivering increased funding of $50.3 billion over
ten years from 2024–25, and $7.7 billion per year ongoing, to support a shift in Defence’s
force structure and posture, and the capability investments prioritised in the 2024 National
Defence Strategy and Integrated Investment Program.
The Government has also committed to further spending to support the strategic objectives
of the 2024 National Defence Strategy, including: $232.3 million over three years to provide
Defence Assistance – regional and global support; and $166.2 million over five years from
2023–24 to strengthen Australia’s defence industrial base through the 2024 Defence Industry
Development Strategy.
Public order and safety
The public order and safety function includes expenses to support the administration of the
federal legal system and the provision of legal services, including legal aid, to the
community. Public order and safety expenses also include law enforcement, border
protection and intelligence activities, and the protection of Australian Government
property.
| Budget Paper No. 1
Page 204 | Statement 6: Expenses and Net Capital Investment
Table 6.6: Summary of expenses – public order and safety
Sub-function
Estimates
2023-24
2024-25
2025-26
2026-27
2027-28
$m
$m
$m
$m
$m
Courts and legal services
1,827
1,894
1,268
1,212
1,278
Other public order and safety(a)
6,133
6,528
5,725
5,619
5,477
Total public order and safety
7,960
8,421
6,993
6,832
6,756
a) A further breakdown of the other public order and safety sub-function is provided in Table 6.6.1.
Total expenses for public order and safety are estimated to decrease by 19.8 per cent over
the period 2024–25 to 2027–28, largely driven by expenses for other public order and
safety.
Courts and legal services expenses are expected to decrease over the period 2024–25 to
2027–28, reflecting the expiration of the National Legal Assistance Partnership on
30 June 2025, noting negotiations on the next agreement will begin shortly.
The profile of other public order and safety expenses is due in large part to two factors.
First, from 2025–26 onwards, funding terminates for some National Partnership Payments
for public order and safety. This funding will be considered by the Government in future
economic updates. Second, consistent with past practice, supplementary funding is
provided to the Australian Border Force on an annual basis for border protection activities,
based on operational requirements. In the 2024–25 Budget, the supplementary increase to
border protection funding is $266.7 million, bringing the total funding for 2024–25 to
$2.0 billion.
Table 6.6.1 sets out the major components of the other public order and safety
sub-function.
Table 6.6.1: Trends in the major components of the other public order and safety
sub-function expense
Component(a)
Estimates
2023-24
2024-25
2025-26
2026-27
2027-28
$m
$m
$m
$m
$m
Policing and law enforcement
4,370
4,571
4,213
4,091
3,997
Border Protection
1,762
1,957
1,512
1,529
1,480
Total
6,133
6,528
5,725
5,619
5,477
a) The entry for each component includes eliminations for inter-agency transactions within that component.
Education
The education function includes expenses to support the delivery of education services
through higher education institutions, vocational education and training providers
(including technical and further education institutions), and government (state and
territory) and non-government primary and secondary schools.
Budget Paper No. 1 |
Statement 6: Expenses and Net Capital Investment | Page 205
Table 6.7: Summary of expenses – education
Sub-function
Estimates
2023-24
2024-25
2025-26
2026-27
2027-28
$m
$m
$m
$m
$m
Higher education
10,918
11,540
12,113
12,529
12,969
Vocational and other education
2,351
2,540
2,654
2,657
2,542
Schools
29,215
30,201
31,385
32,597
33,833
Non-government schools
18,116
18,726
19,497
20,275
21,051
Government schools
11,099
11,474
11,889
12,322
12,782
School education - specific funding
1,182
940
895
861
808
Student assistance
5,132
7,482
5,863
6,156
6,478
General administration
301
343
309
294
294
Total education
49,099
53,046
53,220
55,093
56,925
Total education expenses are estimated to increase by 7.3 per cent over the period 2024–25
to 2027–28, reflecting the Government’s ongoing investment in schools, higher education,
and vocational education and training programs.
The main movements in expenses for the education function are attributable to schools
(comprising non-government schools and government schools), along with higher
education and student assistance. The remaining sub-functions are expected to remain
broadly stable over the period 2024–25 to 2027–28.
Higher education expenses are estimated to increase over the period 2024–25 to 2027–28,
primarily driven by growth in funding for Commonwealth supported study places at
universities. The Government is also increasing the number of Commonwealth supported
places for fee-free university preparation courses through the 2024–25 Budget measure
Australian Universities Accord – tertiary education system reforms.
Vocational and other education expenses are estimated to remain broadly stable across the
period 2024–25 to 2027–28. This reflects the profile of Government investment in vocational
education and training under the 5-year National Skills Agreement, which commenced from
1 January 2024.
Non-government schools expenses are estimated to increase over the period 2024–25 to
2027–28. This is primarily driven by growth in student enrolments, largely due to a one-off
change to enrolment projection methodology.
Government schools expenses are estimated to increase over the period 2024–25 to 2027–28
primarily reflecting an increase in the number of students that are eligible to attract a
‘student with disability’ loading.
| Budget Paper No. 1
Page 206 | Statement 6: Expenses and Net Capital Investment
Fluctuations in student assistance expenses reflect the Government’s decision to change
indexation arrangements for outstanding debt for student loans from 1 June 2023 through
the 2024–25 Budget measure Australian Universities Accord – tertiary education system reforms.
This measure results in a large, one-off increase in expenses in 2024–25 when students will
receive an indexation credit to their outstanding debt for prior year indexation adjustments.
Excluding this one-off expense, student assistance expenses are estimated to increase over
the period 2024–25 to 2027–28 primarily driven by growth in student numbers over the
period 2024–25 to 2027–28.
Health
The health function includes expenses relating to medical services funded through
Medicare, payments to the states and territories to deliver essential health services
(including public hospitals), the Pharmaceutical Benefits and Repatriation Pharmaceutical
Benefits Schemes, the Private Health Insurance Rebate, Aboriginal and Torres Strait
Islander health programs, mental health services, and health workforce initiatives.
Table 6.8: Summary of expenses – health
Sub-function
Estimates
2023-24
2024-25
2025-26
2026-27
2027-28
$m
$m
$m
$m
$m
Medical services and benefits(a)
38,777
41,233
43,341
45,141
47,206
Pharmaceutical benefits and services(b)
20,131
20,574
20,740
20,516
20,640
Assistance to the states for public hospitals
27,853
30,149
32,187
34,229
36,454
Hospital services(c)
1,100
1,130
1,189
1,215
1,249
Health services
13,860
13,363
12,715
12,423
12,515
General administration
4,460
4,900
4,434
3,701
3,476
Aboriginal and Torres Strait Islander health
1,235
1,344
1,308
1,286
1,260
Total health
107,416
112,693
115,913
118,512
122,801
a) A further breakdown of the medical services and benefits sub-function is provided in Table 6.8.1.
b) A further breakdown of the pharmaceutical benefits and services sub-function is provided in Table 6.8.2.
c) The hospital services sub-function predominantly reflects Commonwealth funding to the states and
territories for veterans’ hospital services.
Expenses for the health function are expected to increase by 9.0 per cent over the period
2024–25 to 2027–28. The largest movement in expenses for the health function is estimated
to occur in assistance to the states for public hospitals, with other significant movements
in medical services and benefits and health services. Expenses for the remaining
sub-functions are expected to largely remain stable over the period 2024–25 to 2027–28.
Medical services and benefits expenses, which primarily consists of Medical Benefits and
Private Health Insurance expenses, comprises 36.6 per cent of total estimated health
expenses for 2024–25. Expenses are expected to increase over the period 2024–25 to 2027–28,
primarily driven by growth in the Medical Benefits component. The increase is a result of
ongoing growth in the use of medical services, particularly primary care and diagnostic
imaging services, mostly driven by population growth.
Budget Paper No. 1 |
Statement 6: Expenses and Net Capital Investment | Page 207
Table 6.8.1 sets out the major components of the medical services and benefits
sub-function.
Table 6.8.1: Trends in the major components of the medical services and
benefits sub-function expense
Component(a)
Estimates
2023-24
2024-25
2025-26
2026-27
2027-28
$m
$m
$m
$m
$m
Medical benefits
29,763
31,983
33,915
35,497
37,344
Private health insurance
7,325
7,533
7,750
7,929
8,095
General medical consultations and
services
710
715
700
709
739
Dental services(b)
340
328
326
325
324
Other
640
674
650
681
703
Total
38,777
41,233
43,341
45,141
47,206
a) The entry for each component includes eliminations for inter-agency transactions within that component.
b) Payments under the funding agreements on Public Dental Services for Adults from 2020–21 are
provided for under the health services sub-function in Table 6.8.
Pharmaceutical benefits and services expenses, which primarily consists of
Pharmaceutical Benefits Scheme expenses, comprises 18.3 per cent of total estimated health
expenses for 2024–25. The Government is investing $3.9 billion over five years from
2023–24 through a range of 2024–25 Budget measures to ensure ongoing affordable access
to medicines. This includes new and amended listings on the Pharmaceutical Benefits
Scheme and investment in the community pharmacy sector through the 2024–25 Budget
measure Securing Cheaper Medicines. In real terms, expenditure is expected to decrease over
the period 2024–25 to 2027–28, primarily driven by the impact of existing pricing polices
under the Pharmaceutical Benefits Scheme component, which results in decreases to the
price of subsidised medicines.
Table 6.8.2 sets out the major components of the pharmaceutical benefits and services
sub-function.
Table 6.8.2: Trends in the major components of the pharmaceutical benefits and
services sub-function expense
Component(a)
Estimates
2023-24
2024-25
2025-26
2026-27
2027-28
$m
$m
$m
$m
$m
Pharmaceutical benefits, services and
supply
19,009
19,543
19,760
19,545
19,717
Immunisation
768
662
612
607
555
Veterans’ pharmaceutical benefits
354
369
367
364
369
Total
20,131
20,574
20,740
20,516
20,640
a) The entry for each component includes eliminations for inter-agency transactions within that component.
| Budget Paper No. 1
Page 208 | Statement 6: Expenses and Net Capital Investment
The Government’s contribution to public hospitals is reported through the assistance to the
states for public hospitals sub-function. Hospital services covered by this sub-function
include all admitted services, programs that deliver hospital services in the home, and
emergency department services. Expenditure for this sub-function is expected to increase
reflecting the Government’s current agreement under the 2020–2025 National Health
Reform Agreement Addendum with states and territories.
Health services include expenses associated with the delivery of population health,
medical research, mental health, blood and blood products, other allied health services,
health infrastructure and disbursements from the Medical Research Future Fund. Expenses
are expected to decrease as a result of a number of terminating measures for preventive
health and chronic disease. Funding for terminating measures will be considered in future
economic updates. The decrease in expenses is partly offset by increases in estimated
expenses for blood products and mental health.
Expenses for general administration include the Government’s general administrative
costs associated with health and aged care, funding for primary health care and
coordination, investment in health workforce measures, and support for rural health
initiatives. Expenditure for this sub-function is expected to decrease for the period 2024–25
to 2027–28, largely reflecting the gradual scaling down of the Government’s COVID-19
pandemic response, and the completion of ICT projects to deliver essential enhancements
to critical aged care digital systems.
Expenditure for Aboriginal and Torres Strait Islander health is expected to increase from
2023–24 to 2024–25, reflecting the Government’s commitment to closing the gap for First
Nations people’s health and wellbeing. Expenses are expected to marginally decrease over
the period 2024–25 to 2027–28, reflecting a number of terminating measures. Funding for
terminating measures will be considered in future economic updates.
Budget Paper No. 1 |
Statement 6: Expenses and Net Capital Investment | Page 209
Social security and welfare
The social security and welfare function includes expenses for pensions and services to the
aged, assistance to the unemployed and the sick, people with disabilities and families with
children, and income support and compensation for veterans and their dependants. It also
includes assistance provided to Indigenous Australians that has not been included under
other functions.
Table 6.9: Summary of expenses – social security and welfare
Sub-function
Estimates
2023-24
2024-25
2025-26
2026-27
2027-28
$m
$m
$m
$m
$m
Assistance to the aged(a)
95,306
100,653
104,825
109,575
115,972
Assistance to veterans and dependants
7,666
7,982
12,291
9,565
9,576
Assistance to people with disabilities(b)
80,401
84,342
89,140
94,510
100,547
Assistance to families with children(c)
44,381
46,931
49,115
51,190
52,597
Assistance to the unemployed and the sick
14,737
16,100
16,562
16,760
16,298
Other welfare programs
1,621
1,897
1,844
1,699
1,589
Assistance for Indigenous Australians nec
3,279
3,399
3,191
3,054
3,178
General administration
4,951
5,388
5,089
4,312
4,338
Total social security and welfare
252,342
266,693
282,057
290,665
304,093
a) A further breakdown of the assistance to the aged sub function is provided in Table 6.9.1.
b) A further breakdown of the assistance to people with disabilities sub function is provided in Table 6.9.2.
c) A further breakdown of the assistance to families with children sub function is provided in Table 6.9.3.
Expenses in social security and welfare are estimated to increase by 14.0 per cent over the
period 2024–25 to 2027–28. The largest movements in expenses for social security and
welfare are expected to occur in relation to assistance to the aged and assistance to people
with disabilities. Significant movements are also expected to occur in assistance to
veterans and dependants and assistance to families with children. The remaining
sub-functions are estimated to remain broadly stable over the period 2024–25 to 2027–28.
The expected increase in expenses for social security and welfare is primarily driven by
expenses for participant supports through the National Disability Insurance Scheme
(NDIS), more payments made to veterans and their families as outstanding claims for
rehabilitation and compensation are processed, and an expected increase in support for
seniors and aged care services expenses.
Assistance to the aged expenses are estimated to increase over the period 2024–25 to
2027–28, primarily driven by increases in expenditure in the Aged Care Services
component and the Support for Seniors component.
The Support for Seniors component is estimated to increase over the period 2024–25 to
2027–28 reflecting the expected increase in the number of Age Pension recipients as the
Australian population ages.
| Budget Paper No. 1
Page 210 | Statement 6: Expenses and Net Capital Investment
The significant drivers of growth in the Aged Care Services component are the expanding
ageing population and rising demand for aged care services. In the 2024–25 Budget, the
Government is providing $0.5 billion to release 24,100 additional Home Care Packages in
2024–25 to reduce wait times and meet the growing demand for care at home.
Table 6.9.1 sets out the major components of the assistance to the aged sub-function.
Table 6.9.1: Trends in the major components of the assistance to the aged
sub-function expense
Component(a)
Estimates
2023-24
2024-25
2025-26
2026-27
2027-28
$m
$m
$m
$m
$m
Support for Seniors
59,160
61,672
64,459
67,163
70,025
Aged Care Services
32,321
36,150
37,863
40,061
43,558
Veterans’ Community Care and Support
1,092
999
1,036
1,034
1,119
Aged Care Quality
1,691
541
303
290
236
Access and information
714
739
728
664
685
National Partnership Payments –
Assistance to the Aged
20
216
190
148
139
Other
309
336
245
214
211
Total
95,306
100,653
104,825
109,575
115,972
a) The entry for each component includes eliminations for inter-agency transactions within that component.
Assistance to veterans and dependants expenses are estimated to increase over the period
from 2024–25 to 2027–28, which largely reflects increasing expenses for income support and
compensation payments to veterans under the Military Rehabilitation Compensation Act 2004
as more claims are processed. In the 2024–25 Budget, the Government is providing
additional resources for frontline support to prioritise processing of outstanding claims for
veterans and their families now that the Department of Veterans’ Affairs has cleared the
claims backlog. Expenses are projected to peak in 2025–26 and then return to a steady state
in 2026–27 once the outstanding permanent impairment claims have been processed.
Assistance to people with disabilities expenses are expected to increase over the period
2024–25 to 2027–28, largely reflecting an increase in the number of people with disability
participating in the NDIS and increases in individual support costs.
On 27 March 2024, the Government introduced the National Disability Insurance Scheme
Amendment (Getting the NDIS Back on Track No. 1) Bill 2024. NDIS legislative reforms are
expected to moderate the additional growth in NDIS expenditure from 2024–25 projected
by the NDIS Actuary to that projected at the 2023–24 MYEFO, to keep NDIS expenditure on
track to achieve the NDIS Sustainability Framework from 1 July 2026.
Budget Paper No. 1 |
Statement 6: Expenses and Net Capital Investment | Page 211
Table 6.9.2 sets out the major components of the assistance to people with disabilities
sub-function.
Table 6.9.2: Trends in the major components of the assistance to people with
disabilities sub-function expense
Component(a)
Estimates
2023-24
2024-25
2025-26
2026-27
2027-28
$m
$m
$m
$m
$m
National Disability Insurance Scheme(b)
44,322
48,752
52,318
56,458
60,746
National Disability Insurance Scheme –
Quality and Safeguards
141
161
112
110
109
Financial Support for People with
Disability
21,165
22,003
22,855
23,657
24,765
Financial Support for Carers
12,752
13,419
13,855
14,285
14,927
National Partnership Payments –
Assistance to People with Disabilities
2,022
7
0
0
0
Total
80,401
84,342
89,140
94,510
100,547
a) The entry for each component includes eliminations for inter-agency transactions within that component.
b) Includes both Commonwealth and State contributions to the cost of the National Disability Insurance
Scheme delivered through the National Disability Insurance Agency, which is a Commonwealth agency
in the general government sector, and the cost of the NDIS program administered by the Department of
Social Services.
Assistance to families with children expenses are expected to increase over the period
2024–25 to 2027–28.
The expected increase in assistance to families with children expenses reflect increases in
Parental Leave Pay expenses, including an increase in both the number of recipients and
the average payment rates. In the 2024–25 Budget, the Government will provide additional
support to recipients of Paid Parental leave through the 2024–25 Budget measure
Commonwealth Government-Funded Paid Parental Leave – enhancement, which will provide a
superannuation guarantee equivalent payment to recipients’ superannuation fund, for
births and adoptions on or after 1 July 2025.
Assistance to families with children expenses are expected to further increase as a result of
the Child Care Subsidy, primarily reflecting the 2022–23 October Budget measure Plan for
Cheaper Child Care.
| Budget Paper No. 1
Page 212 | Statement 6: Expenses and Net Capital Investment
Table 6.9.3 sets out the major components of the assistance to families with children
sub-function.
Table 6.9.3: Trends in the major components of the assistance to families with
children sub-function expense
Component(a)
Estimates
2023-24
2024-25
2025-26
2026-27
2027-28
$m
$m
$m
$m
$m
Family Assistance
19,787
20,742
22,107
23,021
23,381
Child Care Subsidy
13,914
14,531
15,113
15,996
16,899
Parents income support
7,223
7,911
8,209
8,535
8,716
Child Support
1,893
1,923
1,963
1,996
2,031
Support for the child care system
412
460
333
326
326
Families and Children
861
1,065
1,087
1,015
936
Family relationship services
267
275
281
281
287
Other
24
23
21
21
22
Total
44,381
46,931
49,115
51,190
52,597
a) The entry for each component includes eliminations for inter-agency transactions within that component.
Expenses for assistance to the unemployed and the sick are estimated to increase over the
period 2024–25 to 2027–28, primarily driven by growth in the expected number of benefits
recipients, as a result of the unemployment rate expecting to modestly rise from its close to
historic low, and an increase in the share of recipients receiving full payment.
Other welfare programs expenses are expected to decrease over the period 2024–25 to
2027–28 as a result of terminating measures. Funding for terminating measures will be
considered in future economic updates. This decrease is partially offset by an increase in
funding through the 2024–25 Budget measure The Leaving Violence Program – financial
support for victim-survivors of intimate partner violence, which will provide $925.2 million over
five years from 2023–24.
In the 2024–25 Budget, the Government is investing in measures which will drive progress
under the National Agreement on Closing the Gap and deliver better outcomes for First
Nations people. Expenses for assistance to Indigenous Australians not elsewhere
classified (nec) includes investments in a range of measures to deliver outcomes across
portfolios addressing the Priority Reforms and Socioeconomic Targets under the National
Agreement on Closing the Gap. Major investments through the Northern Territory Homelands
and Housing and Remote Jobs and Economic Development Program deliver the Government’s
commitment to improve outcomes for First Nations people in remote Northern Territory
and remote Australia.
Housing and community amenities
The housing and community amenities function includes expenses for the Government’s
contribution to the National Housing and Homelessness Agreement, other Australian
Government housing programs, the expenses of Defence Housing Australia (DHA), urban
and regional development programs and environmental protection initiatives.
Budget Paper No. 1 |
Statement 6: Expenses and Net Capital Investment | Page 213
Table 6.10: Summary of expenses – housing and community amenities
Sub-function
Estimates
2023-24
2024-25
2025-26
2026-27
2027-28
$m
$m
$m
$m
$m
Housing
4,305
4,372
4,206
4,541
3,696
Urban and regional development
1,620
2,906
2,258
854
520
Environment protection
2,029
2,721
2,367
1,676
1,413
Total housing and community amenities
7,955
9,999
8,831
7,072
5,629
Expenses for housing and community amenities are expected to decrease by 43.7 per cent
over the period 2024–25 to 2027–28, primarily driven by a decrease in expenses for urban
and regional development and environment protection.
Housing expenses include the Government’s contribution to the new National Agreement on
Social Housing and Homelessness, the provision of housing for the general public and people
with special needs, and DHA expenses. Housing expenses are estimated to increase from
2024–25 to 2026–27, before decreasing from 2026–27 to 2027–28, primarily driven by
terminating National Partnership Payments. The National Partnership Payments include
short-term support for enabling infrastructure through the Housing Support Program, the
finalisation of Homebuilder and the initial distribution of $100 million in 2024–25 from the
Housing Australia Future Fund (HAFF). This distribution is made towards the
Government’s commitment to provide $200 million over five years to support repairs to,
maintenance of, and improvements to infrastructure in remote First Nations communities.
In the 2024–25 Budget, the Government is investing $9.3 billion over five years from
2024–25 through the new National Agreement on Social Housing and Homelessness, which will
support states and territories to provide social housing and homelessness services. Subject
to states and territories agreement to the new National Agreement on Social Housing and
Homelessness, the Government is also providing an additional $1 billion in 2023–24 to states
and territories to support enabling infrastructure for new housing through the Housing
Support Program – Priority Works Stream.
The Government is providing $1.5 billion over five years from 2023–24 in grants and
availability payments to support the supply of social and affordable housing funded
through: distributions from HAFF; changes to the National Housing Infrastructure Facility
to support crisis and transitional accommodation for women and children fleeing domestic
violence and youth; and commitments under the National Housing Accord.
In addition, the Government will support up to $4.7 billion in concessional loans and
increase access to guaranteed financing through the Australian Housing Bond Aggregator,
as part of the 2024–25 Budget measure Housing Support. This measure will provide eligible
community housing projects with lower than market rate loans to support the delivery of
social and affordable housing including those being funded through the HAFF and the
National Housing Accord. These payments will flow through Housing Australia.
| Budget Paper No. 1
Page 214 | Statement 6: Expenses and Net Capital Investment
Expenses for urban and regional development comprise urban development, services to
territories, and regional development programs. Expenses under this sub-function are
estimated to decrease over the period 2024–25 to 2027–28, primarily reflecting the profile of
funding for the Priority Community Infrastructure Program and Investing in Our
Communities Program and the conclusion of the Community Development Grants
program and Building Better Regions Fund.
Environment protection expenses includes expenses for a variety of initiatives, including
the protection and conservation of the environment, water and waste management,
pollution abatement and environmental research. Expenses are estimated to decrease over
the period 2024–25 to 2027–28, primarily due to the deferral of construction for the Paradise
Dam project until beyond 2027–28 and planned termination of the Critical Inputs to Clean
Energy Industries program from 2026–27. The Government’s investment in clean energy is
also captured in the fuel and energy function.
In the 2024–25 Budget, the Government is providing $364.5 million over six years from
2024–25 to continue implementation of environmental reforms, streamline environmental
approvals and deliver the Government’s circular economy functions through the measures
Nature Positive Plan – additional funding, Future Made in Australia – Strengthening Approvals
Processes and Commonwealth Leadership for a Safe Circular Economy – continuing delivery. The
Government is also investing in water infrastructure projects under the
2024–25 Budget measure National Water Grid Fund – responsible investment in water
infrastructure for the regions.
Recreation and culture
The recreation and culture function includes expenses to support public broadcasting and
cultural institutions, funding for the arts and the film industry, assistance to sport and
recreation activities, as well as the management and protection of national parks and other
world heritage areas. This function also includes expenses relating to the protection and
preservation of historic sites and buildings, including war graves.
Table 6.11: Summary of expenses – recreation and culture
Sub-function
Estimates
2023-24
2024-25
2025-26
2026-27
2027-28
$m
$m
$m
$m
$m
Broadcasting(a)
1,688
1,749
1,801
1,800
1,813
Arts and cultural heritage
1,992
2,140
1,919
1,890
1,851
Sport and recreation
594
708
993
1,016
1,223
National estate and parks
776
774
759
717
717
Total recreation and culture
5,050
5,372
5,472
5,423
5,604
a) A further breakdown of the broadcasting sub-function is provided in Table 6.11.1.
Budget Paper No. 1 |
Statement 6: Expenses and Net Capital Investment | Page 215
Total expenses under the recreation and culture function are estimated to increase by
4.3 per cent over the period 2024–25 to 2027–28. This increase is primarily driven by an
expected increase in sport and recreation expenses, which is linked to the Government’s
investment in venue infrastructure for the 2032 Brisbane Olympic and Paralympic Games
provided in the 2023–24 Budget. The increase is partially offset by a decrease in arts and
cultural heritage expenses. The remaining sub-functions are estimated to remain broadly
stable over the period 2024–25 to 2027–28.
Broadcasting expenses reflect the five year funding terms for the Australian Broadcasting
Corporation and Special Broadcasting Services Corporation that commenced from
1 July 2023.
Table 6.11.1 sets out the major components of the broadcasting sub-function.
Table 6.11.1: Trends in the major components of the broadcasting sub-function
expense
Component(a)
Estimates
2023-24
2024-25
2025-26
2026-27
2027-28
$m
$m
$m
$m
$m
ABC general operational activities
1,004
1,042
1,060
1,045
1,063
SBS general operational activities
409
421
447
457
446
ABC transmission and distribution
services
197
207
213
216
221
SBS transmission and distribution
services
77
79
81
82
83
Total
1,688
1,749
1,801
1,800
1,813
a) The entry for each component includes eliminations for inter-agency transactions within that component.
Expenses under arts and cultural heritage are estimated to increase from 2023–24 to
2024–25, followed by a decrease over the period 2024–25 to 2027–28. This is due to
increased estimated payments under the Australian Screen Production Incentives and
Digital Game Production Offset programs in 2023–24 and 2024–25 and a reduction in
funding for the Location Incentive Program over the five years from 2023–24 to 2027–28.
The decrease is partially offset by additional funding for the national arts training
organisations and the Australian Film Television and Radio School through the
2024–25 Budget measure Revive – National Cultural Policy. This measure will provide
$216.6 million over four years to support Australia’s arts, entertainment, and cultural
sector.
Sport and recreation expenses are estimated to increase over the period 2024–25 to
2027–28, due to the Government’s investment in venue infrastructure for the 2032 Brisbane
Olympic and Paralympic Games. The Government is also providing additional funding
through the 2024–25 Budget measures Supporting Sports Participation and Sport Integrity
Australia – funding support to continue Commonwealth sport participation and
high-performance grants funding programs, provide additional funding to support
preparation for and delivery of key international events, safeguard the integrity of
Australian sport and invest in the upgrade and restoration of sporting infrastructure.
| Budget Paper No. 1
Page 216 | Statement 6: Expenses and Net Capital Investment
National estate and parks expenses are estimated to decrease slightly over the period
2024–25 to 2027–28, reflecting the Government’s upfront investment in 2024–25 for
Antarctic shipping requirements, the Macquarie Island Research Station and cultural
heritage reform through the 2024–25 Budget measures, Australian Antarctic
Program – additional funding and Future Made in Australia – Strengthening Approvals Processes.
Fuel and energy
The fuel and energy function includes expenses for the Fuel Tax Credits and Product
Stewardship for Oil schemes administered by the Australian Taxation Office. It also
includes expenses related to improving Australia’s energy efficiency, resource related
initiatives, and programs to support the production and use of renewable energy.
Table 6.12: Summary of expenses – fuel and energy
Sub-function
Estimates
2023-24
2024-25
2025-26
2026-27
2027-28
$m
$m
$m
$m
$m
Fuel and energy(a)
13,273
20,121
13,908
13,794
13,825
Total fuel and energy
13,273
20,121
13,908
13,794
13,825
a) A further breakdown of the fuel and energy sub-function is provided in Table 6.12.1.
Total fuel and energy expenses are estimated to increase in 2024–25, before returning to a
stable trend. The increase in 2024–25 is driven by the concessional component of the
Government’s concessional loan investments to grow Australia’s renewable energy sector
through the Rewiring the Nation Fund, administered by the Clean Energy Finance
Corporation.
Table 6.12.1 sets out the major components of the fuel and energy sub-function.
Table 6.12.1: Trends in the major components of the fuel and energy
sub-function expense
Component(a)
Estimates
2023-24
2024-25
2025-26
2026-27
2027-28
$m
$m
$m
$m
$m
Fuel Tax Credits Scheme
9,857
10,184
10,561
11,309
12,115
Resources and Energy
2,093
4,464
1,346
496
568
Renewable Energy
973
5,053
1,673
1,705
890
Other
350
420
328
284
252
Total
13,273
20,121
13,908
13,794
13,825
a) The entry for each component includes eliminations for inter-agency transactions within that component.
The major program within this function is the Fuel Tax Credits Scheme, for which
payments are expected to increase over the period 2024–25 to 2027–28, partially offsetting
the overall function movement. This largely reflects an expected increase in the use of fuels
that are eligible for the Fuel Tax Credit Scheme.
Budget Paper No. 1 |
Statement 6: Expenses and Net Capital Investment | Page 217
Resources and Energy expenses are expected to fluctuate over the period 2024–25 to
2027–28, reflecting the profile of the 2024–25 Budget measure Energy Bill Relief
Fund – extension and expansion. This measure is expected to increase expenses from 2023–24
to 2024–25, reflecting the Government’s focus on providing immediate cost-of-living relief,
before terminating 2025–26, resulting in a decrease in expenses from 2025–26 to 2027–28.
Expenses for the Renewable Energy component are expected to increase for 2024–25,
before decreasing for the period 2025–26 to 2027–28, reflecting the profile of expenses for
the concessional component of the concessional loan deployment by the Clean Energy
Finance Corporation. The forecasted loan deployment is primarily expected to be made
under the 2022–23 October Budget measure Powering Australia – Rewiring the Nation. In the
2024–25 Budget, the Government is continuing to invest in renewable energy and clean
energy technologies, including through an additional round of Hydrogen Headstart, the
commencement of the Hydrogen Production Tax Incentive from 2027–28 and the Solar Sunshot
program.
Agriculture, forestry and fishing
The agriculture, forestry and fishing function include expenses to support assistance to
primary producers, forestry, fishing, land and water resources management, biosecurity
services, and contributions to research and development.
Table 6.13: Summary of expenses – agriculture, forestry and fishing
Sub-function
Estimates
2023-24
2024-25
2025-26
2026-27
2027-28
$m
$m
$m
$m
$m
Wool industry
68
84
95
95
95
Grains industry
272
290
292
295
297
Dairy industry
58
57
55
55
55
Cattle, sheep and pig industry
258
262
268
277
279
Fishing, horticulture and other agriculture
508
503
443
429
388
General assistance not allocated to
specific industries
45
47
45
45
45
Rural assistance
406
316
398
379
380
Natural resources development
1,089
1,346
1,177
1,106
485
General administration
1,364
1,411
1,306
1,269
1,271
Total agriculture, forestry and fishing
4,068
4,317
4,079
3,949
3,294
Total expenses for agriculture, forestry and fishing are estimated to decrease by
23.7 per cent over the period 2024–25 to 2027–28. The expected decrease largely reflects the
scheduled completion of activities under the Murray-Darling Basin Plan 2012 (Basin Plan),
within natural resources development.
The overall decrease in the agriculture, forestry and fishing function is partially offset by an
increase in expenses for rural assistance. This is largely due to an expected increase in Farm
Household Allowance payments from 2024–25, due to the start of the new ten year claim
period for eligible recipients on 1 July 2024.
| Budget Paper No. 1
Page 218 | Statement 6: Expenses and Net Capital Investment
Natural resources development expenses are estimated to decrease over the period
2024–25 to 2027–28. The decrease in expenses largely reflects the scheduled completion of
water reform activities to deliver the Basin Plan by the December 2027 deadline set out in
the Water Amendment (Restoring Our Rivers) Act 2023. In the 2024–25 Budget, the
Government is investing $256.5 million over four years through the 2024–25 Budget
measure Sustaining Water Functions to support delivery of the Government’s water
commitments.
Mining, manufacturing and construction
The mining, manufacturing and construction function includes expenses for programs
designed to promote the efficiency and competitiveness of Australian industries. The major
components include the Research and Development Tax Incentive and industry
assistance programs.
Table 6.14: Summary of expenses – mining, manufacturing and construction
Sub-function
Estimates
2023-24
2024-25
2025-26
2026-27
2027-28
$m
$m
$m
$m
$m
Mining, manufacturing and construction(a)
5,968
5,511
5,563
5,776
6,172
Total mining, manufacturing
and construction
5,968
5,511
5,563
5,776
6,172
a) A further breakdown of the mining, manufacturing and construction sub-function is provided in
Table 6.14.1.
Total expenses for mining, manufacturing and construction are expected to increase by
12.0 per cent over the period 2024–25 to 2027–28, reflecting the Government’s increased
support for the Australian mining, manufacturing, and construction industries.
Table 6.14.1 sets out the major components of the mining, manufacturing and construction
sub-function.
Table 6.14.1: Trends in the major components of the mining, manufacturing and
construction sub-function expense
Component(a)
Estimates
2023-24
2024-25
2025-26
2026-27
2027-28
$m
$m
$m
$m
$m
Research and Development Tax
Incentive
4,783
4,475
4,610
4,751
4,895
Growing Business Investment
684
451
241
178
105
Northern Australia Infrastructure Facility
98
145
275
436
408
Other
402
440
438
411
764
Total
5,968
5,511
5,563
5,776
6,172
a) The entry for each component includes eliminations for inter-agency transactions within that component.
Budget Paper No. 1 |
Statement 6: Expenses and Net Capital Investment | Page 219
Expenses for the Research and Development Tax Incentive administered by the
Australian Taxation Office are expected to increase over the period 2024–25 to 2027–28 due
to increases in the number and value of expected claims from eligible companies,
particularly companies in the ‘Professional, Scientific and Technical Services’ industry.
The Northern Australia Infrastructure Facility offers debt and equity finance to projects
that contribute to the establishment or enhancement of economic activity in northern
Australia. Expenses are expected to increase over the period 2024–25 to 2027–28, due to
changes in concessional loan discount expenses associated with the expected commitment
of concessional loans across the period 2024–25 to 2027–28.
Expenses under the Other component are expected to increase over the period 2024–25 to
2027–28, driven by the 2024–25 Budget measures Future Made in Australia – Making Australia
a Renewable Energy Superpower and Future Made in Australia – Investing in Innovation, Science
and Digital Capabilities. This measure will provide additional resourcing to Geoscience
Australia to map all of Australia’s critical minerals, strategic minerals, groundwater, and
other resources essential to the transition to net zero. This funding also covers the expenses
involved in introducing the Critical Minerals Production Tax Incentive. The expected
increase in expenses will be partially offset by the Growing Business Investment
component which is expected to decrease in expenses over the period 2024–25 to 2027–28,
reflecting terminating measures.
Transport and communication
The transport and communication function includes expenses to support the infrastructure
and regulatory framework for Australia’s transport and communication sectors. Expenses
for the transport and communication function primarily reflect Government investment in
road and rail transport through the Infrastructure Investment Program. This function also
includes expenditure for communications activities and support for the digital economy
through the Department of Infrastructure, Transport, Regional Development,
Communications and the Arts, and the Australian Communications and Media Authority.
Table 6.15: Summary of expenses – transport and communication
Sub-function
Estimates
2023-24
2024-25
2025-26
2026-27
2027-28
$m
$m
$m
$m
$m
Communication
1,775
1,927
1,825
1,745
1,645
Rail transport
3,082
3,814
3,212
3,676
2,816
Air transport
434
465
446
355
291
Road transport
8,859
9,707
10,408
9,799
9,111
Sea transport
499
496
496
501
507
Other transport and communication
279
360
331
299
286
Total transport and communication
14,928
16,769
16,717
16,375
14,656
Total expenses under this function are estimated to decrease by 12.6 per cent from 2024–25
to 2027–28. This is largely driven by the realignment of project profiles under the
Infrastructure Investment Program to more accurately reflect delivery schedules, as well as
the completion of priority infrastructure projects.
| Budget Paper No. 1
Page 220 | Statement 6: Expenses and Net Capital Investment
Communication expenses are estimated to decrease from 2024–25 to 2027–28, primarily
reflecting the funding profile for the Better Connectivity Plan for Regional and Rural
Australia, and the conclusion of the Mobile Black Spot Program.
Rail transport expenses are estimated to increase from 2023–24 to 2024–25, before
decreasing from 2024–25 to 2027–28. The initial increase and subsequent decrease in
expenditure reflects the schedules of major rail infrastructure projects, including projects
under the METRONET program and Sydney Metro – Western Sydney Airport.
Air transport expenses primarily relate to activities of the safety regulator Civil Aviation
Safety Authority, and aviation related initiatives. Total expenses are estimated to decrease
from 2024–25 to 2027–28, due to the conclusion of a number of aviation initiatives,
including upgrades at Hobart and Newcastle Airports and the timing of additional rounds
of regional aviation connectivity programs provided through the 2024–25 Budget measure
Supporting Transport Priorities.
Road transport expenses are estimated to increase from 2023–24 to 2025–26, and then
decrease from 2025–26 to 2027–28. The increase and subsequent decrease in expenditure,
reflects the Government’s continued investment in priority road infrastructure projects, and
the expected completion of priority infrastructure projects including the Bunbury Outer
Ring Road and M12 Motorway. Through the 2024–25 Budget measure Building a Better
Future Through Considered Infrastructure Investment, the Government is providing
$16.5 billion towards priority road and rail projects and re-profile $2.1 billion to beyond the
forward estimates to better align with construction market conditions and project delivery
timeframes.
Total expenses for other transport and communication are estimated to decrease from
2024–25 to 2027–28, primarily reflecting the timeline of departmental activities under the
2024–25 Budget measure New Vehicle Efficiency Standard Implementation.
Other economic affairs
The other economic affairs function includes expenses on tourism and area promotion,
labour market assistance, immigration, industrial relations, and other economic affairs not
elsewhere classified (nec).
Budget Paper No. 1 |
Statement 6: Expenses and Net Capital Investment | Page 221
Table 6.16: Summary of expenses – other economic affairs
Sub-function
Estimates
2023-24
2024-25
2025-26
2026-27
2027-28
$m
$m
$m
$m
$m
Tourism and area promotion
198
192
191
191
191
Total labour and employment affairs
6,308
5,881
5,575
5,198
5,081
Vocational and industry training
2,984
2,384
2,130
1,676
1,561
Labour market assistance to job
seekers and industry
2,326
2,411
2,400
2,490
2,473
Industrial relations
998
1,086
1,044
1,032
1,047
Immigration(a)
3,836
3,699
3,147
3,156
3,088
Other economic affairs nec(b)
3,669
3,614
3,300
3,187
3,151
Total other economic affairs
14,011
13,386
12,214
11,733
11,512
a) A further breakdown of the immigration sub function is provided in Table 6.16.1.
b) A further breakdown of the other economic affairs nec sub function is provided in Table 6.16.2.
Total expenses for other economic affairs are estimated to decrease by 14.0 per cent over the
period 2024–25 to 2027–28, reflecting the cessation of the Boosting Apprenticeship
Commencements wage subsidy. The Government is undertaking a Strategic Review of the
Australian Apprenticeships Incentive System and, through the 2024–25 Budget measure
Australian Apprenticeships Incentive System – further support, is providing additional financial
support to apprentices and their employers while this review is completed.
The largest movement in the other economic affairs function is estimated to occur in
vocational and industry training, with other significant movements in expenses in labour
market assistance to job seekers and industry, immigration, and other economic affairs
nec. The remaining sub-functions are estimated to remain broadly stable over the period
2024–25 to 2027–28.
Vocational and industry training expenses are estimated to decrease over the period
2024–25 to 2027–28, primarily reflecting the cessation of the temporary COVID-19 support
Boosting Apprenticeship Commencements wage subsidy, which is closed to new
applicants. The Government is providing additional support to apprentices and their
employers through the 2024–25 Budget measure Australian Apprenticeships Incentive System
– further support, while the Government undertakes the Strategic Review of the Australian
Apprenticeships Inventive System. This support, targeted towards apprenticeships in
priority occupations, will boost apprenticeship commencements in industries where skills
needs are greatest.
Labour market assistance to job seekers and industry expenses are estimated to increase
over the period 2024–25 to 2027–28, reflecting the Government’s commitment to strengthen
Australia’s employment services system and improve outcomes for individuals accessing
employment services more broadly. The growth in expenses is primarily driven by
implementing a range of improvements to the current employment services system,
consistent with the Government’s vision for a dynamic and inclusive labour market and the
Employment White Paper.
| Budget Paper No. 1
Page 222 | Statement 6: Expenses and Net Capital Investment
Industrial relations expenses are estimated to decrease over the period 2024–25 to 2027–28
largely as a result of terminating funding provided in the 2023–24 MYEFO measures
Prohibition on the Use of Engineered Stone – communication strategy and Review of the Safety,
Rehabilitation and Compensation Act 1988. This decrease is expected to be partially offset by a
range of supports to progress the Government’s workplace relations agenda, critical to the
implementation of changes made by the Fair Work Legislation Amendment (Closing Loopholes)
Act 2023, and further reforms passed in the Fair Work Legislation Amendment (Closing
Loopholes No.2) Bill 2023.
The immigration sub-function includes the provision of migration and citizenship services,
the management of unlawful non-citizens, and refugee and humanitarian assistance.
Immigration expenses are expected to decrease over the period 2024–25 to 2027–28,
primarily reflecting the forecast reduction of the detainee population in onshore detention
and in the offshore processing centre.
Table 6.16.1 sets out the major components of the immigration sub-function.
Table 6.16.1: Trends in the major components of the immigration sub-function
expense
Component(a)
Estimates
2023-24
2024-25
2025-26
2026-27
2027-28
$m
$m
$m
$m
$m
Management of unlawful non-citizens
1,779
1,732
1,417
1,455
1,472
Citizenship, visas and migration
975
945
818
809
816
Regional co-operation and refugee and
humanitarian assistance
1,082
1,022
912
892
800
Total
3,836
3,699
3,147
3,156
3,088
a) The entry for each component includes eliminations for inter-agency transactions within that component.
Expenses for other economic affairs nec are expected to decrease over the period 2024–25
to 2027–28. This reflects a decrease in departmental expenses for the Department of
Industry, Science, and Resources and the Australian Securities and Investments
Commission.
The decrease in departmental expenses for the Department of Industry, Science, and
Resources over the period 2024–25 to 2027–28, is driven by a range of terminating measures
and the provision of terminating departmental funding in elements of the 2024–25 Budget
measure Future Made in Australia – Investing in Innovation, Science and Digital Capabilities
which provides funding to the National Measurement Institute to ensure sophisticated and
reliable Australian measurement capability to underpin the Government’s Future Made in
Australia agenda.
Expenses for other economic affairs nec also includes funding for the Australian
Competition and Consumer Commission provided through the 2024–25 Budget measure
Competition Reform. This measure will provide funding to implement a mandatory and
suspensory administrative merger control system to prevent harmful mergers, maintain
competition, and increase transparency.
Budget Paper No. 1 |
Statement 6: Expenses and Net Capital Investment | Page 223
Table 6.16.2 sets out the major components of the other economic affairs nec sub-function.
Table 6.16.2: Trends in the major components of the other economic affairs nec
sub-function expense
Component(a)
Estimates
2023-24
2024-25
2025-26
2026-27
2027-28
$m
$m
$m
$m
$m
Economic Response to the Coronavirus
228
0
0
0
0
Promotion of Australia’s export and
other international economic interests
486
456
390
380
372
Operating costs for:
Department of Industry, Science and
Resources
755
775
706
624
603
Australian Securities and Investments
Commission
714
849
728
730
709
Bureau of Meteorology
561
522
523
539
542
IP Australia
255
269
278
288
299
Australian Competition and
Consumer Commission
266
301
250
212
210
Australian Prudential Regulation
Authority
239
269
265
255
256
Other
164
174
160
158
160
Total
3,669
3,614
3,300
3,187
3,151
a) The entry for each component includes eliminations for inter-agency transactions within that component.
Other purposes
The other purposes function includes expenses incurred in the servicing of public debt
interest, and assistance to state, territory and local governments. This function also includes
items classified as natural disaster relief, the Contingency Reserve, and expenses related to
the nominal interest on unfunded liabilities for government superannuation benefits.
Table 6.17: Summary of expenses – other purposes
Sub-function
Estimates
2023-24
2024-25
2025-26
2026-27
2027-28
$m
$m
$m
$m
$m
Public debt interest
22,547
24,107
28,269
32,432
35,744
Interest on Commonwealth Government's
behalf
22,547
24,107
28,269
32,432
35,744
Nominal superannuation interest
13,374
14,620
15,126
15,610
16,054
General purpose inter-government transactions
92,917
97,995
102,937
108,329
112,941
General revenue assistance - states and
territories
92,107
94,412
99,241
104,771
109,243
Local government assistance
810
3,583
3,696
3,558
3,697
Natural disaster relief
1,392
921
676
408
314
Contingency reserve
2,200
167
14,674
19,357
26,496
Total other purposes
132,430
137,810
161,683
176,135
191,549
| Budget Paper No. 1
Page 224 | Statement 6: Expenses and Net Capital Investment
Total expenses for other purposes are estimated to increase by 39.0 per cent over the period
2024–25 to 2027–28.
The main drivers of the increase in other purposes expenses are public debt interest,
general purpose inter-government transactions, and the contingency reserve.
Public debt interest expenses are expected to increase from 2023–24, largely reflecting
higher debt servicing costs.
The increase in nominal superannuation interest expenses between 2023–24 and 2024–25
primarily reflects the use of updated discount rates. In accordance with accounting
standards, superannuation expenses for 2023–24 are calculated using the long-term
government bond rate that best matched each individual scheme’s duration of liabilities at
the start of the financial year. These rates were between 4.0 and 4.4 per cent per year. In
preparing the latest Long Term Cost Reports, the scheme actuaries have determined that a
discount rate of 5.0 per cent should be applied to the estimates in the budget year and
forward estimates as per usual practice.
General purpose inter-government transactions expenses are made up of general revenue
assistance paid to state and territory governments and local government assistance.
Expenses are expected to increase over the period 2024–25 to 2027–28. Nearly all the
expenses relate to general revenue assistance paid to state and territory governments,
which is expected to increase over the period 2024–25 to 2027–28, largely comprising
payments of GST entitlements provided on an ‘untied’ basis. Payments to state and
territory governments tied to specific purposes are reported under the relevant sections in
this Statement. Further information on general revenue assistance to the states and
territories can be found in Budget Paper No. 3, Federal Financial Relations.
Expenses for natural disaster relief reflect financial support provided by the Australian
Government to affected states and territories under the Natural Disaster Relief and
Recovery Arrangements and, since November 2018, the Disaster Recovery Funding
Arrangements. Expenses also reflect departmental funding for the National Emergency
Management Agency. The majority of funding over the period 2024–25 to 2027–28 reflects
expected payments to the states in relation to disaster events that have already occurred. As
provisions are not generally made for future disasters, the amount reduces over time.
Additional funding is provisioned as needed in response to natural disasters.
Budget Paper No. 1 |
Statement 6: Expenses and Net Capital Investment | Page 225
The contingency reserve in the 2024–25 Budget is estimated to increase expenses by
$166.6 million in 2024–25, $14.7 billion in 2025–26, $19.4 billion in 2026–27 and $26.5 billion
in 2027–28. A key component of this is the conservative bias allowance, which makes
provision for the tendency for the estimate of expenses for existing Government policy
(excluding GST payments to the states) to be revised upwards in the forward years. The
2024–25 Budget includes a provision of:
• nil in the Budget year 2024–25
• ½ of a percentage point of total general government sector expenses in the first forward
year 2025–26 ($3.3 billion)
• 1 per cent of general government sector expenses in the second forward year 2026–27
($6.8 billion)
• 2 per cent of general government sector expenses in the third forward year 2027–28
($14.1 billion).
The drawdown of the conservative bias allowance decreased expenses by $1.6 billion in
2024–25, $1.5 billion in 2025–26, $3.2 billion in 2026–27 and $3.1 billion in 2027–28. This is
consistent with long standing practice and does not represent a saving or offset to spending
measures.
As part of the Government’s responsible approach to economic management, the
Contingency Reserve includes a provision for the estimated financial impact of further
wage increases resulting from the decision of the Fair Work Commission’s Aged Care
Work Value Case – Stage 3, with the operative date and phasing in of wage increases still to
be determined. The Government has also made a provision to deliver on its commitment to
provide funding towards a wage increase for Early Childhood Education and Care
workers, with details to be finalised following Fair Work Commission processes.
The Contingency Reserve also includes a provision to reflect the outcomes of the
December 2023 National Cabinet meeting and to meet future anticipated disaster recovery
costs.
The Contingency Reserve also includes estimates for policy decisions that have been
announced but cannot yet be included in entity estimates, usually due to some uncertainty
as to their final cost and/or outcomes, or as they are subject to negotiations.
| Budget Paper No. 1
Page 226 | Statement 6: Expenses and Net Capital Investment
In general, the Contingency Reserve can include:
• commercial-in-confidence and national security-in-confidence items that cannot be
disclosed separately
• financial assistance to state and territory governments for future programs and reforms
subject to negotiations, including commitments made by National Cabinet
• the effect, on the budget and forward estimates, of economic parameter revisions
received late in the process and hence not able to be allocated to individual entities or
functions
• decisions taken but not yet announced by the Government, and decisions made too late
for inclusion against individual entity estimates
• provisions for other specific events and pressures that are reasonably expected to affect
the budget estimates, including the continuation of terminating measures.
Budget Paper No. 1 |
Statement 6: Expenses and Net Capital Investment | Page 227
General government net capital investment
Net capital investment is broadly defined as the sale and acquisition of non-financial assets,
less depreciation expenses. It provides a measure of the overall growth in capital assets
(including buildings and infrastructure, specialist military equipment, and computer
software) after taking into account depreciation and amortisation as previously acquired
assets age.
Government capital spending involves acquisition of physical assets, financial assets and
provision of grants and subsidies to others (primarily state and territory governments),
which they then use to acquire assets.
Australian Government general government sector net capital investment is expected to be
$6.3 billion in 2024–25, reflecting a decrease from 2023–24. Net capital investment is
expected to increase to $11.9 billion in 2027–28, primarily reflecting capability investments
prioritised in the 2024 National Defence Strategy and Integrated Investment Program.
Details of movements are further explained in the following section.
Table 6.18: Estimates of total net capital investment
MYEFO
Revised
Estimates
2023-24
2023-24
2024-25
2025-26
2026-27
2027-28
Total net capital
investment ($m)
8,895
7,754
6,303
8,055
8,988
11,899
Per cent of GDP
0.3
0.3
0.2
0.3
0.3
0.4
| Budget Paper No. 1
Page 228 | Statement 6: Expenses and Net Capital Investment
Reconciliation of net capital investment since the 2023–24 Budget
A reconciliation of the net capital investment estimates, showing the effect of policy
decisions and parameter and other variations since the 2023–24 Budget, is provided in
Table 6.19.
Table 6.19: Reconciliation of net capital investment estimate
Estimates
2023-24
2024-25
2025-26
2026-27
Total
$m
$m
$m
$m
$m
2023-24 Budget net capital investment
10,431
7,229
5,449
9,271
32,380
Changes from 2023-24 Budget to
2023-24 MYEFO
Effect of policy decisions(a)
225
194
137
38
593
Effect of parameter and other variations
-1,761
1,654
1,488
373
1,754
Total variations
-1,536
1,849
1,625
410
2,348
2023-24 MYEFO net capital investment
8,895
9,078
7,074
9,681
34,728
Changes from 2023-24 MYEFO to
2024-25 Budget
Effect of policy decisions(a)
12
1,587
1,843
1,028
4,469
Effect of parameter and other variations
-1,153
-4,362
-862
-1,722
-8,099
Total variations
-1,141
-2,775
981
-693
-3,629
2024-25 Budget net capital investment
7,754
6,303
8,055
8,988
31,098
a) Excludes secondary impacts on public debt interest of policy decisions and offsets from the Contingency
Reserve for decisions taken.
Estimated net capital investment for 2024–25 is $0.9 billion lower when compared to the
estimate for 2024–25 in the 2023–24 Budget. This is driven by a decrease of $2.7 billion as a
result of parameter and other variations and an increase of $1.8 billion from policy
decisions.
Budget Paper No. 1 |
Statement 6: Expenses and Net Capital Investment | Page 229
Net capital investment estimates by function
Estimates for Australian Government general government sector net capital investment by
function for the period 2023–24 to 2027–28 are provided in Table 6.20.
Table 6.20: Estimates of net capital investment by function
Estimates
2023-24
2024-25
2025-26
2026-27
2027-28
$m
$m
$m
$m
$m
General public services
346
423
256
791
1,052
Defence
7,409
6,853
7,504
9,018
11,550
Public order and safety
78
28
-23
-143
-87
Education
34
50
33
1
1
Health
-123
133
182
-96
-104
Social security and welfare
13
-76
-400
-410
-439
Housing and community amenities
68
74
88
55
79
Recreation and culture
385
372
130
-14
-44
Fuel and energy
-1
-1
3
-9
-2
Agriculture, forestry and fishing
212
539
297
24
12
Mining, manufacturing and construction
-15
-9
-10
-12
-24
Transport and communication
-625
-2,107
-35
-64
-39
Other economic affairs
-34
-53
-182
-394
-129
Other purposes
8
75
212
240
72
Total net capital investment
7,754
6,303
8,055
8,988
11,899
A significant component of the Government’s net capital investment occurs in the defence
function and primarily relates to Defence capability investments. Major factors contributing
to changes in net capital investment are expected to occur in the following functions:
• Defence – the increase in net capital investment from 2024–25 to 2027–28 reflects
funding for capability investments prioritised in the 2024 National Defence Strategy and
Integrated Investment Program.
• General public services – the increase in net capital investment from 2024–25 to
2027–28 largely reflects the timing of estimated renewal of property leases that are due
to expire and the timing of building and equipment purchases.
• Health – net capital investment is estimated to increase in 2024–25 and 2025–26, largely
reflecting funding for system enhancements to the My Aged Care Gateway system and
the Government Provider Management System to support the implementation of the
new Aged Care Act, the new aged care regulatory model and the Support at Home
Program from 1 July 2025. The increase in 2024–25 and 2025–26 is also driven by routine
replenishment of the National Medical Stockpile.
• Social security and welfare – the decrease in net capital investment from 2024–25 to
2027–28 is largely driven by the depreciation and amortisation of prior Commonwealth
investments into Services Australia’s assets, including ICT capabilities and
infrastructure.
| Budget Paper No. 1
Page 230 | Statement 6: Expenses and Net Capital Investment
• Housing and community amenities – the increase in net capital investment over the
period 2024–25 to 2027–28 largely reflects changes in Defence Housing Australia’s
property investment strategy to meet the housing needs of Australian Defence Force
personnel.
• Recreation and culture – the decrease in net capital investment from 2023–24 to 2027–28
reflects the expected completion of capital investments at the Australian War Memorial
and projects within various Commonwealth national parks funded under the Protecting
Australia’s Iconic National Parks measure. The decrease is also driven by anticipated
completion of projects under the 2023–24 Budget measure Sydney Harbour Federation
Trust – infrastructure improvements and completion of the various projects led by the
Australian Antarctic Division and the Director of National Parks, delays in the
refurbishment of the Great Barrier Reef Marine Park Authority’s Reef HQ Aquarium,
and the timing of capital works at the National Collecting Institutions.
• Transport and communication – the variable profile of net capital investment reflects
the sale of non-financial assets through the 850/900 MHz and the 3.4/3.7 GHz Spectrum
Auctions.
• Other economic affairs – the decrease in net capital investment from 2023–24 to 2024–25
reflects the anticipated completion of the Bureau of Meteorology’s digital
transformation program.
Table 6.21 reports the acquisition of non-financial assets by function before taking into
account depreciation or amortisation.
Table 6.21: Australian Government general government sector purchases of
non-financial assets by function
Estimates
2023-24
2024-25
2025-26
2026-27
2027-28
$m
$m
$m
$m
$m
General public services
1,888
2,243
1,872
2,355
2,605
Defence
14,805
14,292
14,540
16,309
19,115
Public order and safety
944
894
837
723
783
Education
51
65
52
20
21
Health
395
550
219
63
56
Social security and welfare
919
803
443
360
312
Housing and community amenities
507
524
507
515
540
Recreation and culture
849
848
618
473
429
Fuel and energy
9
11
16
4
7
Agriculture, forestry and fishing
320
670
418
137
116
Mining, manufacturing and construction
25
33
33
32
23
Transport and communication
221
102
80
48
72
Other economic affairs
823
846
708
502
762
Other purposes
13
79
214
244
75
General government purchases
of non-financial assets
21,771
21,960
20,556
21,785
24,917
Budget Paper No. 1 |
Statement 6: Expenses and Net Capital Investment | Page 231
Appendix A: Expense by function and sub-function
Table 6A.1: Estimates of expenses by function and sub-function
Actual
Estimates
2022-23
2023-24
2024-25
2025-26
2026-27
2027-28
$m
$m
$m
$m
$m
$m
General public services
Legislative and executive affairs
1,685
2,052
2,216
1,676
1,633
1,840
Financial and fiscal affairs
9,187
10,378
10,227
10,070
10,081
9,814
Foreign affairs and economic aid
7,522
7,282
8,730
7,667
8,105
8,632
General research
3,695
4,063
4,485
4,378
4,232
4,276
General services
1,110
1,260
1,253
1,221
1,235
1,268
Government superannuation
benefits
6,912
6,407
5,485
5,584
5,782
6,008
Total general public services
30,111
31,442
32,395
30,595
31,068
31,838
Defence
41,436
45,128
47,986
50,046
51,339
55,102
Public order and safety
Courts and legal services
1,814
1,827
1,894
1,268
1,212
1,278
Other public order and safety
5,698
6,133
6,528
5,725
5,619
5,477
Total public order and safety
7,513
7,960
8,421
6,993
6,832
6,756
Education
Higher education
10,428
10,918
11,540
12,113
12,529
12,969
Vocational and other education
2,234
2,351
2,540
2,654
2,657
2,542
Schools
26,998
29,215
30,201
31,385
32,597
33,833
Non-government schools
16,705
18,116
18,726
19,497
20,275
21,051
Government schools
10,292
11,099
11,474
11,889
12,322
12,782
School education –
specific funding
1,082
1,182
940
895
861
808
Student assistance
3,925
5,132
7,482
5,863
6,156
6,478
General administration
264
301
343
309
294
294
Total education
44,932
49,099
53,046
53,220
55,093
56,925
Health
Medical services and benefits
36,224
38,777
41,233
43,341
45,141
47,206
Pharmaceutical benefits and
services
18,569
20,131
20,574
20,740
20,516
20,640
Assistance to the states for
public hospitals
25,821
27,853
30,149
32,187
34,229
36,454
Hospital services(a)
956
1,100
1,130
1,189
1,215
1,249
Health services
15,844
13,860
13,363
12,715
12,423
12,515
General administration
4,147
4,460
4,900
4,434
3,701
3,476
Aboriginal and Torres Strait
Islander health
1,119
1,235
1,344
1,308
1,286
1,260
Total health
102,680
107,416
112,693
115,913
118,512
122,801
| Budget Paper No. 1
Page 232 | Statement 6: Expenses and Net Capital Investment
Table 6A.1: Estimates of expenses by function and sub-function (continued)
Actual
Estimates
2022-23
2023-24
2024-25
2025-26
2026-27
2027-28
$m
$m
$m
$m
$m
$m
Social security and welfare
Assistance to the aged
82,946
95,306
100,653
104,825
109,575
115,972
Assistance to veterans and
dependants
8,105
7,666
7,982
12,291
9,565
9,576
Assistance to people with
disabilities
69,126
80,401
84,342
89,140
94,510
100,547
Assistance to families with
children
38,399
44,381
46,931
49,115
51,190
52,597
Assistance to the unemployed
and the sick
14,006
14,737
16,100
16,562
16,760
16,298
Other welfare programs
2,370
1,621
1,897
1,844
1,699
1,589
Assistance for Indigenous
Australians nec
2,735
3,279
3,399
3,191
3,054
3,178
General administration
5,224
4,951
5,388
5,089
4,312
4,338
Total social security and welfare
222,911
252,342
266,693
282,057
290,665
304,093
Housing and community
amenities
Housing
4,994
4,305
4,372
4,206
4,541
3,696
Urban and regional development
1,518
1,620
2,906
2,258
854
520
Environment protection
1,840
2,029
2,721
2,367
1,676
1,413
Total housing and community
amenities
8,352
7,955
9,999
8,831
7,072
5,629
Recreation and culture
Broadcasting
1,690
1,688
1,749
1,801
1,800
1,813
Arts and cultural heritage
1,813
1,992
2,140
1,919
1,890
1,851
Sport and recreation
573
594
708
993
1,016
1,223
National estate and parks
565
776
774
759
717
717
Total recreation and culture
4,641
5,050
5,372
5,472
5,423
5,604
Fuel and energy
9,093
13,273
20,121
13,908
13,794
13,825
Agriculture, forestry and fishing
Wool industry
55
68
84
95
95
95
Grains industry
200
272
290
292
295
297
Dairy industry
59
58
57
55
55
55
Cattle, sheep and pig industry
239
258
262
268
277
279
Fishing, horticulture and other
agriculture
463
508
503
443
429
388
General assistance not allocated
to specific industries
41
45
47
45
45
45
Rural assistance
306
406
316
398
379
380
Natural resources development
773
1,089
1,346
1,177
1,106
485
General administration
1,234
1,364
1,411
1,306
1,269
1,271
Total agriculture, forestry and
fishing
3,371
4,068
4,317
4,079
3,949
3,294
Budget Paper No. 1 |
Statement 6: Expenses and Net Capital Investment | Page 233
Table 6A.1: Estimates of expenses by function and sub-function (continued)
Actual
Estimates
2022-23
2023-24
2024-25
2025-26
2026-27
2027-28
$m
$m
$m
$m
$m
$m
Mining, manufacturing and
construction
5,167
5,968
5,511
5,563
5,776
6,172
Transport and communication
Communication
1,580
1,775
1,927
1,825
1,745
1,645
Rail transport
2,532
3,082
3,814
3,212
3,676
2,816
Air transport
349
434
465
446
355
291
Road transport
6,969
8,859
9,707
10,408
9,799
9,111
Sea transport
484
499
496
496
501
507
Other transport and
communication
253
279
360
331
299
286
Total transport and
communication
12,166
14,928
16,769
16,717
16,375
14,656
Other economic affairs
Tourism and area promotion
204
198
192
191
191
191
Total labour and employment
affairs
7,410
6,308
5,881
5,575
5,198
5,081
Vocational and industry training
4,580
2,984
2,384
2,130
1,676
1,561
Labour market assistance to
job seekers and industry
2,129
2,326
2,411
2,400
2,490
2,473
Industrial relations
701
998
1,086
1,044
1,032
1,047
Immigration
3,405
3,836
3,699
3,147
3,156
3,088
Other economic affairs nec
3,380
3,669
3,614
3,300
3,187
3,151
Total other economic affairs
14,399
14,011
13,386
12,214
11,733
11,512
Other purposes
Public debt interest
22,242
22,547
24,107
28,269
32,432
35,744
Interest on Commonwealth
Government's behalf
22,242
22,547
24,107
28,269
32,432
35,744
Nominal superannuation interest
12,336
13,374
14,620
15,126
15,610
16,054
General purpose inter-government
transactions
92,076
92,917
97,995
102,937
108,329
112,941
General revenue assistance -
states and territories
87,618
92,107
94,412
99,241
104,771
109,243
Local government assistance
4,458
810
3,583
3,696
3,558
3,697
Natural disaster relief
3,600
1,392
921
676
408
314
Contingency reserve
0
2,200
167
14,674
19,357
26,496
Total other purposes
130,254
132,430
137,810
161,683
176,135
191,549
Total expenses
637,025
691,070
734,518
767,290
793,765
829,755
a) The hospital services sub-function predominantly reflects Commonwealth funding to the states and
territories for veterans’ hospital services.
Statement 7: Debt Statement | Page 235
Statement 7:
Debt Statement
The Debt Statement provides information on Government gross debt, net debt, Australian
Government Securities (AGS) issuance and interest costs over the forward estimates.
Gross debt as a share of GDP is expected to be lower each year over the forward estimates
compared to the 2023–24 Mid-Year Economic and Fiscal Outlook (MYEFO). Gross debt is
estimated to peak at 35.2 per cent of GDP at 30 June 2027, 0.2 percentage points lower and
one year sooner than the estimated peak of 35.4 per cent of GDP in 2027–28 at the
2023-24 MYEFO.
• Gross debt is estimated to be 33.9 per cent of GDP at 30 June 2025, 0.3 percentage points
lower than estimated at the 2023–24 MYEFO.
• Net debt is estimated to be 20.0 per cent of GDP at 30 June 2025, 0.5 percentage points
higher than estimated at the 2023–24 MYEFO.
Interest payments on AGS are estimated to be $22.4 billion in 2024–25, increasing to
$34.1 billion by 2027–28.
Statement 7: Debt Statement | Page 237
Statement contents
Australian Government Securities on issue .......................................................... 239
Changes in AGS on issue since the 2023–24 MYEFO ............................................................. 240
Breakdown of AGS currently on issue ....................................................................................... 241
Treasury Bonds ......................................................................................................................... 242
Treasury Indexed Bonds ........................................................................................................... 243
Treasury Notes ......................................................................................................................... 243
Green Treasury Bonds ............................................................................................. 244
Non-resident holdings of AGS on issue ................................................................. 244
Net debt ...................................................................................................................... 245
Changes in net debt since the 2023–24 MYEFO ...................................................................... 246
Interest on AGS ......................................................................................................... 247
Statement 7: Debt Statement | Page 239
Statement 7: Debt Statement
Australian Government Securities on issue
Estimates of AGS on issue are published in both face value and market value terms in
this Statement.
• The face value of AGS on issue (also referred to as gross debt) is the amount the
Government pays back to investors at maturity, independent of fluctuations in market
prices.
36
The total face value of AGS on issue changes when new securities are issued, or
when securities are repurchased or reach maturity.
• The market value of AGS on issue represents the value of securities as traded on the
secondary market, which changes continuously with movements in market prices (often
quoted as a yield to maturity). Consistent with external reporting standards, the market
value of AGS on issue is reported in the Australian Government general government
sector balance sheet.
The Commonwealth Inscribed Stock Act 1911 (CIS Act) requires the Treasurer to issue a
direction stipulating the maximum face value of relevant AGS that may be on issue.
Effective from 7 October 2020, the then Treasurer directed that the maximum face value of
AGS that can be on issue is $1,200 billion. The estimated face value of AGS on issue subject
to the Treasurer’s direction (end-of-year and within-year peak)
37
in each year of the
forward estimates remains below $1,200 billion.
Gross debt is estimated to be $934 billion (33.9 per cent of GDP) at 30 June 2025, increasing
to $1,112 billion (34.9 per cent of GDP) at 30 June 2028.
Gross debt as a percentage of GDP is expected to be lower across each year of the forward
estimates than at the 2023–24 MYEFO. The $13.1 billion improvement to the headline cash
balance in 2023–24 and the impact of lower yields on AGS contribute to this reduction.
—
36
For Treasury Indexed Bonds (TIBs), the final repayment amount paid to investors includes
an additional amount to reflect the impact of inflation over the life of the security.
This additional amount is not included in the calculation of face value.
37
End-of-year values are estimates of AGS on issue at 30 June for the particular year.
The precise timing and level of within-year peaks of AGS on issue cannot be determined
with accuracy. The timing of the within-year peak is therefore reported to the given month in
the particular year.
| Budget Paper No. 1
Page 240 | Statement 7: Debt Statement
Table 7.1 presents estimates of AGS on issue.
Table 7.1: Estimates of AGS on issue subject to the Treasurer’s Direction
(a)(b)
Estimates
2023-24
2024-25
2025-26
2026-27
2027-28
$b
$b
$b
$b
$b
Face value – end-of-year
904
934
1,007
1,064
1,112
Per cent of GDP
33.7
33.9
35.1
35.2
34.9
Face value – within-year peak(c)
922
947
1,007
1,071
1,126
Per cent of GDP(c)
34.3
34.4
35.1
35.4
35.4
Month of peak(c)
Apr-24
Apr-25
Apr-26
Feb-27
May-28
Market value – end-of-year
848
886
963
1,026
1,080
Per cent of GDP
31.6
32.1
33.6
33.9
33.9
a) The Treasurer’s Direction applies to the face value of AGS on issue. This table also shows the
equivalent market value of AGS that are subject to the Treasurer’s Direction.
b) The stock and securities that are excluded from the current limit set by the Treasurer’s Direction are
outlined in subsection 51JA(2A) of the CIS Act.
c) The precise within-year timing of cash receipts and payments is not known. Estimated peaks of AGS on
issue are therefore subject to considerable uncertainty.
Source: The Australian Office of Financial Management (AOFM).
Changes in AGS on issue since the 2023–24 MYEFO
The increase in total face value of AGS on issue primarily reflects the cumulative reduction
in the headline cash balance over the four years to 2026–27 since the 2023–24 MYEFO.
Table 3.4 in Statement 3: Fiscal Strategy and Outlook reconciles the net cash flows from
investments in financial assets for policy purposes affecting the headline cash balance.
Further details on the changes to the underlying cash balance and headline cash balance
since the 2023–24 MYEFO can be found in Statement 3: Fiscal Strategy and Outlook.
Budget Paper No. 1 |
Statement 7: Debt Statement | Page 241
Table 7.2: Estimates of AGS on issue subject to the Treasurer’s Direction –
reconciliation from the 2023–24 MYEFO to the 2024–25 Budget
2023-24
2024-25
2025-26
2026-27
$b
$b
$b
$b
Total face value of AGS on issue subject to the
Treasurer’s Direction as at 2023-24 MYEFO
909
934
1,007
1,058
Factors affecting the change in face value of AGS on
issue from 2023-24 MYEFO to 2024-25 Budget(a)
Cumulative receipts decisions
-0.1
-2.4
-1.4
-3.3
Cumulative receipts variations
-6.9
-12.4
-21.4
-24.1
Cumulative payment decisions
0.3
12.0
21.3
26.6
Cumulative payment variations
-3.7
1.7
8.2
14.8
Cumulative change in net investments in financial assets(b)
-2.7
2.1
6.5
11.6
Other contributors
8.1
-1.1
-13.2
-20.0
Total face value of AGS on issue subject to the
Treasurer’s Direction as at 2024-25 Budget
904
934
1,007
1,064
a) Cumulative impact of decisions and variations from 2023–24 to 2026–27. Increases to payments are
shown as positive and increases to receipts are shown as negative.
b) Change in net cash flows from investments in financial assets for policy purposes only.
Note: End-of-year data.
Breakdown of AGS currently on issue
Table 7.3 provides a breakdown of the AGS on issue by type of security as at 2 May 2024.
Table 7.3: Breakdown of current Australian Government Securities on issue
On issue as at 2 May 2024
Face value
Market value
$m
$m
Treasury Bonds
823,849
748,718
Treasury Indexed Bonds
40,435
50,922
Treasury Notes
30,000
29,817
Total AGS subject to Treasurer’s Direction (a)
894,284
829,458
Other stock and securities
5
5
Total AGS on issue
894,289
829,463
a) The stock and securities that are excluded from the current limit set by the Treasurer’s Direction are
outlined in subsection 51JA(2A) of the CIS Act.
Source: AOFM.
Appendix A provides further information on the different types of securities.
| Budget Paper No. 1
Page 242 | Statement 7: Debt Statement
Treasury Bonds
As at 2 May 2024, there were 28 Treasury Bond lines on issue, with a weighted average
term to maturity of around 6.7 years and the longest maturity extending to June 2054.
Table 7.4: Treasury Bonds on issue
On issue as at
Coupon
2 May 2024
Per cent
Maturity
$m
Timing of interest payments(a)
0.25
21-Nov-24
41,300
Twice yearly
21-Nov
21-May
3.25
21-Apr-25
41,500
Twice yearly
21-Apr
21-Oct
0.25
21-Nov-25
39,200
Twice yearly
21-Nov
21-May
4.25
21-Apr-26
39,600
Twice yearly
21-Apr
21-Oct
0.50
21-Sep-26
39,400
Twice yearly
21-Sep
21-Mar
4.75
21-Apr-27
37,500
Twice yearly
21-Apr
21-Oct
2.75
21-Nov-27
32,200
Twice yearly
21-Nov
21-May
2.25
21-May-28
32,500
Twice yearly
21-May
21-Nov
2.75
21-Nov-28
35,600
Twice yearly
21-Nov
21-May
3.25
21-Apr-29
36,600
Twice yearly
21-Apr
21-Oct
2.75
21-Nov-29
35,500
Twice yearly
21-Nov
21-May
2.50
21-May-30
37,900
Twice yearly
21-May
21-Nov
1.00
21-Dec-30
39,500
Twice yearly
21-Dec
21-Jun
1.50
21-Jun-31
38,100
Twice yearly
21-Jun
21-Dec
1.00
21-Nov-31
41,800
Twice yearly
21-Nov
21-May
1.25
21-May-32
39,300
Twice yearly
21-May
21-Nov
1.75
21-Nov-32
29,000
Twice yearly
21-Nov
21-May
4.50
21-Apr-33
26,700
Twice yearly
21-Apr
21-Oct
3.00
21-Nov-33
24,100
Twice yearly
21-Nov
21-May
3.75
21-May-34
21,200
Twice yearly
21-May
21-Nov
3.50
21-Dec-34
18,600
Twice yearly
21-Dec
21-Jun
2.75
21-Jun-35
16,250
Twice yearly
21-Jun
21-Dec
3.75
21-Apr-37
13,800
Twice yearly
21-Apr
21-Oct
3.25
21-Jun-39
10,300
Twice yearly
21-Jun
21-Dec
2.75
21-May-41
14,600
Twice yearly
21-May
21-Nov
3.00
21-Mar-47
14,200
Twice yearly
21-Mar
21-Sep
1.75
21-Jun-51
19,600
Twice yearly
21-Jun
21-Dec
4.75
21-Jun-54
8,000
Twice yearly
21-Jun
21-Dec
a) Where the timing of an interest payment falls on a non-business day, the payment will occur on the
following business day.
Source: AOFM.
Budget Paper No. 1 |
Statement 7: Debt Statement | Page 243
Treasury Indexed Bonds
As at 2 May 2024, there were 7 Treasury Indexed Bond (TIB) lines on issue, with a weighted
average term to maturity of around 9.0 years and the longest maturity extending to
February 2050.
Table 7.5: Treasury Indexed Bonds on issue
On issue as at
Coupon
2 May 2024
Per cent
Maturity
$m
Timing of interest payments (a)
3.00
20-Sep-25
6,042
Quarterly
20-Sep
20-Dec
20-Mar
20-Jun
0.75
21-Nov-27
7,150
Quarterly
21-Nov
21-Feb
21-May
21-Aug
2.50
20-Sep-30
7,042
Quarterly
20-Sep
20-Dec
20-Mar
20-Jun
0.25
21-Nov-32
4,950
Quarterly
21-Nov
21-Feb
21-May
21-Aug
2.00
21-Aug-35
6,050
Quarterly
21-Aug
21-Nov
21-Feb
21-May
1.25
21-Aug-40
4,850
Quarterly
21-Aug
21-Nov
21-Feb
21-May
1.00
21-Feb-50
4,350
Quarterly
21-Feb
21-May
21-Aug
21-Nov
a) Where the timing of an interest payment falls on a non-business day, the payment will occur on the
following business day.
Source: AOFM.
Treasury Notes
As at 2 May 2024, there were nine Treasury Note lines on issue. Treasury Notes do not pay
a coupon.
Table 7.6: Treasury Notes on issue
On issue as at 2 May 2024
Maturity
$m
Timing of interest payment
10-May-24
5,000
At maturity
10-May
24-May-24
5,000
At maturity
24-May
7-Jun-24
4,000
At maturity
7-Jun
21-Jun-24
4,000
At maturity
21-Jun
12-Jul-24
4,000
At maturity
12-Jul
26-Jul-24
3,000
At maturity
26-Jul
9-Aug-24
2,000
At maturity
9-Aug
23-Aug-24
2,000
At maturity
23-Aug
13-Sep-24
1,000
At maturity
13-Sep
Source: AOFM.
| Budget Paper No. 1
Page 244 | Statement 7: Debt Statement
Green Treasury Bonds
The Government will begin issuing Green Treasury Bonds before 30 June 2024. The initial
bond line will be around $7 billion in size and will mature in June 2034. Issuance of green
bonds will not impact gross debt estimates as it will replace issuance of other AGS.
Green bonds provide financing or refinancing for specific government programs with
positive climate change and environmental outcomes. Green bonds will enable investors to
back public projects that drive Australia’s net zero transformation and progress the
Government’s environmental agenda. Green bonds will boost the scale and credibility of
Australia’s green finance market and attract more green capital to Australia by increasing
transparency around climate outcomes and the availability of green investments.
The Government will publish annual Allocation and Impact Reports for green bonds
separate to the Budget, commencing no more than 18 months after the first issuance.
Non-resident holdings of AGS on issue
As at the December 2023 quarter, the proportion of non-resident holdings of AGS was
around 48 per cent (Chart 7.1). This proportion is down from historical highs of
around 76 per cent in 2012. While the value of non-resident holdings of AGS have increased
significantly over this time, the proportion has fallen since the rate of buying by
non-resident investors has not matched the rate of issuance.
Chart 7.1: Non-resident holdings of AGS
0
20
40
60
80
100
0
100
200
300
400
500
600
700
800
900
1,000
Jun 2011 Mar 2014 Dec 2016 Sep 2019 Jun 2022
$b
Non-re side nt hol dings Resident holding s Pro portion of AG S h eld by Non-residents
% of total AGS on issue
Note: Data refer to the repo-adjusted market value of holdings.
Source: ABS Balance of Payments and International Investment Position, Australia December 2023,
AOFM, RBA.
Budget Paper No. 1 |
Statement 7: Debt Statement | Page 245
Net debt
Net debt is equal to the sum of interest-bearing liabilities (which include AGS on issue
measured at market value) less the sum of selected financial assets (cash and deposits,
advances paid and investments, loans and placements). As net debt incorporates both
selected financial assets and liabilities at their fair value, it provides a broader measure
of the Government’s financial obligations than gross debt.
Not all government assets or liabilities are included in the measurement of net debt. For
example, the Government’s unfunded superannuation liability is not accounted for in net
debt, nor are holdings of equities, for example those held by the Future Fund or the
Government’s equity investment in the NBN.
Table 7.7: Liabilities and assets included in net debt
Estimates
2023-24
2024-25
2025-26
2026-27
2027-28
$m
$m
$m
$m
$m
Liabilities included in net debt
Deposits held
415
415
415
415
415
Government securities(a)
847,774
885,886
962,711
1,026,120
1,080,171
Loans
31,772
32,360
33,379
33,786
33,779
Lease liabilities
19,302
18,649
17,484
16,508
16,115
Total liabilities included in net debt
899,263
937,310
1,013,988
1,076,829
1,130,480
Assets included in net debt
Cash and deposits
89,311
61,997
57,532
54,634
49,732
Advances paid
67,539
73,193
83,592
94,634
105,091
Investments, loans and placements
242,528
249,588
257,386
267,513
278,151
Total assets included in net debt
399,378
384,778
398,510
416,781
432,974
Net debt
499,886
552,532
615,478
660,048
697,505
a) Government securities are presented at market value.
| Budget Paper No. 1
Page 246 | Statement 7: Debt Statement
Changes in net debt since the 2023–24 MYEFO
Net debt is expected to be higher than estimated at the 2023–24 MYEFO across each year of
the forward estimates. This increase primarily reflects the impact of lower yields on AGS,
as well as an increase in the financing requirement from 2024–25 onwards.
Table 7.8: Net debt – reconciliation from the 2023–24 MYEFO to the
2024–25 Budget
2023-24
2024-25
2025-26
2026-27
$b
$b
$b
$b
Net debt as at 2023-24 MYEFO
491.0
533.3
586.4
623.9
Changes in financing requirement
-5.0
3.6
10.7
20.0
Impact of yields on AGS
20.3
16.3
12.8
8.4
Asset and other liability movements
-6.5
-0.7
5.6
7.7
Cash and deposits
-8.8
-3.1
4.5
8.8
Advances paid
4.7
6.1
5.2
3.0
Investments, loans and placements
-2.1
-3.1
-4.3
-4.8
Other movements
-0.3
-0.5
0.1
0.7
Total movements in net debt from 2023-24 MYEFO
to 2024-25 Budget
8.8
19.2
29.1
36.1
Net debt as at 2024-25 Budget
499.9
552.5
615.5
660.0
Budget Paper No. 1 |
Statement 7: Debt Statement | Page 247
Interest on AGS
Estimates of the interest payments and expense of AGS on issue include the cost of AGS
already on issue and future AGS issuance.
• The cost of AGS already on issue reflects the actual yield at the time of issuance.
• The expected cost of future AGS issuance is based on a recent average of daily spot rates
across the yield curve at the time of a budget estimates update.
Total interest payments on AGS across the forward estimates are estimated to be broadly
similar compared to the 2023–24 MYEFO. This is primarily due to lower yields and
improved terms of borrowing offsetting the change in the headline cash balance across the
forward estimates.
Chart 7.2 shows the yield curve assumptions underpinning the 2022 Pre-election Economic
and Fiscal Outlook (PEFO), 2023-24 MYEFO and the 2024–25 Budget. Yields are lower
compared to the 2023–24 MYEFO, reflecting a moderation in market expectations for
inflation and future cash rates.
Volatility in yields over the past two years has influenced the outlook for interest
payments. The supply of bonds, expectations for future monetary policy and perceptions of
risks all influence yields. While yields have fallen since the end of 2023, they remain
significantly higher than at the 2022 PEFO.
At the 2022 PEFO, the weighted average cost of borrowing was 2.2 per cent, rising to
3.8 per cent at the 2022–23 October Budget. The weighted average yield fell to 3.4 per cent
at the 2023–24 Budget, before increasing to 4.7 per cent at the 2023–24 MYEFO. Since then,
the assumed weighted average cost of borrowing has fallen to 4.2 per cent for future
issuance of Treasury Bonds over the forward estimates in this budget.
| Budget Paper No. 1
Page 248 | Statement 7: Debt Statement
Chart 7.2: Yield curve assumptions from 2024–25 to 2027–28
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
5.0
5.5
1Y 2Y 3Y 4Y 5Y 7Y 10Y 12Y 15Y 20Y 25Y 30Y
%
2023-24 MYEFO
2024-25 Budget
2022 PEFO
Source: AOFM.
By the end of the forward estimates total interest payments are $35.6 billion, of which
$34.1 billion relates to AGS on issue (Table 7.9). Compared with the 2023–24 MYEFO,
interest payments as a share of GDP are estimated to be broadly unchanged since the
2023–24 MYEFO.
Interest receipts are estimated to be higher across each year of the forward estimates than at
the 2023–24 MYEFO and broadly unchanged as a share of GDP.
Net interest payments as a share of GDP in 2024–25 are estimated to be broadly similar to
the 2023–24 MYEFO. Over the forward estimates, net interest payments as a share of GDP
are expected to be 0.5 per cent in 2023–24, reaching 0.8 per cent of GDP by 2027–28.
Budget Paper No. 1 |
Statement 7: Debt Statement | Page 249
Table 7.9: Interest payments, interest receipts and net interest payments
(a)
Estimates
2023-24
2024-25
2025-26
2026-27
2027-28
$m
$m
$m
$m
$m
Interest payments on AGS(b)
20,967
22,364
26,052
28,339
34,057
Per cent of GDP
0.8
0.8
0.9
0.9
1.1
Interest payments(c)
22,685
23,824
27,502
29,833
35,585
Per cent of GDP
0.8
0.9
1.0
1.0
1.1
Interest receipts
10,404
9,275
8,705
9,051
9,591
Per cent of GDP
0.4
0.3
0.3
0.3
0.3
Net interest payments(d)
12,281
14,549
18,797
20,782
25,994
Per cent of GDP
0.5
0.5
0.7
0.7
0.8
a) Interest payments and receipts are a cash measure, with the relevant amount recognised in the period in
which the interest payment is made or interest is received.
b) The increases in 2025–26 and 2027–28 primarily reflect Treasury Indexed Bond lines maturing in those
years.
c) Interest payments include interest payments on AGS, loans and other borrowing, as well as interest
payments on lease liabilities.
d) Net interest payments are equal to the difference between interest payments and interest receipts.
As well as cash accounting terms, interest costs related to AGS are also presented on
accrual accounting terms. The difference between the cash interest payments and accrual
interest expense generally relates to the timing of when the interest cost is recognised.
• Interest payments are recognised in the period when they are paid during the life of the
security.
• Interest expense is recognised in the period in which an expense is incurred during the
life of the security, rather than when it is actually paid.
| Budget Paper No. 1
Page 250 | Statement 7: Debt Statement
The Government’s total interest expense in 2024–25 is estimated to be $33.4 billion, of
which $24.1 billion relates to AGS on issue. Table 7.10 shows changes in interest expense,
interest income and net interest expense over the forward estimates.
Table 7.10: Interest expense, interest income and net interest expense
(a)
Estimates
2023-24
2024-25
2025-26
2026-27
2027-28
$m
$m
$m
$m
$m
Interest expense on AGS
22,533
24,083
28,259
32,422
35,733
Per cent of GDP
0.8
0.9
1.0
1.1
1.1
Total interest expense(b)
27,667
33,414
34,300
39,085
41,190
Per cent of GDP
1.0
1.2
1.2
1.3
1.3
Interest income
11,131
10,276
9,998
10,573
11,338
Per cent of GDP
0.4
0.4
0.3
0.3
0.4
Net interest expense(c)
16,536
23,138
24,302
28,511
29,853
Per cent of GDP
0.6
0.8
0.8
0.9
0.9
a) Interest expense is an accrual measure, with the relevant amount recognised in the period in which the
expense is incurred, but not necessarily paid.
b) Total interest expense includes interest expense on AGS, loans and other borrowing, as well as interest
expense on lease liabilities and other financing costs (including debt not expected to be repaid (DNER)).
c) Net interest expense is equal to the difference between interest expenses and interest income.
Budget Paper No. 1 |
Statement 7: Debt Statement | Page 251
Appendix A: AGS issuance
The Australian Office of Financial Management (AOFM) is responsible for issuing AGS and
managing the Government’s financing activities. The AOFM currently issues three types of
securities:
• Treasury Bonds: medium to long-term securities with a fixed annual rate of interest
payable every six months. This will include the Green Treasury Bonds the Government
will begin issuing before 30 June 2024.
• Treasury Indexed Bonds (TIBs): medium to long-term securities for which the capital
value of the security is adjusted for movements in the consumer price index (CPI).
Interest on TIBs is paid quarterly, at a fixed rate, on the adjusted capital value.
• Treasury Notes: short-term discount securities which mature within one year of
issuance. The volume of Treasury Notes on issue will vary over the course of the year,
depending on the size and profile of the within-year funding requirements.
Within these three broad categories of AGS, issuance is undertaken into a limited number
of maturities (known as lines). The number of lines on issue is determined by the AOFM as
part of its debt portfolio management role. Each line has a fixed maturity date (the date on
which the Government repays the principal it has borrowed) and, for Treasury Bonds and
TIBs, a coupon rate (the annual fixed interest rate paid on the security).
Concentrating AGS issuance into a limited number of lines (rather than issuing securities
with a specific tenor, such as ten years) ensures each line is sufficiently large that it can be
more readily traded in the secondary market. Strong liquidity in the secondary market is
attractive to investors and intermediaries, promotes demand for AGS and assists in
lowering borrowing costs. All AGS issuance is undertaken in Australian dollars.
The AOFM exercises operational independence in the execution of its duties. Its announced
issuance program for each year is determined on the basis of maturing AGS, net new
issuance required to fund the Budget and operational considerations.
Operational considerations often mean that the annual issuance program may not be
equivalent to the financing task for a particular year. For example, the AOFM may decide
there is merit in holding higher or lower cash balances. The AOFM may also choose to
smooth issuance across several financial years in order to reduce changes in AGS issuance
from one financial year to the next.
The AOFM aims to maintain an AGS yield curve out to a 30-year benchmark bond.
This facilitates a lower risk profile of maturing debt, broadens the investor base and helps
to reduce the impact of interest rate volatility on budget outcomes. Further details on the
AOFM’s debt issuance program are available on the AOFM website at www.aofm.gov.au.
| Budget Paper No. 1
Page 252 | Statement 7: Debt Statement
The AOFM publishes an issuance program for the budget year only. Estimates beyond the
budget year are based on a set of technical assumptions and will vary with changes to these
assumptions and budget estimates.
Statement 8: Forecasting Performance and Sensitivity Analysis | Page 253
Statement 8:
Forecasting Performance
and Sensitivity Analysis
Economic and fiscal forecasts and projections in the Budget are underpinned by a range of
assumptions and judgements based on best available information at the time of
preparation. In practice, economic and fiscal circumstances can evolve in ways that differ
from expectations.
This statement assesses:
1. The performance of past forecasts based on the variance between forecasts and actuals.
2. The uncertainty around current forecasts using confidence interval analysis.
3. The sensitivity of current forecasts to changes in key assumptions:
– Iron ore prices
– Yields on Australian Government Securities.
The economic impact of other key variables, including iron ore and metallurgical coal
prices are considered in Budget Statement 2: Economic Outlook. The fiscal impact of key
developments and Australia’s climate change outlook are considered in Budget Statement 3:
Fiscal Strategy and Outlook.
Forecasts are based on assumptions and judgements. Forecast accuracy depends on
whether assumptions and judgements prove to be correct, and the reliability of the
modelled economic and fiscal relationships.
Statement 8: Forecasting Performance and Sensitivity Analysis | Page 255
Statement contents
Assessing past forecasting performance .............................................................. 257
Economic forecasting performance ........................................................................................... 258
Fiscal forecasting performance ................................................................................................. 259
Assessing forecast uncertainty – confidence interval analysis .......................... 265
Economic uncertainty based on historical forecast errors ......................................................... 265
Fiscal uncertainty based on historical forecast errors ............................................................... 268
Assessing current forecasts through sensitivity analysis ................................... 271
Movements in iron ore prices .................................................................................................... 271
Movements in yields .................................................................................................................. 273
Statement 8: Forecasting Performance and Sensitivity Analysis | Page 257
Statement 8: Forecasting Performance and
Sensitivity Analysis
Assessing past forecasting performance
This section assesses the variance between historical forecasts and outcomes (forecast
errors) for real and nominal GDP, tax receipts, non-tax receipts, payments and the
underlying cash balance.
Forecasts are prepared using a range of techniques:
• Macroeconomic forecasts are prepared consistent with a national accounting framework
using econometric models, analysis and professional judgement.
• Tax receipts forecasts are generally prepared using a ‘base plus growth’ methodology.
The last outcome for each head of revenue is the base to which growth rates are applied,
using appropriate economic parameters. Forecasts are then updated to include costings
of new policy.
• Payments forecasts are generally prepared through analysis of payment program data,
costings for new policies and historical trends in programs, in consultation with
relevant agencies.
| Budget Paper No. 1
Page 258 | Statement 8: Forecasting Performance and Sensitivity Analysis
Economic forecasting performance
Real GDP forecasts incorporate assumptions for exchange rates, interest rates, commodity
prices and population growth. The forecasts also incorporate judgements about how
domestic and international developments might affect Australia’s economy.
Real GDP grew by 3.1 per cent in 2022–23 rather than the 3½ per cent growth forecast at the
March 2022–23 Budget (Chart 8.1). The overestimate of real GDP growth in 2022–23 was
primarily due to weaker-than-expected household consumption in response to cost-of-
living pressures.
Chart 8.1: Comparison of forecasts and outcomes for real GDP growth
-2
0
2
4
6
2002-03 2006-07 2010-11 2014-15 2018-19 2022-23
%
Budget forecasts
Outcomes
Note: Outcome is as published in the December quarter 2023 National Accounts. Forecast is that
published in the Budget for that year. For 2022–23, the forecast is from the March 2022–23
Budget.
Source: ABS Australian National Accounts: National Income, Expenditure and Product and Budget papers.
Nominal GDP forecasts include a price component that adds uncertainty compared to real
GDP forecasts. Price uncertainty relates to domestic prices and wages, prices of imported
goods, and world prices for Australia’s exports including commodities. Since the
early 2000s, nominal GDP forecast errors have largely reflected volatility in global
commodity prices.
Nominal GDP grew by 9.9 per cent in 2022–23 rather than the ½ per cent growth forecast at
the March 2022–23 Budget (Chart 8.2). The large underestimation in nominal GDP largely
reflected higher-than-expected commodity prices. The March 2022–23 Budget assumed
commodity prices would decrease to levels more consistent with long-term fundamentals,
but global energy prices and the prices of Australian coal and LNG exports remained
elevated, partly due to the continuation of Russia’s invasion of Ukraine. Consequently, over
2022–23, the terms of trade decreased by 0.5 per cent, rather than the decline of
21¼ per cent expected in the March 2022–23 Budget.
Budget Paper No. 1 |
Statement 8: Forecasting Performance and Sensitivity Analysis | Page 259
Chart 8.2: Comparison of forecasts and outcomes for nominal GDP growth
-2
0
2
4
6
8
10
12
2002-03 2006-07 2010-11 2014-15 2018-19 2022-23
%
Budget forecasts
Outcome
Note: Outcome is as published in the December quarter 2023 National Accounts. Forecast is that
published in the Budget for that year. For 2022–23, the forecast is from the March 2022–23
Budget.
Source: ABS Australian National Accounts: National Income, Expenditure and Product and Budget papers.
Fiscal forecasting performance
Fiscal forecast errors are driven by economic and demographic forecast errors, along with
unanticipated changes in demand for government programs. Government policies
announced after the Budget can also affect fiscal forecast errors. Further information on
Budget outcomes can be found in the 2022–23 Final Budget Outcome.
Total receipts
Total receipts are comprised of tax and non-tax receipts (for example, dividends from
investment funds). Tax receipts account for over 90.0 per cent of total receipts and are
therefore the main driver of forecasting performance.
Total receipts grew 11.1 per cent in 2022–23 rather than the 1.6 per cent decrease forecast at
the March 2022–23 Budget. Total receipts were $101.8 billion higher than forecast.
Tax receipts
Tax receipts grew 12.1 per cent in 2022–23 rather than the 0.8 per cent decrease forecast at
the March 2022–23 Budget (Chart 8.3). Tax receipts were $92.9 billion higher than forecast.
This outcome reflected higher-than-expected company tax receipts and
stronger-than-expected employment and wage growth.
| Budget Paper No. 1
Page 260 | Statement 8: Forecasting Performance and Sensitivity Analysis
Chart 8.3: Comparison of forecasts and outcomes for tax receipts growth
-5
0
5
10
15
2002-03 2006-07 2010-11 2014-15 2018-19 2022-23
%
Outcomes
Budget forecasts
Source: Budget papers and Treasury.
On average, nominal GDP forecast errors magnify tax receipts forecast errors, owing to
Australia’s progressive personal income tax system (Chart 8.4).
Chart 8.4: Forecast errors for nominal non-farm GDP and tax receipts growth
(a)
2003-04
2004-05
2005-06
2006-07
2007-08
2008-09
2009-10
2010-11
2011-12
2012-13
2013-14
2014-15
2015-16
2016-17
2017-18
2018-19
2019-20
2020-21
2021-22
2022-23
-8
-4
0
4
8
12
16
-6 -2 2 6 10
Forecast error on taxation growth
Forecast error on nominal non-farm GDP growth
Percentage points
a) Excludes CGT.
Source: ABS Australian National Accounts: National Income, Expenditure and Product and Treasury.
Budget Paper No. 1 |
Statement 8: Forecasting Performance and Sensitivity Analysis | Page 261
Non-tax receipts
Forecast variances for non-tax receipts are generally driven by financial market volatility
which impacts investment earnings and resource royalties.
Non-tax receipts grew by 0.8 per cent in 2022–23 rather than the 11.1 per cent decrease
forecast at the March 2022–23 Budget (Chart 8.5). Non-tax receipts were $8.9 billion higher
in 2022–23 than forecast in the March 2022–23 Budget. This increase largely reflects
significant variations in returns on investments, including higher than estimated earnings
from interest on cash deposits due to the rise in short-term interest rates, and higher than
estimated earnings from the Future Fund and the Australian Government Investment
Funds. Additionally, increases to non-tax receipts flowed from increased passport demand
following the reopening of Australia’s borders, and higher-than-estimated receipts under
the Higher Education Loan Program due to strong labour market conditions.
Chart 8.5: Comparison of forecasts and outcomes for non-tax receipts growth
-20
-10
0
10
20
30
2002-03 2006-07 2010-11 2014-15 2018-19 2022-23
%
Outcomes
Budget forecasts
Source: Budget papers and Treasury.
Payments
Payments forecasting performance is affected by growth in indexation factors (for example,
CPI growth) and demand for government programs. Demand-driven programs, such as
payments to individuals for social welfare, form the bulk of Australian Government
expenditure and vary with economic conditions.
Payments increased by 1.8 per cent in 2022–23 rather than the 1.7 per cent decrease forecast
at the March 2022–23 Budget (Chart 8.6). Payments were $1.8 billion higher in 2022–23 than
forecast in the March 2022–23 Budget. This relatively small increase reflects a large number
of individual variations having offsetting impacts. These include higher-than-estimated
payments across a range of welfare programs, including Jobseeker, the Disability Support
Pension, and the Age Pension due to higher-than-expected indexation. Policy decisions
| Budget Paper No. 1
Page 262 | Statement 8: Forecasting Performance and Sensitivity Analysis
made in the 2022–23 October Budget to deliver cheaper child care, ease the cost of living for
families, and reduce barriers to greater workforce participation also resulted in increases to
payments in 2022–23. These increases were partially offset by lower-than-expected interest
payments due to the reduction in the level of gross debt. The stronger budget position
resulted from a range of factors, including upgrades to tax revenue that were largely used
to repair the budget, and lower-than-estimated medical benefits payments, resulting from
lower spending on COVID-19 pathology and vaccine administration and a reduction in
demand for services.
Chart 8.6: Comparison of forecasts and outcomes for payments growth
-20
-10
0
10
20
30
2002-03 2006-07 2010-11 2014-15 2018-19 2022-23
%
Outcomes
Budget forecasts
Source: Budget papers and Treasury.
Underlying cash balance
Underlying cash balance forecasting performance is driven by the forecast errors of total
receipts and payments.
The underlying cash surplus was 0.9 per cent of GDP in 2022–23 rather than the forecast
deficit of 3.4 per cent of GDP (Chart 8.7). The underlying cash balance was $100.0 billion
more than forecast. The better-than-expected underlying cash balance outcome in 2022–23
largely reflected higher-than-expected receipts, the majority of which were returned to the
budget.
Budget Paper No. 1 |
Statement 8: Forecasting Performance and Sensitivity Analysis | Page 263
Chart 8.7: Comparison of forecasts and outcomes for underlying cash balance
-12
-8
-4
0
4
2002-03 2006-07 2010-11 2014-15 2018-19 2022-23
% of GDP
Outcomes
Budget forecasts
Source: Budget papers and Treasury.
The underlying cash balance
38
forecast error for 2022–23 is consistent with the experience of
the past two decades, outside major downturns, where forecast errors largely reflect
forecast errors of total receipts (Chart 8.8). In 2022–23 key contributors to the error were the
impact on tax receipts of higher global commodity prices and stronger-than-expected
employment and wage growth.
Large forecast errors for payments in 2008–09 and 2019–20 reflected unexpected
Government payment assistance during the Global Financial Crisis and COVID–19.
Overestimates of receipts tend to coincide with underestimates of payments during
economic shocks, magnifying underlying cash balance forecast errors.
—
38
Between 2005–06 and 2019–20, the underlying cash balance was equal to receipts less
payments, less net Future Fund earnings. In all other years, the underlying cash balance is
equal to receipts less payments.
| Budget Paper No. 1
Page 264 | Statement 8: Forecasting Performance and Sensitivity Analysis
Chart 8.8: Total receipts, payments, and underlying cash balance forecast errors
-6
-3
0
3
6
2002-03 2006-07 2010-11 2014-15 2018-19 2022-23
% of GDP
Total receipts error Payments error UCB error
Source: Budget papers and Treasury.
Budget Paper No. 1 |
Statement 8: Forecasting Performance and Sensitivity Analysis | Page 265
Assessing forecast uncertainty – confidence interval analysis
Confidence intervals illustrate the uncertainty around current forecasts based on the
historical distribution of forecast errors. Confidence interval analysis assumes that future
forecast errors are consistent with the distribution of past forecast errors
39
Based on past
forecasting performance, there is a 70 and 90 per cent probability that the actual outcome
will lie within the 70 and 90 per cent confidence interval bands.
Future forecast errors may not have the same distribution as historical forecast errors. The
large forecast errors in 2019–20 and 2020–21, related to the COVID–19 pandemic, are an
example of events not previously captured in the historical error sample. Large disruptive
events are difficult to predict and could occur again in the future.
Economic uncertainty based on historical forecast errors
Average annualised growth in real GDP in the three years to 2025–26 is expected to be
around 2 per cent. The 70 per cent confidence interval ranges from 1¼ per cent to
2¾ per cent. The 90 per cent confidence interval ranges from 1 per cent to 3 per cent
(Chart 8.9).
—
39
See Treasury Working Paper: Estimates of Uncertainty around Budget Forecasts (2013).
| Budget Paper No. 1
Page 266 | Statement 8: Forecasting Performance and Sensitivity Analysis
Chart 8.9: Confidence intervals around real GDP growth rate forecasts
-1
0
1
2
3
4
5
2012-13
2013-14
2014-15
2015-16
2016-17
2017-18
2018-19
2019-20
2020-21
2021-22
2022-23
2022-23 to
2023-24 (f)
2022-23 to
2024-25 (f)
2022-23 to
2025-26 (f)
%
70% confidence interval
90% confidence interval
Note: The line shows the outcomes and the 2024–25 Budget forecasts. Annual growth rates are reported
for the outcomes. Average annualised growth rates from 2022–23 are reported for 2023–24
onwards. Confidence intervals are based on the root mean squared errors (RMSEs) of Budget
forecasts from 1998–99 onwards and are a statistical assessment that does not take account of
any change in circumstance in the economic outlook. (f) are forecasts.
Source: ABS Australian National Accounts: National Income, Expenditure and Product and Treasury.
The confidence intervals around the nominal GDP forecasts are wider than those around
the real GDP forecasts, reflecting the additional uncertainty around domestic prices and
commodity prices. Average annualised growth in nominal GDP in the three years
to 2025–26 is expected to be around 3¾ per cent, with the 70 per cent confidence interval
ranging from 1½ per cent to 6 per cent. The 90 per cent confidence interval ranges from
¼ per cent to 7¼ per cent (Chart 8.10).
Budget Paper No. 1 |
Statement 8: Forecasting Performance and Sensitivity Analysis | Page 267
Chart 8.10: Confidence intervals around nominal GDP growth rate forecasts
0
3
6
9
12
2012-13
2013-14
2014-15
2015-16
2016-17
2017-18
2018-19
2019-20
2020-21
2021-22
2022-23
2022-23 to
2023-24 (f)
2022-23 to
2024-25 (f)
2022-23 to
2025-26 (f)
%
70% confidence interval
90% confidence interval
Note: The line shows the outcomes and the 2024–25 Budget forecasts. Annual growth rates are reported
for the outcomes. Average annualised growth rates from 2022–23 are reported for 2023–24
onwards. Confidence intervals are based on the root mean squared errors (RMSEs) of Budget
forecasts from 1998–99 onwards and are a statistical assessment that does not take account of
any change in circumstance in the economic outlook. (f) are forecasts.
Source: ABS Australian National Accounts: National Income, Expenditure and Product and Treasury.
| Budget Paper No. 1
Page 268 | Statement 8: Forecasting Performance and Sensitivity Analysis
Fiscal uncertainty based on historical forecast errors
Fiscal estimates are based on economic and demographic forecasts as well as estimates of
spending and revenue measures.
Historical variations caused by subsequent policy decisions not known at the time of
forecast are excluded because these decisions do not reflect forecasting errors based on
available information at the time of preparation. Payment estimates do not exclude the
public debt interest associated with these subsequent policy decisions because this cannot
be separately identified.
Total receipts
Total receipts (including GST)
are expected to be around 25.3 per cent of GDP in 2024–25,
with the 70 per cent confidence interval ranging from 23.7 per cent to 27.0 per cent of GDP.
The 90 per cent confidence interval ranges from 22.7 per cent to 27.9 per cent in 2024–25.
The uncertainty around receipts forecasts increases with time (Chart 8.11).
Chart 8.11: Confidence intervals around total receipts forecasts
(a)
20
22
24
26
28
30
2013-14
2014-15
2015-16
2016-17
2017-18
2018-19
2019-20
2020-21
2021-22
2022-23
2023-24 (f)
2024-25 (f)
2025-26 (f)
% of GDP
90% confidence interval
70% confidence interval
a) Includes Future Fund earnings from 2020–21 onwards.
Note: The central line shows outcomes and the 2024–25 Budget forecasts. Confidence intervals use
Root Mean Square Errors (RMSE) for Budget forecasts from the 1999–2000 Budget onwards.
(f) are forecasts.
Source: Budget papers and Treasury.
Budget Paper No. 1 |
Statement 8: Forecasting Performance and Sensitivity Analysis | Page 269
Payments
The confidence interval for payments is narrower than receipts because there is greater
certainty around payments forecasts. Payments (including GST) are expected to be around
26.4 per cent of GDP in 2024–25, with the 70 per cent confidence interval ranging from
25.8 per cent to 26.9 per cent of GDP. The 90 per cent confidence interval ranges from
25.5 per cent to 27.2 per cent in 2024–25 (Chart 8.12).
Chart 8.12: Confidence intervals around payments forecasts
(a)
22
24
26
28
30
32
2013-14
2014-15
2015-16
2016-17
2017-18
2018-19
2019-20
2020-21
2021-22
2022-23
2023-24 (f)
2024-25 (f)
2025-26 (f)
% of GDP
90% confidence interval
70% confidence interval
a) Includes GST payments.
Note: The central line shows outcomes and the 2024–25 Budget forecasts. Confidence intervals use
Root Mean Square Errors (RMSE) for Budget forecasts from the 1999–2000 Budget onwards.
(f) are forecasts.
Source: Budget papers and Treasury.
| Budget Paper No. 1
Page 270 | Statement 8: Forecasting Performance and Sensitivity Analysis
Underlying cash balance
The underlying cash deficit in 2024–25 is expected to be 1.0 per cent of GDP, with the
70 per cent confidence interval ranging from a deficit of 2.9 per cent to a surplus of
0.9 per cent of GDP. The 90 per cent confidence interval ranges from a deficit of
4.0 per cent to a surplus of 2.0 per cent in 2024–25.
The uncertainty around underlying cash balance forecasts reflects forecast errors in
receipts and payments which increase with time (Chart 8.13).
Chart 8.13: Confidence intervals around the underlying cash balance forecasts
-8
-6
-4
-2
0
2
4
2013-14
2014-15
2015-16
2016-17
2017-18
2018-19
2019-20
2020-21
2021-22
2022-23
2023-24 (f)
2024-25 (f)
2025-26 (f)
% of GDP
90% confidence interval
70% confidence interval
Note: The central line shows outcomes and the 2024–25 Budget forecasts. Confidence intervals use
Root Mean Square Errors (RMSE) for Budget forecasts from the 1999–2000 Budget onwards.
(f) are forecasts.
Source: Budget papers and Treasury.
Budget Paper No. 1 |
Statement 8: Forecasting Performance and Sensitivity Analysis | Page 271
Assessing current forecasts through sensitivity analysis
Sensitivity analysis allows for an assessment of the impact of key assumptions. The
following sensitivity analyses are considered due to their variability and importance for the
Budget:
• Higher and lower iron ore prices.
• Higher and lower yields over the medium term.
For illustrative purposes, the upper and lower sensitivities are broadly symmetric, even
where not equally probable.
Movements in iron ore prices
The forecasts for nominal GDP and tax receipts are sensitive to commodity price
assumptions, particularly iron ore prices. Iron ore is Australia’s largest export by value,
representing around 18.0 per cent of the total value of goods and services exports in 2022–
23. See Budget Statement 2: Economic Outlook for more information on developments in
commodity prices.
Iron ore prices are volatile and sensitive to global market developments. Table 8.1 considers
the impact of a permanent US$10 per tonne increase and decrease in the iron ore price on
nominal GDP and tax receipts relative to the Budget baseline forecast.
Table 8.1: Scenario analysis of a US$10 per tonne movement in iron ore prices
US$10/tonne FOB
(a)
increase
US$10/tonne FOB decrease
2024-25
2025-26
2026-27
2027-28
2024-25
2025-26
2026-27
2027-28
Nominal GDP ($billion)
5.3
2.7
5.9
11.0
-5.3
-2.7
-5.9
-11.0
Tax receipts ($billion)
0.5
0.5
0.5
1.9
-0.5
-0.5
-0.5
-1.9
a) Prices are presented in free-on-board (FOB) terms which exclude the cost of freight.
Source: Treasury.
The effects of a US$10 per tonne increase and decrease in the iron ore price are broadly
symmetric. The following discussion focuses mainly on an increase for illustrative
purposes. The US$10 per tonne increase in the assumed price for iron ore exports is
expected to result in an increase in nominal GDP of around $5.3 billion in 2024–25, rising to
around $11.0 billion in 2027–28.
The economic response to a permanent change in the price of iron ore is derived from a
commodity price shock in Treasury’s Macroeconometric Model of Australia.
40
The model
incorporates forward-looking financial markets, which anticipate the permanent increase
(or decrease) in commodity prices. An increase in iron ore export prices leads to a higher
terms of trade, which leads directly to higher output prices and nominal GDP. However,
the appreciation in the exchange rate partially offsets the increase in exports prices and acts
—
40
See Treasury Paper: The Macroeconometric Model of Australia: Modelling Approach (2021).
| Budget Paper No. 1
Page 272 | Statement 8: Forecasting Performance and Sensitivity Analysis
to reduce domestic inflation through lower import prices. In comparison, Box 2.4:
Commodity prices illustrates the effect of changing the short-term commodity price
assumptions on the forecasts for nominal GDP and tax receipts while maintaining the
Budget forecasts for economic activity, the exchange rate and other prices. This
methodology is more consistent with how short-run movements in commodity prices
would impact the forecasts for nominal GDP and tax receipts in the budget.
The volume of output and exports of the mining sector increase in response to higher iron
ore prices. The higher exchange rate leads to a substitution towards imports, which
partially offsets the increase in exports and GDP.
A US$10 per tonne increase in the assumed price for iron ore exports is expected to result
in an increase in tax receipts of around $0.5 billion in 2024–25, 2025–26 and 2026–27,
before increasing to $1.9 billion in 2027–28. An increase in iron ore prices increases
mining company profits and therefore company tax receipts. This builds over time as
receipts fully incorporate the lag between when profits are realised and tax is paid by
companies, with the largest increase occurring in 2027–28. Lower domestic prices result
in lower individuals and other withholding taxes and indirect tax receipts, partially
offsetting the increase in company tax.
Budget Paper No. 1 |
Statement 8: Forecasting Performance and Sensitivity Analysis | Page 273
Movements in yields
Government borrowing costs are sensitive to yields on Australian Government Securities
and the level of debt. See Budget Statement 7: Debt Statement for further information on
yields. Given the uncertainty surrounding the global and domestic outlook and the impact
on yields, Treasury makes the following technical assumptions:
• Over the forward estimates, government bond yields are fixed at rates observed
immediately prior to the Budget update. In the 2024–25 Budget, the 10-year yield, which
approximates the average yield on new issuance, is assumed to be 4.2 per cent over the
forward estimates.
• After the forward estimates, the 10-year bond yield converges linearly towards the
long-run nominal GDP growth rate over 15 years. This is broadly consistent with the
long-run approaches of comparable advanced economies. The yields on other bond
tenors are assumed to maintain their historical relativity to the 10-year bond yield.
The higher yield assumption has bond yields increasing by 100 basis points by
30 June 2025. Yields are then held constant over the remainder of the forward estimates to
2027–28, before linearly converging to the long-run yield assumption of nominal GDP
growth over 15 years. The lower yield sensitivity is symmetric (Chart 8.14). Other economic
parameters are assumed to remain unchanged from baseline forecasts to isolate the direct
impact on fiscal aggregates.
Chart 8.14: Baseline and alternative movements in the 10-year bond yield
2
3
4
5
6
Jun-23 Jun-25 Jun-27 Jun-29 Jun-31 Jun-33 Jun-35
%
2024–25 Budget
Lower yield Higher yield
Estimates
Medium-term assumptions
Source: Treasury.
| Budget Paper No. 1
Page 274 | Statement 8: Forecasting Performance and Sensitivity Analysis
Higher yields increase public debt interest payments and receipts earned on investments.
As government interest bearing liabilities usually exceed interest bearing assets, higher
yields lead to a deterioration in the underlying cash balance. Lower yields have the reverse
effect, improving the underlying cash balance.
The higher yield assumption results in a deterioration to the underlying cash balance of
0.3 percentage points of GDP by 2034–35 and increases gross debt by 1.9 percentage points
of GDP at 30 June 2035 (Chart 8.15).
The lower yield assumption results in an improvement to the underlying cash balance of
0.2 percentage points of GDP by 2034–35. Under the lower yield assumption, cumulative
improvements to the underlying cash balance reduce gross debt by 1.7 percentage points of
GDP at 30 June 2035.
Chart 8.15: Gross debt
25
30
35
40
2024–25 2026–27 2028–29 2030–31 2032–33 2034–35
% of GDP
2024–25 Budget
Lower yield Higher yield
Estimates
Medium-term projections
Source: Australian Office of Financial Management and Treasury.
Even under the higher yield assumption, projected Commonwealth gross debt as a share
of GDP is less than 30 per cent of the average general government gross debt in the
G7 countries today.
Statement 9: Statement of Risks | Page 275
Statement 9:
Statement of Risks
A range of factors may influence the actual budget outcome in future years. The Charter of
Budget Honesty Act 1998 requires these factors to be disclosed in a statement of risks in each
Budget and Mid-Year Economic and Fiscal Outlook. This Statement outlines general fiscal
risks, specific contingent liabilities and specific contingent assets that may affect the
budget balances.
Statement 9: Statement of Risks | Page 277
Statement contents
Risks to the Budget – Overview .............................................................................. 279
The risks associated with climate change ................................................................................. 280
Specialist Investment Vehicles .................................................................................................. 281
Specific risks to the Budget ....................................................................................................... 281
Agriculture, Fisheries and Forestry ........................................................................ 288
Contingent liabilities – unquantifiable ........................................................................................ 288
Attorney-General’s .................................................................................................... 290
Significant but remote contingency ........................................................................................... 290
Contingent liabilities – unquantifiable ........................................................................................ 290
Contingent asset – unquantifiable ............................................................................................. 291
Climate Change, Energy, the Environment and Water .......................................... 292
Fiscal Risk .. .............................................................................................................................. 292
Significant but remote contingencies......................................................................................... 292
Contingent liabilities – unquantifiable ........................................................................................ 293
Contingent liability – quantifiable ............................................................................................... 295
Defence ...................................................................................................................... 296
Fiscal Risks .............................................................................................................................. 296
Significant but remote contingencies......................................................................................... 296
Contingent liabilities – unquantifiable ........................................................................................ 297
Contingent liability – quantifiable ............................................................................................... 298
Employment and Workplace Relations ................................................................... 299
Fiscal Risk .. .............................................................................................................................. 299
Contingent liabilities – quantifiable ............................................................................................ 299
Finance ....................................................................................................................... 301
Significant but remote contingency ........................................................................................... 301
Contingent liabilities – unquantifiable ........................................................................................ 301
Foreign Affairs and Trade ........................................................................................ 305
Fiscal Risk .. .............................................................................................................................. 305
Contingent liability – quantifiable ............................................................................................... 306
Health and Aged Care ............................................................................................... 307
Fiscal Risk .. .............................................................................................................................. 307
Contingent liabilities – unquantifiable ........................................................................................ 307
Contingent asset – unquantifiable ............................................................................................. 310
Page 278 | Statement 9: Statement of Risks
Home Affairs .............................................................................................................. 311
Fiscal Risk .. .............................................................................................................................. 311
Contingent liabilities – unquantifiable ........................................................................................ 311
Industry, Science and Resources ............................................................................ 314
Fiscal Risk .. .............................................................................................................................. 314
Significant but remote contingencies......................................................................................... 314
Contingent liabilities – unquantifiable ........................................................................................ 316
Infrastructure, Transport, Regional Development,
Communications and the Arts ................................................................................. 317
Fiscal Risks .............................................................................................................................. 317
Significant but remote contingencies......................................................................................... 318
Contingent liabilities – unquantifiable ........................................................................................ 320
Prime Minister and Cabinet ...................................................................................... 323
Contingent liability – unquantifiable ........................................................................................... 323
Contingent liability – quantifiable ............................................................................................... 323
Social Services .......................................................................................................... 324
Fiscal Risks .............................................................................................................................. 324
Contingent liability – unquantifiable ........................................................................................... 325
Contingent asset – quantifiable ................................................................................................. 325
Treasury ..................................................................................................................... 326
Significant but remote contingencies......................................................................................... 326
Contingent liabilities – unquantifiable ........................................................................................ 327
Contingent liabilities – quantifiable ............................................................................................ 330
Veterans’ Affairs ........................................................................................................ 333
Fiscal Risk .. .............................................................................................................................. 333
Government loans ..................................................................................................... 334
Agriculture, Fisheries and Forestry ........................................................................................... 338
Climate Change, Energy, the Environment and Water.............................................................. 340
Education .. .............................................................................................................................. 341
Employment and Workplace Relations ..................................................................................... 341
Foreign Affairs and Trade ......................................................................................................... 342
Industry, Science and Resources ............................................................................................. 343
Infrastructure, Transport, Regional Development, Communications and the Arts ..................... 343
Prime Minister and Cabinet ....................................................................................................... 344
Social Services ......................................................................................................................... 345
Treasury .. .............................................................................................................................. 346
Statement 9: Statement of Risks | Page 279
Statement 9: Statement of Risks
Risks to the Budget – Overview
The forward estimates of revenue and expenses in the 2024–25 Budget incorporate
assumptions and judgments based on the best information available at the time of
publication, together with a range of economic assumptions and other forecasts and
projections.
Events that could affect fiscal outcomes include:
• changes in economic and other parameters, which may be driven by the evolution
of and responses to domestic and global inflationary pressures, volatility in global
commodity prices, further global instability stemming from conflicts in Europe and
the Middle East, and the challenges associated with the transition towards net zero
emissions
• matters not included in the fiscal forecasts because of uncertainty about their timing,
magnitude or likelihood
• the realisation of contingent liabilities or assets.
The revenue and expense estimates and projections published in the 2024–25 Budget are
based on a range of economic and other parameters that are consistent with the domestic
and international outlook detailed in Budget Statement 2: Economic Outlook. Economic
outcomes that differ from the parameters used in the Budget represent a material risk to the
Budget estimates. Budget Statement 8: Forecasting Performance & Sensitivity Analysis examines
the impact on receipts and payments of altering some of the key economic assumptions
underlying the Budget estimates.
A significant portion of government expenditure is for demand-driven programs.
Outcomes for these programs could differ from the estimates and projections due to
changes in economic outcomes, particularly for inflation and wages growth. For a number
of demand-driven support programs, including the National Disability Insurance Scheme,
aged care programs and health programs, outcomes depend on the wide range of factors
that affect the take-up of and cost of these programs.
Revenue forecasting relies heavily on the observed relationships between the economy,
tax bases and tax revenues. Such relationships may shift over time as the economy changes,
presenting further risk to the estimates. For example, the ability of entities to use tax losses
to offset profits may continue to pose heightened challenges in estimating the profile for
company and resource tax receipts. Revenue forecasts also incorporate costings for new
policies that typically involve a degree of uncertainty.
The estimates and projections of revenue are also subject to general risks that can affect
taxation collections. These risks include the ability of the tax system to keep pace with
changes in the business environment, the potential for tax avoidance, pending court
| Budget Paper No. 1
Page 280 | Statement 9: Statement of Risks
decisions and Australian Taxation Office rulings, and the uncertain outcomes of
compliance programs. The manifestation of these risks may result in a shift in the
composition of taxation collected from the various tax bases or a change in the size of
the tax base.
Many agencies rely on external revenue to fund the delivery of some of their services.
Estimates included in the Budget for these agencies reflect the latest information about the
likely amount of external revenue they will raise. The external revenue actually collected is
not certain and depends on some common factors, including economic conditions, which
can affect estimates for individual agencies and for the Budget as a whole.
The forward estimates in the Budget include the impact of all policy decisions, including
those that remain unlegislated. There is a risk of a variation to the fiscal position outlined in
the Budget where legislation is not passed in time for the commencement of the measure on
the anticipated commencement date, the legislation is passed with amendments to the
original decision, or the legislation fails to pass the Parliament.
The risks associated with climate change
Over time, climate change is expected to have a significant impact on the Budget, both in
terms of risk and opportunities. The Australian Government is managing these impacts by
reducing emissions and supporting the economic opportunities presented by the net zero
transition. However, there is still significant uncertainty about the trajectory of global
greenhouse gas emissions and the impacts climate change will have on Australia.
Climate change can affect macroeconomic and fiscal outcomes in various ways. These
include the physical impacts of climate change, the indirect impacts climate change will
have on Australia’s industry mix, and the impacts of policy responses to reduce emissions
or adapt to the impacts of a changing climate. Each of these has the potential to affect
receipts, payments, and the Australian Government’s balance sheet. They also have the
potential to influence general economic outcomes, which may, in turn, affect Budget
outcomes.
Policy responses taken by the Australian Government to address climate change include
the establishment of the Capacity Investment Scheme in the 2023–24 Budget and its
expansion in the 2023–24 MYEFO to drive investment in renewable dispatchable capacity
and ensure reliability in Australia’s energy market. The Budget impact of the Capacity
Investment Scheme will depend on future developments in energy prices, which may
present risks that are not fully reflected in the Budget estimates. While the Government has
opened the first Capacity Investment Scheme tender, contracts have yet to be finalised.
Specific risks associated with this program will be reflected in the Statement once contracts
are finalised and if it is determined that they meet the materiality thresholds for inclusion.
Measures in the 2024–25 Budget to reduce emissions in the Australian economy include the
Hydrogen Production Tax Incentive and Critical Minerals Production Tax Incentive which
align with the Government’s Future Made in Australia agenda. The uncertainty
surrounding these measures could affect revenue forecasts.
Budget Paper No. 1 |
Statement 9: Statement of Risks | Page 281
Budget Statement 9: Statement of Risks sets out specific risks where they may have an impact
on the Budget in the Budget year or over the forward estimates period. Some of these risks,
such as those associated with the cyclone and related flooding reinsurance pool and
disaster recovery arrangements, are likely to be exacerbated by climate change over time.
Other specific risks may emerge that will impact the Budget beyond the forward estimates
period. These would be included in this Statement when it is apparent that the potential
impact on the Budget would exceed the materiality threshold.
Specialist Investment Vehicles
Successive Australian Governments have established Specialist Investment Vehicles (SIVs)
to achieve policy outcomes. These include the National Reconstruction Fund, Export
Finance Australia, the Clean Energy Finance Corporation, and the Northern Australia
Infrastructure Facility. These SIVs have been established with robust governance
arrangements, including independent boards, which are charged with making investment
decisions that manage risk and deliver outcomes in line with each SIV’s specific investment
mandates. Details of each SIV is set out in Budget Paper No. 2 or Appendix A to the
MYEFO when they are established and, where relevant, presented in the ‘Government
loans’ section of this Statement, including the total value of loans issued by each entity.
This Statement includes reference to specific risks associated with these SIVs at the time it is
apparent that those risks associated with the investments exceed or are expected to exceed
the materiality threshold.
Specific risks to the Budget
The Budget is subject to contingent liabilities. Many of these reflect indemnities, including
those relating to the Department of Defence, the Future Fund Management Agency and
Future Fund Board of Guardians, and the Reserve Bank of Australia. The Australian
Government has also issued guarantees, including those relating to guarantee schemes for
the banking and financial sector, payments by Export Finance Australia, and the
superannuation liabilities of the Commonwealth Bank prior to its sale. Other significant
contingent liabilities relate to uncalled capital subscriptions and credit facilities to
international financial institutions and legal cases concerning the Australian Government.
The Government has robust and conservative strategies in place to reduce its potential
exposure to these contingent liabilities.
Fiscal risks arise from general developments or specific events that may affect the fiscal
outlook. Some developments or events raise the possibility of a fiscal impact. In other cases,
the likelihood of a fiscal impact may be reasonably certain but will not be included in the
forward estimates because the timing or magnitude of the impact is not known.
Table 9.1 outlines how fiscal risks, assets and liabilities, and contingent assets and liabilities,
are disclosed in the Budget.
| Budget Paper No. 1
Page 282 | Statement 9: Statement of Risks
Table 9.2 summarises fiscal risks, contingent liabilities and contingent assets with a possible
impact on the forward estimates greater than $20 million in any one year, or $50 million
over the forward estimates period. Risks that are new or that have materially changed are
detailed by portfolio after Table 9.2.
The Australian Government’s annual consolidated financial statements and the annual
financial statements of departments and other Government entities also set out information
on contingent liabilities and contingent assets.
The Government also makes direct loans for policy purposes. All loans contain some
element of credit risk (that is, they will not be repaid in full) although, in many cases, this
risk is small. Details of Government loans that exceeded $200 million at 30 June 2024 are
included at the conclusion of Statement 9.
Table 9.1: Disclosure of fiscal risks, contingent assets and contingent liabilities,
and assets and liabilities in the Budget papers
Category
Type
(a)
Disclosure
Fiscal Risks
Fiscal Risks
Statement of Risks
Contingent assets and
contingent liabilities
Significant contingent assets and liabilities
considered remote
Statement of Risks
Unquantifiable contingent assets and liabilities
that are improbable but not remote
Statement of Risks
Quantifiable contingent assets and liabilities that
are improbable but not remote
Statement of Risks
Contingent assets and liabilities excluded on the
basis of immateriality
(b)
None
Assets and liabilities
Assets and liabilities that are probable and can
be reliably measured
Balance sheet
(c) (d)
Assets and liabilities that are probable but have
an uncertain timing or amount (provisions)
Balance sheet
a) Items that are described as probable have a 50 per cent or higher chance of occurrence.
b) Only risks with a possible impact on the forward estimates greater than $20 million in any one year, or
$50 million over the forward estimates period, are considered material and disclosed in this Statement.
c) Unearned income from charging guarantee fees is shown as a liability in the balance sheet.
d) Additional disclosure to increase transparency on loans over $200 million is included in this Statement.
Budget Paper No. 1 |
Statement 9: Statement of Risks | Page 283
Table 9.2: Summary of fiscal risks, contingent liabilities and contingent assets in
the Statement of Risks
(a)
Agriculture, Fisheries and Forestry
Status
Contingent liabilities – unquantifiable
Commonwealth liabilities in respect of matching payments to industries for
research and development contributions
Unchanged
Emergency pest and disease response arrangements
Modified
White spot syndrome virus and disease 2016 outbreak
Unchanged
Attorney-General’s
Status
Significant but remote contingency
Indemnities relating to the Air Security Officer Capability
Unchanged
Contingent liabilities – unquantifiable
Native Title costs
Unchanged
Current and prospective investor-state claims against the Australian Government
Modified
Contingent asset – unquantifiable
Civil penalty relating to the Anti-Money Laundering and Counter-Terrorism
Financing Act 2006
Modified
Climate Change, Energy, the Environment and Water
Status
Fiscal Risk
Snowy Hydro Limited
Modified
Significant but remote contingencies
Snowy Hydro Limited – Board Members’ indemnity
Unchanged
Snowy Hydro Limited – Termination of the Equity Subscription Agreements
Modified
Underwriting of Transmission Projects
Unchanged
Contingent liabilities – unquantifiable
Gorgon liquefied natural gas and carbon dioxide storage project – long-term liability
Unchanged
Liability for costs incurred in a national liquid fuel emergency
Unchanged
Marinus Link Project – Shareholders’ agreement
New
Murray-Darling Basin Reform – risk assignment
Unchanged
Remediation of Jabiru Township
Unchanged
United States Strategic Petroleum Reserve Lease Agreement – indemnity
under certain conditions
Unchanged
Contingent liability – quantifiable
Underwriting of the Marinus Link Project
Modified
Defence
Status
Fiscal Risks
Implementation of the nuclear-powered submarine program
Modified
Major operations of the Australian Defence Force in 2024–25
Unchanged
Significant but remote contingencies
ADI Limited – Officers’ and Directors’ indemnities
Unchanged
Litigation cases
Unchanged
Remote contingencies
Unchanged
Contingent liabilities – unquantifiable
Cockatoo Island Dockyard
Unchanged
Land decontamination, site restoration and decommissioning of Defence assets
Unchanged
Contingent liability – quantifiable
Claims against the Department of Defence
Unchanged
| Budget Paper No. 1
Page 284 | Statement 9: Statement of Risks
Table 9.2: Summary of fiscal risks, contingent liabilities and contingent assets in
the Statement of Risks
(a)
(continued)
Employment and Workplace Relations
Status
Fiscal Risk
Recovery of inappropriately claimed VET FEE-HELP payments from VET providers
Unchanged
Contingent liabilities – quantifiable
ParentsNext program
Modified
Workforce Australia – Employment Fund
Modified
Finance
Status
Significant but remote contingency
Australian Naval Infrastructure Pty Ltd – Termination of the Equity Funding Agreement
Unchanged
Contingent liabilities – unquantifiable
ASC Pty Ltd – Directors’ and Executives’ indemnities
Unchanged
ASC Pty Ltd – Guarantee of Indemnity from ASC in favour of ASC Shipbuilding
Pty Limited
Unchanged
Australian Government general insurance fund – Comcover
Unchanged
Commonwealth Superannuation Corporation – immunity and indemnity
Unchanged
Finance owned estate
Unchanged
Future Fund Management Agency and Future Fund Board of Guardians – indemnity
Unchanged
Googong Dam
Unchanged
Indemnities for the Reserve Bank of Australia and private sector banks
Unchanged
Indemnities relating to other former asset sales, privatisations and information
technology outsourcing projects
Unchanged
Foreign Affairs and Trade
Status
Fiscal Risk
Export Finance Australia – National Interest Account
Modified
Contingent liability – quantifiable
Export Finance Australia
Modified
Health and Aged Care
Status
Fiscal Risk
Fair Work Commission decision – Aged Care Work Value Case
Modified
Contingent liabilities – unquantifiable
Accommodation Payment Guarantee Scheme
Unchanged
Advance Purchasing Agreements for COVID-19 vaccines
Unchanged
Australian Red Cross Society – indemnities
Unchanged
Blood and blood products liability cover
Unchanged
CSL Ltd
Unchanged
Indemnities relating to vaccines
Unchanged
Major sporting events
Unchanged
Medical Indemnity Exceptional Claims Scheme
Unchanged
Medical Rural Bonded Scholarship Waivers
New
mRNA manufacturing facility – indemnities
Unchanged
Contingent asset – unquantifiable
Legal action seeking compensation
Unchanged
Budget Paper No. 1 |
Statement 9: Statement of Risks | Page 285
Table 9.2: Summary of fiscal risks, contingent liabilities and contingent assets in
the Statement of Risks
(a)
(continued)
Home Affairs
Status
Fiscal Risk
Regional processing arrangements
Unchanged
Contingent liabilities – unquantifiable
Australian victims of terrorism overseas payment
Unchanged
Disaster Recovery
Unchanged
Facilities, garrison, transferee arrivals and reception, and health services in the
Republic of Nauru – liability limit
Unchanged
Immigration detention services by state and territory governments – liability limit
Modified
Immigration detention services contract – liability limit
Unchanged
Industry, Science and Resources
Status
Fiscal Risk
Rehabilitation of the Ranger Uranium Mine
Unchanged
Significant but remote contingencies
Liability for damages caused by space and certain high-power rocket activities
Unchanged
Operations and maintenance of the Northern Endeavour and associated infrastructure
Unchanged
Contingent liabilities – unquantifiable
Australian Nuclear Science and Technology Organisation – asbestos contamination
Unchanged
Australian Nuclear Science and Technology Organisation – indemnity
Unchanged
Australian Nuclear Science and Technology Organisation – legacy waste management
to final disposal
Unchanged
Former British atomic test site at Maralinga
Unchanged
Land decontamination and site restoration for CSIRO property
Unchanged
Infrastructure, Transport, Regional Development, Communications and the Arts
Status
Fiscal Risks
Australia Post’s financial stability
Modified
Inland Rail – delivery
Unchanged
Significant but remote contingencies
Inland Rail – Termination of the Equity Financing Agreement
Unchanged
Maritime Industry Finance Company Limited – Board Members’ indemnity
Unchanged
Moorebank Intermodal Project – Glenfield Waste Site Easement
Unchanged
National Intermodal Corporation Limited – Termination of the Funding Agreement
Unchanged
Optus Financial Guarantee
Removed
Telstra Financial Guarantee
Unchanged
Tripartite deeds relating to the sale of federal leased airports
Unchanged
WSA Co Limited – Board Members’ indemnities
Unchanged
WSA Co Limited – Sydney Metro – Western Sydney Airport indemnity
Unchanged
WSA Co Limited – Termination of the Equity Subscription Agreement
Unchanged
| Budget Paper No. 1
Page 286 | Statement 9: Statement of Risks
Table 9.2: Summary of fiscal risks, contingent liabilities and contingent assets in
the Statement of Risks
(a)
(continued)
Infrastructure, Transport, Regional Development, Communications and the Arts
(continued)
Status
Contingent liabilities – unquantifiable
Australian Maritime Safety Authority – ship-sourced pollution incident costs
Unchanged
Aviation rescue and firefighting services potential per- and poly-fluoroalkyl
substances contamination
Unchanged
Indemnity provided to the New South Wales Rural Fire Fighting Service
in relation to the Jervis Bay Territory
Unchanged
Moorebank Intermodal Project – Georges River rail crossing
Unchanged
Service Delivery Arrangement Indemnities – Indian Ocean Territories
and Jervis Bay Territory
Unchanged
Prime Minister and Cabinet
Status
Contingent liability – unquantifiable
McDonald v Commonwealth (Stolen Wages Class Action)
Unchanged
Contingent liability – quantifiable
Indigenous Land and Sea Corporation – Voyages Indigenous Tourism Australia
Unchanged
Social Services
Status
Fiscal Risks
COVID-19 and disaster social security debt pause for specified areas
Unchanged
National Disability Insurance Scheme
Modified
Contingent liability – unquantifiable
Income apportionment and debt pause
Unchanged
Contingent asset – quantifiable
National Redress Scheme
Modified
Treasury
Status
Significant but remote contingencies
Asbestos Injuries Compensation Fund
Unchanged
Financial Claims Scheme
Unchanged
Guarantee for Housing Australia
Modified
Guarantees under the Commonwealth Bank Sale Act 1995
Modified
Reserve Bank of Australia – Guarantee
Modified
Contingent liabilities – unquantifiable
Compensation scheme of last resort
Unchanged
Establishment of a cyclone and related flooding reinsurance pool
Unchanged
Government guarantees for housing
Unchanged
Indemnities for specialised external advisers during the COVID-19 pandemic
Unchanged
Small and Medium Enterprise (SME) Guarantee Scheme and
SME Recovery Loan Scheme
Unchanged
Terrorism insurance – commercial cover
Unchanged
Budget Paper No. 1 |
Statement 9: Statement of Risks | Page 287
Table 9.2: Summary of fiscal risks, contingent liabilities and contingent assets in
the Statement of Risks
(a)
(continued)
Treasury (continued)
Status
Contingent liabilities – quantifiable
Australian Taxation Office – tax disputes
Modified
International financial institutions – uncalled capital subscriptions
Modified
International Monetary Fund – 16th General Review of Quota
New
International Monetary Fund – New Arrangements to Borrow and
Bilateral Borrowing Agreement
Modified
International Monetary Fund – Poverty Reduction and Growth Trust
Modified
International Monetary Fund – Resilience and Sustainability Trust
Modified
Veterans’ Affairs
Status
Fiscal Risk
Defence Service Homes Insurance Scheme
Unchanged
a) Detailed descriptions of these items are in the following text.
| Budget Paper No. 1
Page 288 | Statement 9: Statement of Risks
Agriculture, Fisheries and Forestry
Contingent liabilities – unquantifiable
Commonwealth liabilities in respect of matching payments to industries for
research and development contributions
Under several Acts, the Commonwealth provides matching contributions to encourage
expenditure on research and development (R&D) and to increase the competitiveness and
sustainability of industries within Australia. Matching contributions on eligible R&D are
subject to an annual limit that is calculated based on the determined gross value of
production (GVP cap) for the industries. There will be a R&D excess, which can be
claimable in future years, where the cumulative R&D expenditure is more than the GVP cap.
The Commonwealth’s future liability in respect of the matching contributions is contingent
on the GVP cap and is therefore unquantifiable.
Emergency pest and disease response arrangements
National emergency response arrangements for animal, plant and environmental pest and
disease incursions are largely funded through cost-sharing agreements between Australian
governments and affected agricultural industry bodies. Under the terms of the emergency
response cost-sharing agreements, the Australian Government is typically liable for
50 per cent of the total government funding for a nationally agreed response to a pest or
disease incursion. Funding is provided in the forward estimates for the Australian
Government’s contributions under the emergency response agreements, which are then
paid to the state or territory governments undertaking relevant activities.
There are currently 11 national cost-shared emergency responses. Since the 2023–24 Budget,
the Australian Government increased the funding for large scale responses for the National
Red Imported Fire Ant Eradication Program in Queensland and the outbreak of
Varroa destructor.
The Australian Government has provided an additional $268.2 million over four years from
2024–25 for its share of the cost of the revised plan for the National Red Imported Fire Ant
Eradication Program in Queensland.
In June 2023, the upper limit of the cost-shared budget for the response to the outbreak
of Varroa destructor was increased to $132.0 million, with the Australian Government
committing to contribute 40 per cent of this amount and allocating an additional
$26.6 million over four years from 2023–24 as a provision for underwriting the
16 cost-sharing industries’ contributions for this response. In February 2024, the Transition
to Management plan was endorsed by the participating jurisdictions, with a revised upper
limit of $100.0 million.
Budget Paper No. 1 |
Statement 9: Statement of Risks | Page 289
The Australian, state and territory governments developed a draft Aquatic Emergency
Animal Disease Deed (the Deed) covering aquatic emergency animal diseases and have
consulted prospective industry signatories. If the Deed is finalised, potential liabilities for
the Australian Government will be increased. The extent of these liabilities will depend on
which parties sign the Deed and what emergency aquatic incursions occur that would be
subject to the Deed arrangements.
White spot syndrome virus and disease 2016 outbreak
The Commonwealth is responding to three claims related to the 2016 outbreak of white
spot syndrome virus in Queensland. White spot syndrome virus was first detected in South
East Queensland in December 2016 and seven prawn farms on the Logan River were
affected from late 2016 to early 2017. Prawns on the infected farms were destroyed to
eradicate the disease as part of a joint industry, Australian and state government response.
Gold Coast Marine Aquaculture Pty Ltd has filed a claim in the Federal Court of Australia,
claiming a breach of a duty to warn by the Commonwealth. Gold Coast Marine
Aquaculture Pty Ltd alleges that the Commonwealth’s alleged breach caused,
or contributed to, the outbreak of white spot syndrome virus in Queensland’s Logan River
in December 2016 and resulting in loss and damage to Gold Coast Marine
Aquaculture Pty Ltd.
A class action has been filed in the Supreme Court of Queensland led by Tweed Bait Pty
Ltd and TPF Management Company Pty Ltd on behalf of commercial fishers, handlers and
wholesalers. The class action seeks compensation for loss and damage suffered as a result
of the 2016 outbreak of white spot syndrome virus and white spot disease in Queensland’s
Logan River area, the Commonwealth’s implementation of biosecurity measures in
response to the outbreak, and the adverse impacts on consumer demand resulting from
publicity regarding the outbreak.
A third claim, an open class action, has been filed in the Supreme Court of Queensland
against the Commonwealth and is led by M&G Oyster Supplies Pty Ltd. The claim arises
out of similar circumstances to the Tweed Bait Pty Ltd and TPF Management Company Pty
Ltd matter. Litigation funding has not yet been secured by the class, despite the matter
being before the court. Should it proceed, the matter is to be case managed alongside
Tweed Bait.
Costs associated with these litigation claims or any future litigation relating to the
2016 outbreak of white spot syndrome virus are not quantifiable until the matter is
determined by the Court or otherwise resolved.
| Budget Paper No. 1
Page 290 | Statement 9: Statement of Risks
Attorney-General’s
Significant but remote contingency
Indemnities relating to the Air Security Officer Capability
The Australian Government has provided an indemnity to two Australian airlines connected
with agreements to allow Air Security Officers on board their aircraft. The indemnities are
limited to $2 billion per incident. The indemnity only applies where the airline(s) can establish
that loss, damage or claim resulted from an act by an Air Security Officer, under or in
connection with the Air Security Officer program. The indemnity applies to the extent that any
loss, damage or claim is not covered by existing relevant insurance policies held by the airline.
Contingent liabilities – unquantifiable
Native Title costs
The Australian Government will likely be liable for any compensation found to be payable
under the Native Title Act 1993 in respect of compensable acts for which the Australian
Government is responsible. While the High Court’s decision in the Timber Creek litigation
(Northern Territory v Griffiths et al [2019] HCA 7) provides guidance on the principles for
calculating compensation under the Native Title Act, the Australian Government’s liability
cannot be quantified owing to uncertainty about the number and effect of compensable acts,
and the value of Native Title affected by those acts.
Current and prospective investor-state claims against the
Australian Government
The Commonwealth received a notice of arbitration from Singapore registered company
Zeph Investments Pte Ltd (Zeph) concerning a dispute about the Iron Ore Processing
(Mineralogy Pty Ltd) Agreement Amendment Act 2020 (WA). Zeph raised this claim under
Chapter 11 (Investment) of the Agreement Establishing the ASEAN-Australia-New Zealand
Free Trade Area (AANZFTA).
Subsequently, the Commonwealth has received two further notices of arbitration from
Zeph. The first concerns a dispute about exploration permits held by Waratah Coal Pty Ltd
(Waratah) in the Galilee Basin of Queensland. The second concerns a dispute about a coal
mine proposed by Waratah, also in the Galilee Basin. Zeph raised both these claims under
Chapter 11 (Investment) of the AANZFTA.
Should the Australian Government be unsuccessful in these proceedings, it would be liable
for any compensation found to be payable to Zeph. Any such potential liability cannot be
quantified at this stage.
The Commonwealth has also received a request for consultation from Zeph concerning
another potential claim. An investor-state claim has not been brought against the
Australian Government in relation to this matter at this time.
Budget Paper No. 1 |
Statement 9: Statement of Risks | Page 291
Contingent asset – unquantifiable
Civil penalty relating to the
Anti-Money Laundering and Counter-Terrorism
Financing Act 2006
The Australian Transaction Reports and Analysis Centre (AUSTRAC) applied to the
Federal Court of Australia for civil penalty orders against the following entities for alleged
serious contraventions of the Anti-Money Laundering and Counter-Terrorism Financing
Act 2006 (AML/CTF Act):
• the Star Pty Limited and the Star Entertainment QLD Limited on 30 November 2022.
• SkyCity Adelaide (SkyCity) on 7 December 2022.
AUSTRAC alleges that these entities failed to comply with obligations under the
AML/CTF Act, including failures to properly assess money laundering and terrorism
financing risks, and failures to undertake appropriate customer due diligence.
The outcomes of these matters are unknown, including whether any penalties will be
imposed by the Court and, if so, the quantum of any penalties.
In respect of the SkyCity matter, AUSTRAC has reached an in-principle agreement with
SkyCity for SkyCity to pay a civil pecuniary penalty. The amount of the proposed penalty
remains confidential and settlement is not finalised unless or until the parties reach a final
agreement with agreed facts and admissions acceptable to AUSTRAC. If an agreement is
reached, it remains subject to the Court’s decision as to whether to make the orders agreed,
including whether the proposed penalty is appropriate. As neither final agreement with
SkyCity has been reached, nor the Court’s judgment made, this remains an unquantifiable
contingent asset.
| Budget Paper No. 1
Page 292 | Statement 9: Statement of Risks
Climate Change, Energy, the Environment and Water
Fiscal Risk
Snowy Hydro Limited
The Australian Government has committed to provide additional financial support to
Snowy Hydro Limited to support the delivery of the Snowy 2.0 pumped hydro project and
the Hunter Power Project. These projects will improve the security and reliability of the
National Electricity Market by providing reliable, dispatchable power and large-scale
energy storage. Project risks for both projects include potential construction delays, cost
pressures and cash flow forecasts.
The Government continues to monitor these risks through engagement and oversight of
Snowy Hydro Limited.
Significant but remote contingencies
Snowy Hydro Limited – Board Members’ indemnity
The Australian Government has provided an indemnity for each of the Directors of
Snowy Hydro Limited to protect them against certain claims relating to their employment
as Directors. Until the indemnity agreements are varied or ceased, they will remain as
contingent and unquantifiable liabilities.
Snowy Hydro Limited – Termination of the Equity Subscription Agreements
The Australian Government will provide sufficient funding to cover costs and liabilities
incurred by Snowy Hydro Limited for the delivery of Snowy 2.0, capped to the total
remaining undrawn equity, in the event that the Commonwealth terminates the Equity
Subscription Agreements between the Commonwealth and Snowy Hydro Limited.
Underwriting of transmission projects
The Australian Government has underwritten up to:
• $75.8 million for early works for the Victoria to New South Wales Interconnector West
(VNI West) NSW Section project (with a preferred route known as KerangLink)
(signed 7 April 2022).
• $181.5 million for the Coleambally to Wagga Wagga section of Project EnergyConnect
(signed 24 September 2021).
• $146.3 million for the early procurement of long lead equipment (transformers, reactors,
towers and conductors) for the VNI West NSW section project and the Humelink project
(signed 1 March 2023).
Budget Paper No. 1 |
Statement 9: Statement of Risks | Page 293
The conditions in which these underwriting agreements would be called on relate to the
projects not achieving regulatory and approval requirements.
Contingent liabilities – unquantifiable
Gorgon liquefied natural gas and carbon dioxide storage project –
long-term liability
The Australian and Western Australian (WA) Governments have provided an indemnity to
the Gorgon Joint Venture Partners (GJV) against independent third-party claims (relating to
stored carbon dioxide) under common law, for loss or damage caused by the injection of
carbon dioxide into the Dupuy formation under Barrow Island, WA. Claims can only occur
at least 15 years after the cessation of carbon dioxide injections into the formation. The
project commenced in 2019 and has an expected life of around 40 years. The claims are
subject to conditions similar to those set out in the Offshore Petroleum and Greenhouse Gas
Storage Act 2006.
The WA Government has indemnified the GJV and, subject to certain conditions being met,
the Australian Government has indemnified the WA Government for 80 per cent of any
amount determined to be payable under that indemnity.
Liability for costs incurred in a national liquid fuel emergency
The Australian Government has responsibility for the Liquid Fuel Emergency Act 1984
(the Liquid Fuel Act). In addition, the Australian Government and state and territory
governments have entered into an inter-governmental agreement (IGA) in 2006 in relation
to a national liquid fuel emergency. Under the IGA, the Australian Government agrees to
consult IGA parties on a likely shortage and, if necessary after those consultations, to
advise the Governor-General of the Commonwealth of Australia to declare a national
emergency under the Act.
The IGA contains three areas where the Australian Government may incur expenses in
the unlikely event of a national liquid fuel emergency. These relate to the direct costs
of managing a liquid fuel emergency and include the possibility of the Australian
Government reimbursing the state and territory governments for costs arising from their
responses, and potential compensation for industry arising from Australian Government
directions under the Liquid Fuel Act.
Marinus Link Project – Shareholders’ agreement
The Australian Government, along with the Victorian and the Tasmanian Governments,
has invested in the joint venture entity Marinus Link Pty Ltd to deliver the Marinus Link
project. If the three shareholders decide not to proceed with the project and Marinus Link
Pty Ltd is wound up, the shareholders may be required to contribute additional equity to
meet any outstanding liabilities of Marinus Link Pty Ltd.
| Budget Paper No. 1
Page 294 | Statement 9: Statement of Risks
Under the shareholders’ agreement, the Tasmanian Government also has the option to
sell some or all of its shares to the other shareholders. This option can only be exercised
following the commencement of commercial operations of stage one of the project,
currently scheduled for 2030. While the Victorian Government has the first right of refusal
to purchase these shares (capped at 16.7 per cent of the Tasmanian Government’s
17.7 per cent of the shareholdings), the Australian Government is required to purchase the
shares that the Victorian Government does not acquire. Any additional shares purchased
would be expected to generate a return in line with the Australian Government’s existing
shareholding in the entity.
There are also ongoing project risks as the project progresses, such as cost pressures,
that may require additional equity contributions from the shareholders. The
Australian Government will continue to monitor these risks through engagement and
oversight of Marinus Link Pty Ltd’s activities.
Murray-Darling Basin Reform – risk assignment
The Australian Government has committed to bridge the gap between the Baseline
Diversion Limit and the Sustainable Diversion Limits in the Basin Plan 2012 through water
recovery. On 1 July 2019, the Sustainable Diversion Limits took effect. The Water Act 2007
provides a risk assignment framework in which entitlement holders with reductions in
water allocations, or changes in the reliability of water allocations (where the gap has not
been bridged and an accredited water resource plan is in place), may be eligible for a
payment from the Commonwealth.
The total cost of the operation of the risk assignment framework cannot be quantified at
this time and remains a fiscal risk until the gap between the Baseline Diversion Limit and
Sustainable Diversion Limits is fully bridged.
Remediation of Jabiru Township
The Australian Government, the Northern Territory Government, Gundjeihmi Aboriginal
Corporation and Energy Resources of Australia Ltd signed a Memorandum of
Understanding in 2019. The Memorandum of Understanding underpins the transfer of
ownership of Jabiru to the Traditional Owners and related make good and rehabilitation
arrangements. On 26 June 2021, the Australian Government officially returned ownership
of Jabiru to the Traditional Owners. Before the handover, the Australian Government
signed a Remediation and Indemnity Deed between representatives of the Traditional
Owners in Jabiru and the Northern Land Council.
Under these agreements, the Australian Government’s responsibilities include renewal or
upgrading of some essential services infrastructure (stormwater, landfill and roads),
managing contamination in Jabiru Lake, management or removal of hazardous materials
and chemicals, replacing asbestos tiled roofs and improving housing stock, and other
ecological remediation. Expenditure for the rehabilitation work will be shared between the
Australian Government, Northern Territory Government and Energy Resources Australia.
Budget Paper No. 1 |
Statement 9: Statement of Risks | Page 295
United States Strategic Petroleum Reserve Lease Agreement – indemnity under
certain conditions
On 3 June 2020, the Australian Government entered into a commercial leasing agreement
with the United States (US) Department of Energy. This agreement facilitates the storage of
Australia’s first government-owned strategic fuel reserve in the US Strategic Petroleum
Reserve (SPR).
Under the lease agreement, the Australian Government indemnifies the SPR for any
liabilities incurred (subject to certain exceptions) arising from or related to: the
transportation of crude oil to the SPR; third-party claims made in connection with the
drawdown or delivery of the oil; and customs duties, fees or other charges which may arise
from the Australian Government’s noncompliance with US Customs Law.
Following the sale and delivery of all Australian oil held in the SPR in June 2022, the risk of
any liability is currently significantly reduced. Australia continues to maintain its lease and
could decide to store new reserves in the future.
Contingent liability – quantifiable
Underwriting of the Marinus Link Project
The Australian Government has underwritten up to:
• $76.5 million for reservation of manufacturing capacity for cable one for the Marinus
Link project (signed 5 September 2023).
• Swedish Krona kr344.2 million, EUR12.9 million, US$2.5 million and A$59.4 million
(estimated total value A$134.6 million as of 31 March 2024) for reservation of
manufacturing and installation capacity for converter stations for the Marinus Link
project (signed 31 March 2024).
The conditions for these underwriting agreements to be called on relate to agreement to
proceed with the project not being reached and the associated notices to proceed not being
issued to the cable one or converter station contractors by 31 July 2024 and 31 August 2025
respectively.
| Budget Paper No. 1
Page 296 | Statement 9: Statement of Risks
Defence
Fiscal Risks
Implementation of the nuclear-powered submarine program
On 14 March 2023, the Australian Government, alongside the governments of the
United Kingdom and the United States of America, announced the optimal pathway for
the nuclear-powered submarine program for Australia under the AUKUS trilateral security
partnership.
The Australian Government has agreed a number of measures to support the initial
implementation of the nuclear-powered submarine program, which have been outlined in
Budget papers since 2023–24.
The total costs associated with the program will depend on the details of design and
production processes and commercial and other arrangements, including the provision of
indemnities, which will be finalised between governments and delivery partners.
Major operations of the Australian Defence Force in 2024–25
The 2024–25 estimates for the Department of Defence include the cost of major operations
of the Australian Defence Force in 2024–25 in the Middle East region, and to protect
Australia’s borders and offshore maritime interests. Funding for major Defence operations
is considered and provisioned on a year-by-year basis.
Significant but remote contingencies
ADI Limited – Officers’ and Directors’ indemnities
Under the sale agreements for ADI Limited, the Australian Government agreed to
indemnify the directors, officers and employees of ADI Limited for claims and legal costs
associated with assistance related to the sale of the Australian Government’s shares in the
company. The Australian Government has also provided an indemnity to ADI Limited for
uninsured losses relating to specific heads of claims.
Litigation cases
The Department of Defence is involved in a wide range of litigation and other claims for
compensation and/or damages that may result in litigation where the matters are not able to
be finalised by negotiation.
Budget Paper No. 1 |
Statement 9: Statement of Risks | Page 297
The litigation includes:
• common law liability claims, including for personal injury and property damage,
investigations of Defence by Comcare and active prosecutions in relation to alleged
breaches of the Work Health and Safety Act 2011
• claims seeking compensation for alleged loss or damage arising from Defence use
of aqueous film forming foam that contained manmade per- and poly-fluoroalkyl
substances
• claims received following reviews into the Australian Defence Force and Defence culture.
Claims may also arise from the disposal of assets to third parties where such assets contain
hazardous materials, or components that have the potential to cause injury.
Remote contingencies
As at 30 June 2023, the Department of Defence carried 273 instances of quantifiable remote
contingent liabilities valued at $3.9 billion and 1,413 instances of unquantifiable remote
contingent liabilities.
Details of these significant but remote contingent liabilities are not given due to commercial
and/or national security sensitivities.
Contingent liabilities – unquantifiable
Cockatoo Island Dockyard
On 13 October 2001, Cockatoo Island Dockyard commenced proceedings against the
Commonwealth in the New South Wales (NSW) Supreme Court seeking full
reimbursement from the Australian Government for personal injury claims costs
incurred after 31 October 1995 in relation to asbestos exposure. Following decisions
in the NSW Supreme Court on 17 December 2004 and 4 February 2005, and the
NSW Court of Appeal on 23 November 2006, Cockatoo Island Dockyard was awarded
a complete indemnity from the Commonwealth for its uninsured exposure to asbestos
damages claims, plus profit of 7.5 per cent. Defence continues to manage reimbursement
of claims costs incurred by Cockatoo Island Dockyard.
Land decontamination, site restoration and decommissioning of Defence assets
The Department of Defence has made a financial provision for the estimated costs involved
in restoring, decontaminating and decommissioning Defence assets where a legal or
constructive obligation has arisen. For cases where there is no legal or constructive
obligation, the potential costs have not been assessed and are unquantifiable contingencies.
| Budget Paper No. 1
Page 298 | Statement 9: Statement of Risks
Contingent liability – quantifiable
Claims against the Department of Defence
The Department of Defence has seven instances of non-remote, quantifiable contingent
liabilities in respect of claims against Defence valued at $7.9 million.
The estimated figure is determined by conducting an objective analysis of the probable
amount payable for all matters managed by firms engaged by Defence using the
Attorney-General’s Whole of Australian Government Legal Services Panel and those being
handled in-house by Defence Legal Division. However, the exact amount payable under
those claims is uncertain. Defence is defending the claims or trying to resolve them through
alternative dispute resolution measures.
Budget Paper No. 1 |
Statement 9: Statement of Risks | Page 299
Employment and Workplace Relations
Fiscal Risk
Recovery of inappropriately claimed VET FEE-HELP payments from
VET providers
The Australian Government is undertaking compliance action, including court action,
to recover VET FEE-HELP payments from VET providers where loans were issued
inappropriately to students by providers. The Government has legislated a remedy,
which commenced 1 January 2019, for VET FEE–HELP students who incurred debts under
the VET FEE-HELP loan scheme following inappropriate conduct by VET providers.
The Government will undertake recovery activities against VET providers in cases where
the student was ineligible for a VET FEE-HELP loan.
There are financial risks to the Commonwealth in the event that it cannot recover payments
from VET providers where they have closed or entered into administration or liquidation.
The financial risk to the Commonwealth is currently unquantifiable as it depends on the
receipt and assessment of applications from students, as well as outcomes from the
Government’s investigations into VET providers’ conduct.
Contingent liabilities – quantifiable
ParentsNext program
ParentsNext supports parents to identify their education and employment related goals
to build their work readiness, and plan and prepare for employment by the time their
youngest child starts school. The Government has announced it will replace ParentsNext
with a new voluntary pre-employment service for parents from 1 November 2024. The
current ParentsNext program has been extended until 31 October 2024, and will continue
to be voluntary during this extension period.
Under the current program, providers accumulate one-off credits which accrue to their
provider’s Participation Fund on commencement of a participant.
Currently, providers are forecast to spend less than the value of the available credits,
creating an accumulating surplus of credits that present a contingent liability. As at
29 February 2024, there was $91.1 million in unspent Participation Fund credits in the
Participation Fund notional bank.
| Budget Paper No. 1
Page 300 | Statement 9: Statement of Risks
Workforce Australia – Employment Fund
Since July 2022, with the introduction of Workforce Australia, contracted service providers
and the Digital Services Contact Centre have had access to the Employment Fund, which
can be used to purchase goods and services to help participants to get and keep a job.
• Providers accumulate a $1,600 Employment Fund credit upon commencement of each
participant in Workforce Australia Provider Services.
• Participants in Workforce Australia Online attract a $300 Employment Fund credit,
credited after a participant has been in Digital Services for two months.
Currently, Employment Fund expenditure is expected to be less than the value of the
available credits, creating an accumulating surplus of credits that present a contingent
liability. As at 29 February 2024, there was $549.7 million in unspent Employment Fund
Credits in the Workforce Australia Employment Fund notional bank.
Budget Paper No. 1 |
Statement 9: Statement of Risks | Page 301
Finance
Significant but remote contingency
Australian Naval Infrastructure Pty Ltd – Termination of the Equity
Funding Agreement
The Australian Government will provide sufficient funding to enable Australian Naval
Infrastructure Pty Ltd (ANI) to meet the direct costs that may be incurred by ANI in the
event that the Commonwealth terminates the Equity Funding Agreement entered into
in October 2017 between the Commonwealth and ANI.
Contingent liabilities – unquantifiable
ASC Pty Ltd – Directors’ and Executives’ indemnities
In 2002, the Australian Government provided former directors of the then Australian
Submarine Corporation Pty Ltd (now known as ASC Pty Ltd (ASC)) with indemnities for:
• any claim against them as a result of complying with ASC’s obligations under the
Process Agreement between the Electric Boat Corporation (EBC), the Australian
Government and ASC
• any claim against them as a result of complying with ASC’s obligations under the
Service Level Agreement between ASC, the Department of Defence, EBC and Electric
Boat Australia
• any claims and legal costs arising from the directors acting in accordance with the
Board’s tasks and responsibilities, as defined under the indemnity.
In 2018, the Australian Government provided directors and senior executives of ASC
with indemnities to mitigate personal risk and provide coverage for legal costs related
to any legal proceedings that may arise in relation to the transaction to separate
ASC Shipbuilding Pty Limited from ASC.
ASC Pty Ltd – Guarantee of Indemnity from ASC in favour of ASC Shipbuilding
Pty Limited
The Australian Government has provided a guarantee of an indemnity from ASC Pty Ltd
(ASC) in favour of ASC Shipbuilding Pty Limited (ASC Shipbuilding).
ASC provided an indemnity in favour of ASC Shipbuilding prior to ASC Shipbuilding
being separated from ASC Pty Ltd, which occurred in December 2018. This indemnity is
intended to cover any liabilities unknown at the time of separation which may arise after
separation. The indemnity is time limited to seven years.
| Budget Paper No. 1
Page 302 | Statement 9: Statement of Risks
The guarantee will only be called on if ASC is no longer owned by the Commonwealth
and ASC can no longer meet its obligations under the terms of the indemnity. It is
Australian Government policy to retain ASC as a Government Business Enterprise.
Australian Government general insurance fund – Comcover
The Department of Finance provides insurance and risk management services to
Australian Government general government sector entities. Insurance liabilities are subject
to potential revisions as the total number and size of claims covered is subject to unforeseen
future events.
The Department of Finance takes all reasonable steps to ensure it has appropriate information
regarding its claims exposure, including regularly updating estimates and parameters based
on analysis of claim experience, actuarial calculations and other relevant factors.
Commonwealth Superannuation Corporation – immunity and indemnity
The Governance of Australian Government Superannuation Schemes Act 2011 (the Governance
Act) provides specific immunities for activities undertaken in good faith by directors and
delegates of the board of the Commonwealth Superannuation Corporation (CSC), provided
these activities relate to the performance of their functions.
Under the Governance Act, other than where not permitted by the Superannuation Industry
(Supervision) Act 1993 or regulations under that Act, any money that becomes payable by
CSC in respect of an action, liability, claim or demand that relates to the superannuation
schemes or funds for which it is responsible, is to be paid out of the relevant
superannuation fund or, if there is no fund, the Consolidated Revenue Fund (CRF).
Amounts paid from a superannuation fund are reimbursed to the fund from the CRF.
Finance owned estate
The Department of Finance owns and is responsible for managing properties in the
Australian Government’s domestic non-Defence portfolio, including remediation projects
of contaminated sites to ensure there is no threat to human health and the environment.
A small number of properties may require remediation and are subject to further
investigation. Except for properties at Lucas Heights in New South Wales and
Cox Peninsula in Northern Territory, none of the properties with potential remediation
issues has had a provision for remediation recognised, as neither the conditions for legal
nor constructive obligations have been met, nor is a reliable estimate of the obligation
currently possible.
Future Fund Management Agency and Future Fund Board of Guardians –
indemnity
The Australian Government has provided certain staff members of the Future Fund
Management Agency (the Agency) and the members (board members) of the Future Fund
Board of Guardians (the Board) with deeds of indemnity. The indemnities are intended to
cover liabilities in excess of the insurance cover (including Comcover) of the Board, its
Budget Paper No. 1 |
Statement 9: Statement of Risks | Page 303
subsidiary entities and the Agency. Board members are indemnified for liabilities incurred
arising out of an act, omission or breach of statutory duty by the Board or a board member
that relates to the performance of the Board’s functions or the exercise of the Board’s
powers or that relates to any act, omission or breach of statutory duty by a board member
as a director or officer of a wholly-owned Australian subsidiary of the Board.
Certain Agency staff members are indemnified in connection with the performance of
functions or the exercise of powers in their capacity as a director or officer of investee
companies or subsidiaries of the Board. Subject to certain exceptions or qualifications,
board members and Agency staff members are indemnified for amounts up to the value
of the relevant funds.
Board members are not indemnified in respect of any liability owed by them to the Board
or its subsidiary, or which results from a contravention of a civil penalty provision of the
Future Fund Act 2006 or the Corporations Act 2001. Agency staff members are not
indemnified to the extent they are indemnified by the relevant investee company or
subsidiary, in respect of any liability owed to the Board or the Commonwealth, or to the
extent that they are granted and receive financial assistance under Appendix E of the
Legal Services Directions 2017. Both board members and Agency staff members are not
indemnified for any liability resulting from conduct they engage in other than in good
faith, to the extent they recover a liability under a Directors and Officers insurance policy
(including Comcover) or in respect of legal costs incurred by them in unsuccessfully
defending or resisting criminal proceedings or proceedings regarding a contravention of
a civil penalty provision.
Googong Dam
On 4 September 2008, a 150-year lease for Googong Dam was signed between the
Australian Government and the Australian Capital Territory (ACT) Government. The
Australian Government is liable to pay just terms compensation if the terms of the lease
are breached by introducing new legislation or changing the Canberra Water Supply
(Googong Dam) Act 1974 in a way that impacts on the rights of the ACT. The lease includes
a requirement for the Australian Government to undertake rectification of easements or
any defects in title in relation to Googong Dam, and remediation of any contamination it
may have caused to the site. It also gives an indemnity in relation to acts or omissions by
the Australian Government.
Indemnities for the Reserve Bank of Australia and private sector banks
In accordance with Government entities’ contracts for transactional banking services, the
Australian Government has indemnified the Reserve Bank of Australia and contracted
private sector banks against loss and damage arising from error or fraud by an entity, or
transactions made by a bank with the authority of an entity.
| Budget Paper No. 1
Page 304 | Statement 9: Statement of Risks
Indemnities relating to other former asset sales, privatisations and information
technology outsourcing projects
Ongoing and terminating indemnities have been given in respect of a range of asset sales,
privatisations and information technology outsourcing projects that have been conducted
by the Department of Finance and the former Office of Asset Sales and Commercial
Support and its predecessors. The probability of an action being brought under one of these
indemnities diminishes over time.
Details of indemnities in respect of other asset sales and privatisations have been provided
in previous Budget and MYEFO papers, and previous Annual Reports of the Department of
Finance and the Office of Asset Sales and Commercial Support.
Indemnified bodies are listed below. Apart from instances noted elsewhere, the
Department of Finance does not currently expect any other action to be taken in respect of
these indemnities.
Indemnified body
Year(s) raised
ADI Ltd
1998
Albury–Wodonga Development Corporation
2014
Australian Airlines
1991
Australian Industry Development Corporation
1996
Australian Multimedia Enterprise
1997
Australian National Rail Commission and National Rail Corporation Ltd
1997 and 2000
Australian River Co Ltd
1999
Australian Submarine Corporation Pty Ltd
2000
Bankstown Airport Ltd
2002
Camden Airport Ltd
2002
ComLand Ltd
2004
Commonwealth Accommodation and Catering Services
1988
Commonwealth Bank of Australia
1993 to 1996
Commonwealth Funds Management and Total Risk Management
1996 to 1997
Employment National Ltd
2003
Essendon Airport Ltd
2001
Federal Airports Corporation’s Airports
1995 to 1997
Health Insurance Commission
2000
Housing Loans Insurance Corporation Ltd
1996
Hoxton Park Airport Limited
2002
Medibank Private Limited
2014
National Transmission Network
1999
Sydney Airports Corporation Ltd
2001
Telstra
1996, 1999 and 2006
Wool International
1999
Budget Paper No. 1 |
Statement 9: Statement of Risks | Page 305
Foreign Affairs and Trade
Fiscal Risk
Export Finance Australia – National Interest Account
There are five financing facilities under Export Finance Australia’s National Interest
Account, set out below.
• The Australian Infrastructure Financing Facility for the Pacific (AIFFP) started operation
on 1 July 2019. The AIFFP can provide up to $4 billion in facilities, including up to
$1 billion in grants and the balance in loans and guarantees, to support high priority
infrastructure development in Pacific countries and Timor-Leste. To date, the
Australian Government has agreed to provide loans, guarantees and grants to support
the development of 19 infrastructure projects in ten countries. As at 29 February 2024,
the maximum loan exposure is $1.1 billion, of which $262.7 million is estimated to be
drawn down by 30 June 2024.
• The Critical Minerals Facility (CMF) was established on 28 September 2021 to provide
finance to critical minerals projects in Australia where private sector finance is
unavailable or insufficient. In the 2023–24 MYEFO, the Government expanded the
CMF by $2.0 billion for a maximum aggregate exposure of $4.0 billion. To date, the
Government has agreed to provide a total of approximately $2.15 billion to support five
projects under the facility. As at 30 June 2024, $145.9 million is estimated to be drawn
down from the CMF.
• The Defence Export Facility (DEF) was established to grow Australia’s defence exports
by helping to overcome difficulties in accessing private sector finance. The DEF has a
maximum aggregate exposure of US$3.0 billion. To date, three loans under the DEF
have been agreed for a total signing value of A$228 million. As at 30 June 2024,
A$172.9 million is estimated to be outstanding.
• The COVID-19 Export Capital Facility was announced on 15 April 2020, with a
maximum aggregate exposure of $500 million. The COVID-19 Export Capital Facility
expired in April 2021. As at 30 June 2024, $1.5 million is estimated to be outstanding.
• The Southeast Asia Investment Financing Facility (SEAIFF) was announced on
5 March 2024. The SEAIFF will provide up to $2.0 billion in loans, guarantees, equity
and insurance for projects that would boost Australian trade and investment in
Southeast Asia, particularly in support of the region’s clean energy transition and
infrastructure development. To date, no funds have been committed under the SEAIFF.
The Government has also agreed to amend the Export Finance and Insurance Corporation Act
1991 to enable Export Finance Australia to finance domestic projects in the national interest
where they are consistent with the Future Made in Australia Framework. The Government
will be able to consider supporting projects on the National Interest Account through
financing including debt or equity, where projects are unable to progress solely through
commercial financing.
| Budget Paper No. 1
Page 306 | Statement 9: Statement of Risks
Contingent liability – quantifiable
Export Finance Australia
The Australian Government guarantees the due payment of money that is, or may at any
time become, payable by Export Finance Australia to anyone other than the Government.
As at 29 February 2024, the Government’s total contingent liability was $6.4 billion,
comprising Export Finance Australia’s liabilities to third parties ($5.3 billion) and Export
Finance Australia’s overseas investment insurance, contracts of insurance and guarantees
($1.1 billion). Of the total contingent liability, $2.6 billion relates to Export Finance
Australia’s Commercial Account and $3.8 billion relates to the National Interest Account.
Budget Paper No. 1 |
Statement 9: Statement of Risks | Page 307
Health and Aged Care
Fiscal Risk
Fair Work Commission decision – Aged Care Work Value Case
As the principal funder of the aged care sector, the Australian Government has committed
to provide funding to support any increases to award wages from the Aged Care Work
Value case that is currently before the Fair Work Commission. On 15 March 2024, the
Fair Work Commission made a decision on Stage 3 of the Aged Care Work Value case.
The operative date and phasing in of the variations to award wages are subject to further
consideration by the Fair Work Commission.
Contingent liabilities – unquantifiable
Accommodation Payment Guarantee Scheme
The Accommodation Payment Guarantee Scheme guarantees the repayment of aged care
residents’ refundable accommodation payments (including refundable deposits and
accommodation bonds) if the approved provider becomes insolvent or bankrupt and
defaults on its refund obligations. In return for the payment, the rights that the resident
had to recover the amount from their approved provider are transferred to the Australian
Government so it can pursue the approved provider for the funds. In cases where the funds
are unable to be recovered, the Australian Government may levy all approved providers
holding bonds, entry contributions and refundable accommodation deposits to meet
any shortfall.
Advance Purchasing Agreements for COVID-19 vaccines
The Australian Government has provided indemnities to the suppliers of COVID-19
vaccines, for which the Australian Government has entered into Advance Purchasing
Agreements, covering certain liabilities that could result from the use of the vaccines.
These agreements support access to vaccines from AstraZeneca Pty Ltd, Pfizer Inc,
Moderna Switzerland GmbH and Novavax, Inc.
Australian Red Cross Society – indemnities
Deeds of Agreement between the Australian Red Cross Society (the Red Cross) and the
National Blood Authority in relation to the operation of Australian Red Cross Lifeblood
and the development of principal manufacturing sites in Sydney and Melbourne, include
certain indemnities and a limitation of liability in favour of the Red Cross. These
indemnities cover defined sets of potential business, product and employee risks and
liabilities. Certain indemnities for specific risk events that operate within the term of the
Deed of Agreement are capped and must meet specified pre-conditions. Other indemnities
and the limitation of liability only operate in the event of the expiry and non-renewal, or
the earlier termination, of the Deed of Agreement relating to the operation of the Red Cross
or the cessation of funding for the principal sites, and only within a certain scope.
| Budget Paper No. 1
Page 308 | Statement 9: Statement of Risks
All indemnities are also subject to appropriate limitations and conditions, including in
relation to mitigation, contributory fault, and the process of handling relevant claims.
Blood and blood products liability cover
The National Managed Fund (NMF) was established by a memorandum of understanding
between the Australian Government, Australian Red Cross Lifeblood (Lifeblood) and state
and territory governments to cover potential future claims in relation to the supply of blood
and blood products by Lifeblood. The NMF provides for liabilities incurred by Lifeblood
where other available mitigation or cover is not available. Under certain conditions, the
Australian Government and the state and territory governments may jointly provide
indemnity for Lifeblood through a cost-sharing arrangement for claims, both current and
potential, regarding personal injury and loss or damage suffered by a recipient of certain
blood products. If there are insufficient funds in the NMF to cover claim costs, the
Jurisdictional Blood Committee will consider a report provided by the National Funds
Manager to determine the level of additional funds required. The Australian Government’s
share of any additional liability is limited to 63 per cent of any agreed net cost.
CSL Ltd
CSL Limited (CSL) is indemnified against claims made by individuals who contract
specified infections from specified products and against employees contracting
asbestos-related injuries. CSL has unlimited cover for most events that occurred before
the sale of CSL on 1 January 1994, but has more limited cover for a specified range of
events that occurred during the operation of the Plasma Fractionation Agreement from
1 January 1994 to 31 December 2004. Where alternative cover was not arranged by CSL,
the Australian Government may have a contingent liability.
The National Fractionation Agreement for Australia with CSL Behring (Australia) Pty Ltd
(a subsidiary of CSL), which has operated since 1 January 2018, includes a requirement that
the National Blood Authority make a defined payment to CSL Behring (Australia) Pty Ltd
in certain circumstances only, in the event that the volume of plasma supplied annually to
CSL Behring (Australia) Pty Ltd is less than a specified amount.
Indemnities relating to vaccines
The Australian Government has provided indemnities to a manufacturer of a
smallpox/monkeypox vaccine held by the Australian Government, covering possible
adverse events that could result from the use of the vaccine in an emergency situation.
Indemnities have also been provided to a particular manufacturer of pandemic and
pre-pandemic influenza vaccines for the supply or future supply of influenza vaccines
under certain conditions (including H1N1 and H5N1).
Budget Paper No. 1 |
Statement 9: Statement of Risks | Page 309
Major sporting events
Brisbane 2032 Olympic and Paralympic Games – On 21 July 2021, the International
Olympic Committee selected Brisbane to host the 2032 Olympic and Paralympic Games.
On 17 February 2023, the Australian Government and the Queensland Government signed
a bilateral agreement on matters of shared interest, including a capped capital contribution
towards venue infrastructure by the Australian Government. The Australian Government
has also provided a range of guarantees to the International Olympic Committee for
provision of government services in support of Brisbane hosting the Games, at no cost to
the Organising Committee of the Olympic Games. The financial implications of this
support are not quantifiable at this time.
2027 Rugby World Cup and 2029 Women’s Rugby World Cup – On 12 May 2022,
World Rugby selected Australia as the host of the 2027 Rugby World Cup and the
2029 Women’s Rugby World Cup. In addition to the financial assistance provided in the
2022–23 March Budget to support event delivery and legacy programs, the Government
has committed to provide services and support (such as security commitments and visa
processing for participants and support staff). The financial implication of this additional
support is not quantifiable at this time.
2023 FIFA Women’s World Cup – Between 20 July 2023 and 20 August 2023, Australia and
New Zealand co-hosted the 2023 FIFA Women’s World Cup. In addition to the financial
assistance provided by the Australian Government to support direct event delivery costs
and legacy programs, the Government committed to provide Commonwealth guarantees
for the event including taxation exemptions. The financial implication of this additional
support is not quantifiable at this time.
Medical Indemnity Exceptional Claims Scheme
Under the Medical Indemnity Exceptional Claims Scheme, the Australian Government
assumes liability for 100 per cent of any damages payable against practitioners practising in
a medical profession that exceed a specified level of cover provided by the practitioner’s
medical indemnity insurer (currently $20 million). These arrangements apply to payouts
either related to a single large claim or to multiple claims that in aggregate exceed the cover
provided by the practitioner’s medical indemnity insurer, and would apply to claims
notified under contract-based cover since 2003. From 1 July 2020, the Medical and Midwife
Indemnity Legislation Amendment Act 2019 provides transferred eligibility for allied health
professionals (including registered only midwives) into the Allied Health High Cost Claims
Scheme and Allied Health Exceptional Claims Scheme within the Medical Indemnity
Act 2002.
| Budget Paper No. 1
Page 310 | Statement 9: Statement of Risks
Medical Rural Bonded Scholarship Waivers
The Department of Health and Aged Care is using debt waivers to address the creation
of statutory debts by participants of the Medical Rural Bonded Scholarship Scheme who
inadvertently breached contractual arrangements from 2020, when the reformed Bonded
Medical Program was implemented. In 2022–23, the Department of Health and Aged Care
waived $51.8 million in statutory debts and further waivers may be required. The total
value of the waivers cannot yet be quantified.
mRNA manufacturing facility – indemnities
The Commonwealth has entered into a strategic partnership with Moderna Australia Pty
Ltd (Moderna) to establish domestic mRNA vaccine manufacturing capacity and capability
in Australia. Under the agreement between the Commonwealth and Moderna, the
Commonwealth may enter into a pandemic vaccine advance purchase agreement with
Moderna for locally manufactured mRNA vaccines in certain circumstances where an
infectious disease pandemic is declared. Moderna will also have the capacity to supply
the Commonwealth with non-pandemic vaccines through a non-pandemic vaccine
supply agreement.
The Commonwealth does provide indemnities to Moderna under these arrangements to
cover certain liabilities that could result from the implementation of the arrangement.
There are also indemnities provided by Moderna in favour of the Commonwealth for
certain liabilities, which reflect risk sharing between the parties and are intended to limit
financial exposure to the Australian Government.
Contingent asset – unquantifiable
Legal action seeking compensation
The Department of Health and Aged Care is engaged in legal action against certain
pharmaceutical companies to recover savings denied to the Commonwealth. This is due to
interim injunctions granted to these companies in unsuccessful patent litigation delaying
generic versions of drugs being listed on the Pharmaceutical Benefits Scheme, thereby
delaying statutory and price disclosure related price reductions for these drugs.
Budget Paper No. 1 |
Statement 9: Statement of Risks | Page 311
Home Affairs
Fiscal Risk
Regional processing arrangements
Effective 1 January 2022, the Australian Government supports regional processing
arrangements in the Republic of Nauru, assisting the Government of Nauru to provide
support and services to transferees residing in Nauru. Any significant changes in the
number of transferees, the arrangements that underpin the provision of those services,
relevant litigation or legislative changes, may incur a cost or generate cost reductions which
are unquantifiable at this time.
Contingent liabilities – unquantifiable
Australian victims of terrorism overseas payment
The Social Security Amendment (Supporting Australian Victims of Terrorism Overseas) Act 2012
inserted Part 2.24AA into the Social Security Act 1991 to create a scheme to provide financial
assistance to Australian residents who are victims of an overseas terrorist act that has been
declared by the Prime Minister. The scheme commenced on 22 January 2013. Under the
scheme, Australian residents who are harmed (primary victims) or whose close family
member dies (secondary victims) as a direct result of a declared terrorist act are eligible to
claim one-off payments of up to $75,000. As acts of terrorism are unpredictable, and the
declaration of overseas terrorists acts discretionary, the cost of the scheme is unquantifiable.
Disaster Recovery
The Australian Government provides funding to states and territories through the
jointly-funded Commonwealth-State Disaster Recovery Funding Arrangements (DRFA) to
assist with natural disaster relief and recovery costs. A state or territory may claim DRFA
funding if a natural disaster occurs and relief and recovery expenditure for that event meet
the thresholds set out in the DRFA.
The forward estimates for the DRFA include preliminary estimates of costs for past events,
based on the best information available at the time of preparation. Preliminary estimates of
the cost of disaster relief and recovery and the timing of expenditure are subject to change.
The total cost of relief and recovery from past events may not be completely realised for
several years.
For major disasters, the Australian Government may approve payments to individuals,
such as the Australian Government Disaster Recovery Payment and Disaster Recovery
Allowance. As natural disasters and their impacts are unpredictable, the cost of these
payments for future disasters is unquantifiable and is not included in the forward
estimates.
| Budget Paper No. 1
Page 312 | Statement 9: Statement of Risks
Facilities, garrison, transferee arrivals and reception, and health services in the
Republic of Nauru – liability limit
The Department of Home Affairs entered into two contracts for the provision of services
and facilities in the Republic of Nauru in relation to regional processing arrangements with
the following entities:
• Management & Training Corporation Pty Ltd (MTC), which commenced on
1 October 2022, for the provision of facilities, garrison and transferee arrival and
reception services. The contract includes a provision that limits MTC’s liability to the
Commonwealth to a maximum of $200 million in aggregate for the term of the contract.
The limitation of liability does not apply to loss arising from claims in relation to death
or bodily injury, disease or illness of any person caused by MTC’s breach of contract,
negligent act or omission, wilful default, or breach of law. The limitation of liability also
does not apply to loss arising from: criminal acts, malicious damage or wilful default of
the service provider or its subcontractors; statutory penalties; breach of privacy
legislation; breach of confidentiality; third party claims in relation to infringement of
intellectual property rights; or claims brought by third parties to the extent they are
caused by the breach of contract, wilful default, or negligence of the service provider.
• International Health and Medical Services Pty Ltd (IHMS), which commenced on
13 August 2022, for the provision of health services in the Republic of Nauru. The
contract includes a provision that limits IHMS’ liability to the Commonwealth with an
indemnity limit of no less than $45 million in respect of each and every occurrence, and
in respect of product liability only, and in the aggregate for all occurrences arising
during any one 12-month policy period. The limitation of liability does not apply to loss
arising from claims in relation to death or bodily injury, disease or illness (including
mental health) of any person caused by IHMS’ breach of contract, negligent act or
omission, wilful default, or breach of law. The limitation of liability also does not apply
to loss arising from: criminal acts, malicious damage or wilful default of the service
provider or its subcontractors; statutory penalties; liability that cannot be excluded at
law; breach of privacy legislation; breach of confidentiality; third party claims in
relation to infringement of Intellectual Property Rights; or claims brought by third
parties to the extent they are caused by the breach of contract, wilful default, or
negligence of the service provider.
Immigration detention services by state and territory governments – liability limit
The Department of Home Affairs has negotiated arrangements with some state and
territory governments for the provision of various services (including health, corrective and
policing services) to immigration detention facilities and people in immigration detention.
Some jurisdictions sought indemnification by the Australian Government for the provision
of these services. These agreements, listed below, provide unquantifiable indemnities
relating to any damage or loss incurred by state and territory governments arising out of,
or incidental to, the provision of services under these agreements.
Budget Paper No. 1 |
Statement 9: Statement of Risks | Page 313
Jurisdiction
Service Stream
Details
Christmas Island
Health
$5 million per claim or event
NSW
Corrections
Uncapped – with a risk rating assessment,
no more than $30 million per event
Police
$5 million per claim or event
QLD
Police
$5 million per claim or event
SA
Police
$5 million per claim or event
VIC
Police
$5 million per claim or event
WA
Police
$5 million per claim or event
NT
Corrections
$5 million per claim or event
The Department of Home Affairs negotiates arrangements as necessary for the provision of
corrective services. The indemnity provided to state and territory governments under these
arrangements is no more than $30 million per event.
The status of each agreement with state and territory governments varies, such as ‘in
progress’, ‘under review’ and ‘legacy’. The table above sets out all known current
agreements with confirmed indemnity liability in accordance with the Public Governance,
Performance and Accountability Act 2013.
Immigration detention services contract – liability limit
The Department of Home Affairs entered into a contract with Serco Australia Pty Ltd
(Serco), which commenced on 11 December 2014, to deliver immigration detention services
in Australia on behalf of the Australian Government at immigration detention facilities.
The contract limits Serco’s liability to the Commonwealth to a maximum of any insurance
proceeds recovered by Serco up to a value of $330 million for the term of the contract.
Serco’s liability is unlimited for specific events defined under the contract.
| Budget Paper No. 1
Page 314 | Statement 9: Statement of Risks
Industry, Science and Resources
Fiscal Risk
Rehabilitation of the Ranger Uranium Mine
The Australian Government approved the Ranger Uranium Mine (Ranger) in the late 1970s.
Energy Resources of Australia Ltd (ERA) was authorised to mine uranium at Ranger until
2021, and is required to rehabilitate the site to achieve an environmental condition similar
to adjacent areas. Pursuant to the renegotiated agreement between the Australian
Government and the Northern Land Council, the Australian Government would be
responsible for carrying out rehabilitation works at the Ranger site should ERA fail
to complete the works. ERA has provided a rehabilitation security to the Australian
Government to cover the expected costs of rehabilitation should it be called upon.
The rehabilitation security is revalued periodically based on estimated rehabilitation costs
at a point in time, and ERA may be required to provide further security if necessary
following a revaluation. The security currently reflects valuation assumptions as
at March 2020. Recent assessments of the rehabilitation costs undertaken by the
Government indicate that the potential costs have increased significantly following
the last security valuation (in March 2020) and that, at present, the security held by
the Australian Government would not be sufficient to rehabilitate the site should the
Australian Government be required to do so. The Government acknowledges the
uncertainty in costing rehabilitation works beyond 2027 and the impact this has on the
timing of the next security valuation. Until the security can be valued in light of the cost
uncertainties being experienced by ERA, the difference between the expected rehabilitation
costs and the security held by the Australian Government represents a fiscal risk to
the Budget.
Significant but remote contingencies
Liability for damages caused by space and certain high-power rocket activities
Under the United Nations Convention on International Liability for Damage Caused by
Space Objects, the Australian Government may be liable to pay compensation for damage
caused to nationals of other countries by space objects launched from Australia, or by
Australian nationals overseas. For activities approved under the Space (Launches and
Returns) Act 2018 the Government also accepts liability for damage suffered by Australian
nationals, to a maximum value of $3 billion above an insured level.
To address this risk, in order to have a space or high-power rocket activity approved under
the Space (Launches and Returns) Act, the responsible party is required to insure against, or
take financial responsibility for, damage to third parties. The amount of insurance or
financial responsibility is capped at $100 million.
The Space (Launches and Returns) Act provides for amounts lower than $100 million
depending on the risk profile of the activity. A maximum probable loss methodology is
also available to calculate the amount of insurance or financial responsibility.
Budget Paper No. 1 |
Statement 9: Statement of Risks | Page 315
Operations and maintenance of the Northern Endeavour and associated
infrastructure
On 31 March 2022, Petrofac Facilities Management Limited (Petrofac) was engaged to
deliver Phase One of the decommissioning of the Northern Endeavour. This will see the
floating production storage and offtake facility (FPSO) disconnected from the sub-sea
equipment and temporary suspension of the wells. On 30 September 2022, the operational
control of the facility transitioned from Upstream Production Solutions Pty Ltd to Petrofac.
The contract with Petrofac has adopted an industry standard “knock-for-knock” risk and
liability allocation arrangement, akin to the one with Upstream Production Solutions Pty
Ltd, that positions risks so that they are borne by the party most likely to be able to
financially manage the consequences of a risk materialising. Petrofac is liable, to a
pre-determined cap, for several insured risks, including to property, pollution and the
environment. Petrofac will also bear responsibility for some instances of loss or damage to
the extent it is caused by Petrofac’s negligence or wilful misconduct.
The Australian Government has obtained protection and indemnity, facility damage and
control of well insurance, and taken out membership with oil spill response agencies. These
limit the Government’s potential risk and financial exposure.
The risk of an incident is remote. The floating production storage offtake facility is being
maintained with safety critical maintenance carried out, limited oil in storage and no
further oil production taking place. The additional works to prepare for disconnection are
not considered to materially increase the risk.
The Australian Government has committed to decommission the Northern Endeavour
FPSO and remediate the Laminaria-Corallina oil fields. The cost to deliver Phase One of the
decommissioning, including the disconnection and disposal of the FPSO, is taken into
account in the forward estimates. However, costs for the subsequent phases of the
decommissioning – the permanent plug and abandonment of the wells (Phase Two) and
the removal of subsea infrastructure (Phase Three), which are estimated to commence over
the forward estimates period – are not able to be fully quantified until procurement
activities for those Phases have been completed. Actual costs associated with Northern
Endeavour decommissioning will be recovered through the Offshore Petroleum (Laminaria
and Corallina Decommissioning Cost Recovery Levy) Act 2022.
| Budget Paper No. 1
Page 316 | Statement 9: Statement of Risks
Contingent liabilities – unquantifiable
Australian Nuclear Science and Technology Organisation – asbestos
contamination
The Australian Nuclear Science and Technology Organisation (ANSTO) site contains
asbestos in several buildings and in the soil at the Lucas Heights campus. Although there is
potential for claims to be made in relation to asbestos-related diseases, the potential costs
have not been assessed and are unquantifiable contingencies.
Australian Nuclear Science and Technology Organisation – indemnity
On 21 April 2016, the then Minister for Industry, Innovation and Science signed a Deed of
Indemnity between the Australian Government, ANSTO and ANSTO Nuclear Medicine
Pty Ltd (ANM), under which the Government formally agreed to indemnify ANSTO and
ANSTO officers, and ANM and ANM officers, from any loss or liability arising from claims
caused by ionising radiation. This Deed will remain in place until April 2026.
Australian Nuclear Science and Technology Organisation – legacy waste
management to final disposal
ANSTO has accumulated, and will continue to accumulate, nuclear waste, the final
disposal of which is unfunded. The majority of this waste has arisen from the production
of nuclear medicine and will require characterisation in order to determine the nature of,
and therefore the costs and timing required to manage, the waste to final disposal. It is
anticipated that the long-term storage of the nuclear waste will be the responsibility of the
National Radioactive Waste Management Facility. If this changes, ANSTO may need to
meet the costs of the future management of the waste.
Former British atomic test site at Maralinga
The Australian Government is responsible for 14 unlimited indemnities relating to
the Maralinga Rehabilitation Project (1995–2000). In November 2009, the Australian
Government agreed to the handback of the former nuclear test site – Maralinga Section 400
– to the site’s Traditional Owners, Maralinga Tjarutja. Under the terms of the Maralinga
Nuclear Test Site Handback Deed, the Australian Government has indemnified the
Maralinga Tjarutja people and the South Australian Government in respect of claims
arising from test site contamination.
Land decontamination and site restoration for CSIRO property
The Commonwealth Scientific and Industrial Research Organisation (CSIRO) has made a
financial provision for the estimated costs in restoring and decontaminating land where a
legal or constructive obligation has arisen. For cases where there is no legal or constructive
obligation, the potential costs have not been assessed and are unquantifiable contingencies.
Budget Paper No. 1 |
Statement 9: Statement of Risks | Page 317
Infrastructure, Transport, Regional Development,
Communications and the Arts
Fiscal Risks
Australia Post’s financial stability
Australia Post is a Government Business Enterprise wholly owned by the
Australian Government. In the 2022–23 financial year, Australia Post reported a full
financial year pre-tax loss of $200 million. This is Australia Post’s first annual loss since
2014–15. It reflects the way in which digitisation of the global and national economy is
changing how many people and businesses use postal and related services. Australia Post
does not receive financial support from the Australian Government but is required to meet
a range of Community Service Obligations.
On 6 December 2023, the Australian Government announced a package of reforms to
enable Australia Post to boost productivity, increase its focus on parcel delivery services,
and improve financial sustainability. The Government will monitor the implementation of
these reforms to assess whether they achieve meaningful financial benefits as intended.
Given the uncertainty surrounding Australia Post’s financial position, there is a risk that
the Australian Government will need to consider providing financial assistance to Australia
Post in the future.
Inland Rail – delivery
In April 2023, the Australian Government released the findings of the Independent Review
of Inland Rail (the Review) and agreed to the 19 recommendations in full or in principle.
The Review assessed the project’s scope, schedule and cost. While final project costs will
not be known until the completion of procurement for all sections of Inland Rail, following
finalisation of design, planning and gaining environmental approvals, the Review
identified that the estimated cost to complete Inland Rail will be significantly higher than
the available funding.
The Australian Government will work with independent specialists to review the cost,
scope, engineering, delivery models and schedule of the project. In the interim, Inland Rail
Pty Ltd (IRPL) is prioritising the delivery of sections from Beveridge to Parkes.
The major funding source available to the Australian Rail Track Corporation/IRPL to
deliver Inland Rail is Commonwealth equity investment. Pre-existing project risks have
been realised, including extensive delays and cost increases. Significant project delivery
risks will remain, including securing jurisdictional support, cost and scheduling pressures,
pre-existing land and contamination, and realising revenues.
| Budget Paper No. 1
Page 318 | Statement 9: Statement of Risks
Significant but remote contingencies
Inland Rail – Termination of the Equity Financing Agreement
The Australian Government will provide sufficient funding to cover all costs and liabilities
incurred by the Australian Rail Track Corporation (ARTC) or Inland Rail Pty Ltd for
delivery of Inland Rail in the event the Commonwealth terminates the Equity Financing
Agreement between the Commonwealth and the ARTC.
Maritime Industry Finance Company Limited – Board Members’ indemnity
Indemnities for Maritime Industry Finance Company Limited (MIFCO) board members
were provided to protect them against civil claims relating to their employment and
conduct as Directors. MIFCO was placed into voluntary liquidation in November 2006 and
was deregistered on 24 April 2008. The indemnity is not time-limited and continues even
though the company has been liquidated. Until the indemnity agreements are varied or
ended, they will remain as contingent and unquantifiable liabilities.
Moorebank Intermodal Project – Glenfield Waste Site Easement
The Australian Government has provided an indemnity to cover all costs and liabilities that
may be incurred by the Grantor (the private sector owner of the Glenfield Waste Site) of
any easement for the rail spur going across the Glenfield Waste Site, to the extent such costs
or liabilities are caused or contributed to by the Commonwealth or its agents.
National Intermodal Corporation Limited – Termination of the Funding
Agreement
The Australian Government has provided an indemnity to cover all costs and liabilities that
may be incurred by the National Intermodal Corporation Limited (National Intermodal) if
the Commonwealth terminates the Funding Agreement between the Commonwealth and
National Intermodal.
Telstra Financial Guarantee
The Australian Government has provided Telstra Corporation Limited (Telstra) a
guarantee in respect of NBN Co’s financial obligations under the Definitive Agreements.
The Agreements were amended on 14 December 2014. The Guarantee was not amended at
that time and it continues in force in accordance with its terms in respect of the amended
Definitive Agreements. The liabilities under the Definitive Agreements between Telstra and
NBN Co arise progressively during the roll-out of the National Broadband Network as
Telstra’s infrastructure is accessed and Telstra’s customers are disconnected from its copper
and Hybrid Fibre Coaxial cable networks. The Australian Government is only liable in the
event NBN Co does not pay an amount when due under the Definitive Agreements. As at
28 February 2024, NBN Co had liabilities covered by the Guarantee estimated at $11 billion.
Budget Paper No. 1 |
Statement 9: Statement of Risks | Page 319
The Guarantee will terminate when:
• NBN Co achieves specified credit ratings for a period of two continuous years
• the company is capitalised by the Commonwealth to the agreed amount
• the Communications Minister declares, under the National Broadband Network Companies
Act 2011, that, in his or her opinion, the National Broadband Network should be treated
as built and fully operational. This declaration was made on 11 December 2020.
Tripartite deeds relating to the sale of federal leased airports
The tripartite deeds between the Australian Government, the airport lessee company and
financiers, amend airport (head) leases to provide for limited step-in rights for financiers in
circumstances where the Australian Government terminates the head lease to enable the
financiers to correct the circumstances that triggered such a termination event. The
tripartite deeds may require the Australian Government to pay financiers compensation as
a result of terminating the (head) lease, once all Australian Government costs have been
recovered. The Australian Government’s contingent liabilities are considered to be
unquantifiable and remote.
WSA Co Limited – Board Members’ indemnities
The Australian Government has provided an indemnity to the inaugural directors of
WSA Co Limited (WSA Co) to protect them against certain claims relating to their role as
directors. Unless the indemnity agreements are varied or ended, they cease to apply from
the date the Commonwealth has fully satisfied its obligations to subscribe for equity in
WSA Co pursuant to the WSA Co Equity Subscription Agreement.
WSA Co Limited – Sydney Metro – Western Sydney Airport indemnity
The Australian Government has provided an indemnity to cover liabilities that may be
incurred by WSA Co related to the integration of the Sydney Metro – Western Sydney
Airport project (delivered by the New South Wales Government) with the Western Sydney
International (Nancy-Bird Walton) Airport, to the extent such liabilities are established in
the Airport-Rail Integration Deed.
WSA Co Limited – Termination of the Equity Subscription Agreement
The Australian Government is required to cover all costs and liabilities that may be
incurred by WSA Co if the Commonwealth terminates the Equity Subscription Agreement
between the Commonwealth and WSA Co.
| Budget Paper No. 1
Page 320 | Statement 9: Statement of Risks
Contingent liabilities – unquantifiable
Australian Maritime Safety Authority – ship-sourced pollution incident costs
In the normal course of operations, shipowners carry the liability for any clean-up costs
following a ship-sourced pollution incident. The Australian Maritime Safety Authority
(AMSA) is responsible for the provision of interim funds necessary to immediately meet
clean-up operations and, in all circumstances, seeks to recover these costs from ship owners.
AMSA has established a pollution response financial capability of $50 million, backed by
liquid investments, to provide funds for clean-up costs (which may be across a range of
concurrent incidents) to cover expenditure pending recoveries.
The Australian Government meets costs that cannot be recovered. Given the nature of
ship-sourced pollution incidents, it is not possible to estimate the amounts of any eventual
payments that may be required.
Aviation rescue and firefighting services potential per- and poly-fluoroalkyl
substances contamination
The Department of Infrastructure, Transport, Regional Development, Communications and
the Arts (DITRDCA) has identified a number of sites in Australia potentially contaminated
with per- and poly-fluoroalkyl substances (PFAS), which were contained in firefighting
foams.
PFAS contaminants do not naturally break down in the environment and several have been
listed on the Stockholm Convention as persistent contaminants. Australian health and
environmental agencies have set a range of standards for environmental protection and
precautionary health measures.
Up to 37 airport sites are potentially contaminated with PFAS (20 federally-leased airports
and 17 regional airports), which relate to the Australian Government’s provision of
firefighting services. DITRDCA is undertaking PFAS investigations at these airports to
understand the risks and develop management plans for any identified PFAS
contamination. These investigations are funded under DITRDCA’s $130.5 million PFAS
Airports Investigation Program (the Program). Airservices Australia (Airservices) is
continuing to implement the National PFAS Management Program, which includes
ongoing PFAS investigations at 18 airport sites. The costs of potential long-term
management options cannot be quantified at this time.
For Commonwealth-owned airports that are leased on a long-term basis, Airport Lessee
Companies are responsible for environmental management of their airport sites. Airport
leases indemnify the Commonwealth in relation to damages or injury to the environment,
including in respect of costs and claims arising due to such damages or injury. However,
these leases do not indemnify Airservices, as it is a corporate Commonwealth entity. The
Commonwealth is not indemnified for 16 airports (which are privately or local government
owned) in the Program’s scope because the Commonwealth is not a party to any lease deed
Budget Paper No. 1 |
Statement 9: Statement of Risks | Page 321
at these airports. The costs of potential long-term management options cannot be quantified
at this time.
A number of Airport Lessee Companies have requested that the Airport Environment
Officer (AEO) issue remedial orders to Airservices for PFAS contamination under the
Airports (Environment Protection) Regulations 1997. On 30 March 2023, the AEO issued
Airservices with an environmental remedial order in relation to PFAS contamination
caused by Airservices at the former fire training ground at Launceston Airport. AEOs
are also actively considering regulatory action at Brisbane, Canberra, Moorabbin and
Sydney Airports.
Brisbane Airport Corporation has commenced legal proceedings in the Queensland
Supreme Court against Airservices concerning legacy PFAS contamination from
Airservices’ use of firefighting foams containing PFAS at the airport. Australia Pacific
Airports Launceston and Perth Airport Pty Ltd have also commenced legal proceedings
against Airservices in relation to PFAS contamination in the Federal Court. Potential costs
relating to these matters are unquantifiable at this time.
Indemnity provided to the New South Wales Rural Fire Fighting Service in
relation to the Jervis Bay Territory
The Department of Infrastructure, Transport, Regional Development, Communications and
the Arts (DITRDCA) engages the New South Wales Rural Fire Service (NSW RFS) to
provide fire management in the Jervis Bay Territory (JBT). To provide these services, the
NSW RFS requires the Australian Government to provide an uncapped indemnity against
any actions or claims resulting from the actions of the NSW RFS while providing fire
management services in the JBT. The indemnity covers the same period of time for which
NSW RFS is engaged to provide the fire management services. The likelihood of an event
occurring that may result in a liability for the Australian Government is assessed as
unlikely. The risk of a liability is mitigated through a range of risk management measures,
including the Jervis Bay Territory Rural Fires Ordinance 2014, the establishment of a
JBT Emergency Management Committee (EMC), a fire management plan prepared and
implemented by the EMC, NSW RFS staff training and professional qualifications and
DITRDCA actively managing the Service Level Agreement with the NSW RFS.
Moorebank Intermodal Project – Georges River rail crossing
The Australian Government has provided an indemnity to cover costs and liabilities that may
be incurred by the State of New South Wales arising under the Native Title Act 1993 (Cth)
associated with the construction of a rail bridge over the Georges River to the Moorebank
Intermodal Terminal. The likelihood of costs being incurred is considered remote and
potential costs are unquantifiable.
| Budget Paper No. 1
Page 322 | Statement 9: Statement of Risks
Service Delivery Arrangement Indemnities – Indian Ocean Territories and
Jervis Bay Territory
Since 1992, the Australian Government has entered into Service Delivery Arrangements
with the Western Australian (WA) Government for the provision of services to the Indian
Ocean Territories of Christmas Island and the Cocos (Keeling) Islands. The Australian
Government has provided certain indemnities for the WA Government and its respective
officers, agents, contractors and employees against civil claims relating to their
employment and conduct as officers.
The Australian Capital Territory (ACT) provides services to the Jervis Bay Territory under
a Memorandum of Understanding. The Australian Government has provided certain
indemnities for the ACT Government authorities and officials in relation to the delivery of
services to the Jervis Bay Territory.
The likelihood of an event occurring that may result in a liability for the Australian
Government has been assessed as remote and the risks are currently mitigated through the
training and professional qualifications of the staff of these agencies and the existence of
systems, processes and standards for the delivery of services.
Budget Paper No. 1 |
Statement 9: Statement of Risks | Page 323
Prime Minister and Cabinet
Contingent liability – unquantifiable
McDonald v Commonwealth
(Stolen Wages Class Action)
A class action against the Commonwealth has been filed in the Victorian Registry of the
Federal Court on behalf of all Aboriginal and Torres Strait Islander persons who lived and
worked in the Northern Territory during the period 1 June 1933 to 12 November 1971, and
whose wages were allegedly unjustly withheld, inadequate or not paid as a result of wage
control legislation. Costs associated with this litigation (if any) and any potential related
future litigation are not quantifiable until the matter is determined by the Court or
otherwise resolved.
Contingent liability – quantifiable
Indigenous Land and Sea Corporation – Voyages Indigenous Tourism Australia
Voyages Indigenous Tourism Australia Pty Ltd (Voyages), the owners of the Ayers Rock
Resort, has debt facilities with ANZ Banking Group Limited ($110.5 million) and the
Northern Australia Infrastructure Facility ($27.5 million). The Indigenous Land and Sea
Corporation is the guarantor for each of these facilities.
While Ayers Rock Resort’s performance has not, as yet, recovered to pre-pandemic levels,
there has been significant improvement over 2022–23 and into 2023–24 due to increased
tourism activity.
| Budget Paper No. 1
Page 324 | Statement 9: Statement of Risks
Social Services
Fiscal Risks
COVID-19 and disaster social security debt pause for specified areas
The Australian Government implemented a temporary pause on a range of debt activities
from 4 August 2021 in New South Wales, Victoria, the Australian Capital Territory and
11 Local Government Areas in South East Queensland. This was undertaken to help
ease pressure on people subject to stay at home orders and natural disaster impacts.
Since 1 July 2022, consistent with the easing of COVID-19 restrictions, Services Australia
has progressively lifted debt pauses associated with the pandemic and natural disasters.
There is currently an unquantifiable financial risk as the financial impacts of the debt pause
over 2020–21 and 2021–22 are yet to be fully realised.
National Disability Insurance Scheme
The National Disability Insurance Scheme (NDIS) provides Australians with permanent
and significant disability with financial support to build capacity, increase independence
and establish stronger connections with their community.
As with other demand-driven programs, the estimated costs for the NDIS are subject to
adjustments to reflect observed changes in actual payments. As the Scheme is relatively
new, there is greater potential for changes in forecasts of the number of participants, the
funds allocated in participant support packages, the payments by participants from those
funds for supports, and the resourcing required by the National Disability Insurance
Agency to administer the Scheme.
National Cabinet has committed to a NDIS Financial Sustainability Framework to ensure
the Scheme is sustainable in the long term, with an annual growth target for Scheme costs
of no more than 8 per cent from 1 July 2026. On 27 March 2024 the Government introduced
the National Disability Insurance Scheme Amendment (Getting the NDIS Back on Track)
Bill 2024 No. 1 (the Bill) to Parliament. Changes in the Bill and subsequent amendments to
NDIS rules and other legislative instruments will moderate growth in NDIS expenditure,
by determining NDIS participant plan budgets more consistently based on participant need
and supporting participants to spend in accordance with their plans. The realisation of the
financial projections for the NDIS is dependent on the successful implementation of the
Financial Sustainability Framework, including the passage of the Bill and subsequent
changes to NDIS rules and other legislative instruments.
Budget Paper No. 1 |
Statement 9: Statement of Risks | Page 325
Contingent liability – unquantifiable
Income apportionment and debt pause
Following legislative changes made in November 2020, from 7 December 2020 the
Australian Government ceased calculating a customer’s income support entitlements for
debts arising through income apportionment. This method was used in certain instances
to evenly divide or apportion a customer’s employment income across two or more
Centrelink fortnightly reporting periods. The legislative changes in November 2020
simplified income reporting: income is now reported when it is received, removing the
need for customers to calculate and report what they have earned each fortnight.
Where income apportionment was or may have been applied to recover certain
Commonwealth social security debts prior to 7 December 2020, recovery activities have
been paused while the Australian Government investigates a resolution.
Contingent asset – quantifiable
National Redress Scheme
The National Redress Scheme for Institutional Child Sexual Abuse Act 2018 aims to support
people who experienced institutional child sexual abuse from institutions participating
in the National Redress Scheme to gain access to counselling and psychological services,
a direct personal response from the responsible institution, and a monetary payment.
The Department of Social Services (DSS) administers the National Redress Scheme. In this
capacity, DSS makes the monetary payment to the survivor and then recovers the costs
from the institution determined to be responsible for the abuse.
As at 5 March 2024, DSS has an administered quantifiable contingent asset of $374.1 million
in relation to the probable recovery from responsible institutions of monetary payments
that may be made to survivors under the National Redress Scheme. The value is based on
applications that have been referred to an independent decision maker for assessment and
the payment values.
As at 5 March 2024, DSS has an administered quantifiable contingent liability of
$195.5 million in relation to applications made under the National Redress Scheme that
have been referred to an independent decision maker for assessment. The amount is based
on the number of applications and the payment values.
The difference between the contingent asset and the contingent liability represents the net
risk to the Budget from the National Redress Scheme.
| Budget Paper No. 1
Page 326 | Statement 9: Statement of Risks
Treasury
Significant but remote contingencies
Asbestos Injuries Compensation Fund
In February 2016, the Commonwealth agreed to assume one third of the default risk
associated with a $320 million New South Wales (NSW) Government loan to the Asbestos
Injuries Compensation Fund (AICF), contingent on all states and territories agreeing to
assume the remaining default risk. States and territories agreed to assume the remaining
default risk in the period following the publication of the 2016–17 Budget.
The AICF provides compensation to Australian asbestos disease related claims against
former subsidiaries of the James Hardie Group and is funded on an ongoing basis through
contributions from the James Hardie Group. NSW provided a $320 million loan facility in
2010 to enable AICF to continue to pay compensation as lump sums, rather than on an
instalment basis.
Financial Claims Scheme
The Financial Claims Scheme provides depositors of authorised deposit-taking institutions
(ADIs) and claimants against general insurers with timely access to their funds in the event
of a financial institution failure.
Under the Banking Act 1959, the Financial Claims Scheme provides a mechanism for
making payments to depositors under the Australian Government’s guarantee of deposits
in ADIs. Payments are capped at $250,000 per account holder per ADI. The total value of
deposits eligible for coverage under the Financial Claims Scheme was estimated at
$1.3 trillion as at 31 December 2023.
Under the Insurance Act 1973, the Financial Claims Scheme provides a mechanism for
making payments to eligible beneficiaries with a valid claim against a failed general
insurer. It is not possible to estimate the amounts of any eventual payments that may be
required in relation to general insurance claims.
In the very unlikely event of an ADI or general insurer failure, any payments made under
the Financial Claims Scheme would be recovered through the liquidation of the failed
institution. If there was a shortfall in the amount recovered through the liquidation of the
failed institution, a levy could be applied to the relevant industry to recover the difference
between the amount expended and the amount recovered in the liquidation.
The Australian Prudential Regulation Authority (APRA) is responsible for the
administration of the Financial Claims Scheme. Under the Financial Claims Scheme, any
payments to account holders with eligible protected accounts or eligible claimants would
be made from APRA’s Financial Claims Scheme Special Account. Under the legislation,
upon declaration by the Minister in relation to a specified ADI, up to $20 billion per
institution would be available to meet Financial Claims Scheme payments and up to
$100 million per institution for administration costs.
Budget Paper No. 1 |
Statement 9: Statement of Risks | Page 327
Guarantee for Housing Australia
The Australian Government guarantees the due payment of money payable by Housing
Australia to anyone other than the Government.
The Housing Australia Board must not allow Housing Australia to enter into a transaction
that would result in its total guaranteed liabilities, and any outstanding amount borrowed
from the Government, to exceed $7.5 billion, unless approved by the Government. As part
of the 2024–25 Budget, the Government announced the cap on the Government guarantee
of Housing Australia’s liabilities will increase from $7.5 billion to a total of $10 billion on
1 July 2024.
Guarantees under the
Commonwealth Bank Sale Act 1995
Under the terms of the Commonwealth Bank Sale Act 1995, the Australian Government
guarantees various superannuation and other liabilities of the Commonwealth Bank. As at
31 December 2023, the Commonwealth Bank of Australia holds no attributed liabilities, and
$4.27 billion is attributable to liabilities of the Commonwealth Bank Officers’
Superannuation Corporation.
Reserve Bank of Australia – Guarantee
The Australian Government guarantees the liabilities of the Reserve Bank of Australia,
measured as the Bank’s total liabilities excluding capital, reserves, and
Australian Government deposits. The principal component of the Bank’s liabilities consists
of exchange settlement balances. As at 29 February 2024, exchange settlement balances
amount to $335.4 billion, and the total guarantee is $453.3 billion.
Contingent liabilities – unquantifiable
Compensation scheme of last resort
The compensation scheme of last resort (CSLR) will facilitate the payment of compensation
to consumers who have an eligible determination from the Australian Financial Complaints
Authority which remains unpaid, primarily due to the insolvency of the relevant financial
service provider.
Legislation to establish the CSLR was passed on 22 June 2023. The CSLR will be funded by
the Government in the first levy period, which ends 30 June 2024. Thereafter, liabilities
under the CSLR will transfer to the financial services sector and will be funded by levies on
the sector.
The value of the Australian Government’s liabilities under the CSLR is unquantifiable. The
collapse of Dixon Advisory and Superannuation Services Pty Ltd substantially increased
the backlog of potential eligible claims.
| Budget Paper No. 1
Page 328 | Statement 9: Statement of Risks
Establishment of a cyclone and related flooding reinsurance pool
The Government provides an annually reinstated Government guarantee to the Australian
Reinsurance Pool Corporation (ARPC) of $10 billion, or a larger amount if required, to
support a reinsurance pool for the impact of cyclones and related flooding on eligible
insured properties. The guarantee took effect from 1 July 2022, following the passage of
legislation in March 2022, and may be called upon in the event of a large cyclone and
related flooding, or in a year with a high number of cyclones and related flooding, to
ensure the ARPC can pay any and all liabilities.
The reinsurance pool is designed to be cost neutral to Government over time, based on the
predicted cost and frequency of cyclone events. The estimated value and range of calls on
the guarantee is unquantifiable due to significant uncertainty in the frequency and severity
of cyclones and the resulting losses.
Government guarantees for housing
The Australian Government has several programs to support individuals to enter the
housing market sooner. These are administered by Housing Australia.
The First Home Guarantee (formerly the First Home Loan Deposit Scheme) is designed to
support eligible first home buyers, and non-first home buyers who have not owned a
property in Australia within the past ten years, to build or purchase a home by providing a
guarantee to participating lenders for up to 15 per cent of the property purchase price.
The First Home Guarantee began on 1 January 2020.
The New Home Guarantee is designed to support eligible first home buyers seeking to
build a new home or purchase a newly built home by providing a guarantee to
participating lenders for up to 15 per cent of the property purchase price. A second tranche
of 10,000 New Home Guarantees was made available from 1 July 2021. The New Home
Guarantee concluded on 30 June 2022 but its guarantees issued in previous financial years
remain active.
The Family Home Guarantee is designed to support single parents and single legal
guardians with dependents seeking to enter, or re-enter, the housing market. The Family
Home Guarantee commenced on 1 July 2021.
The Regional First Home Buyer Guarantee is designed to support eligible first home
buyers and non-first home buyers who have not owned a property in Australia within the
past ten years, to build or purchase a home in a regional location by providing a guarantee
to participating lenders of up to 15 per cent of the property purchase price (subject to a
minimum deposit of 5 per cent). The Regional First Home Buyer Guarantee commenced on
1 October 2022.
For the four programs listed above, the Australian Government guarantees the liabilities as
they arise. Guaranteed liabilities arise where a lender’s loss is covered by the guarantee.
The lender then makes a claim against the guarantee and Housing Australia assesses the
claim. Given liabilities under the Scheme are met by a standing appropriation, Housing
Budget Paper No. 1 |
Statement 9: Statement of Risks | Page 329
Australia is not required to maintain capital and reserves to meet the liabilities associated
with these programs.
Indemnities for specialised external advisers during the COVID-19 pandemic
The Government has provided indemnities for certain specialised external advisers
engaged to provide advice on emerging markets issues related to COVID-19. Indemnities
were provided to mitigate personal risk and provide coverage for costs related to any legal
proceedings that may arise in relation to the provision of that advice.
The indemnities apply for the period of engagement as advisers and for claims that are
notified within 12 years after cessation of the adviser’s engagement. Until the indemnity
agreements are varied or expire, they will remain as contingent and unquantifiable
liabilities.
Small and Medium Enterprise (SME) Guarantee Scheme and SME Recovery
Loan Scheme
The Australian Government provided support for small and medium enterprises during
the COVID-19 pandemic through guaranteeing loans issued by participating lenders.
This support was provided under a number of schemes.
The Coronavirus Small and Medium Enterprises (SME) Guarantee Scheme provided a
guarantee of 50 per cent of the eligible loan amount for eligible SMEs and the Show Starter
Loan Scheme provided a guarantee of 100 per cent of the eligible loan amount for the arts
and entertainment businesses, with both schemes closing for new loans on 30 June 2021.
The SME Recovery Loan Scheme, an expansion and extension of the Coronavirus SME
Guarantee Scheme, provided a guarantee of up to 80 per cent of the eligible loan amount,
and was initially available to applicants from 1 April 2021 until 31 December 2021.
The SME Recovery Loan Scheme was extended from 1 January 2022 to 30 June 2022, and
during this period the Government provided a guarantee of 50 per cent of the eligible
loan amount.
Under each of the above schemes, the Australian Government guaranteed to pay an
approved lender in the event of default by small and medium enterprises. Although all
schemes have closed to new loans, the risk to the Australian Government remains until the
final claim date for SME Recovery Loan Scheme on 30 September 2033.
Terrorism insurance – commercial cover
The Terrorism and Cyclone Insurance Act 2003 (formerly the Terrorism Act 2003) established
a scheme for terrorism insurance covering damage to commercial property, including
associated business interruption and public liability (extended in 2017 to mixed-use and
high-value residential buildings). The Australian Reinsurance Pool Corporation (ARPC)
uses reinsurance premiums paid by insurers to meet its administrative expenses, to
maintain a pool of funds and to purchase reinsurance to help meet future claims.
| Budget Paper No. 1
Page 330 | Statement 9: Statement of Risks
The Australian Government guarantees to pay any liabilities of the ARPC, however the
responsible Minister (or delegate) must declare a reduced payout rate to insured entities if
the Government’s liability would otherwise exceed $10 billion.
Contingent liabilities – quantifiable
Australian Taxation Office – tax disputes
At any point in time, the Australian Taxation Office is involved in a range of dispute
resolution processes, including litigation, relating to tax disputes.
Details of the outcome of dispute resolution processes remain uncertain until a court ruling
is made and/or an agreement is reached with the taxpayer. Accordingly, in most cases it is
not possible to reliably estimate the likely financial impact of current disputes. The
estimated aggregate value of tax in dispute as at 29 February 2024, for which a provision
has not been made, is $9.7 billion.
Outcomes of dispute resolution processes are included in the Commissioner of Taxation’s
Annual Report each year. This may include disputes resolved through objections,
settlements and court and tribunal decisions. It may also include amounts owed by
taxpayers that are subject to dispute but not finalised.
International financial institutions – uncalled capital subscriptions
The Australian Government has held an uncalled capital subscription in the International
Bank for Reconstruction and Development (IBRD) since 1947. Australia’s current uncalled
capital subscription to the IBRD totals around US$4.4 billion (estimated value A$6.6 billion
as at 14 March 2024).
The Australian Government has an uncalled capital subscription in the European Bank
for Reconstruction and Development (EBRD) since 1991. Australia’s uncalled capital
subscription to the EBRD totals around EUR237.5 million (estimated value A$396.9 million
as at 14 March 2024).
The Australian Government has held an uncalled capital subscription in the Asian
Development Bank (ADB) since 1966. Australia’s uncalled capital subscription to the
ADB totals around US$7.0 billion (estimated value A$10.6 billion as at 14 March 2024).
The Australian Government has an uncalled capital subscription in the Multilateral
Investment Guarantee Agency of around US$26.5 million (estimated value A$40.0 million
as at 14 March 2024).
The Asian Infrastructure Investment Bank (AIIB) was established on 25 December 2015.
The Australian Government has subscribed to shares in the AIIB, which includes an
uncalled capital subscription. Australia’s uncalled capital subscription to the AIIB totals
around US$3.0 billion (estimated value A$4.5 billion as at 14 March 2024).
Budget Paper No. 1 |
Statement 9: Statement of Risks | Page 331
None of these international financial institutions has ever drawn on Australia’s uncalled
capital subscriptions.
International Monetary Fund – 16
th
General Review of Quota
The Australian Government has agreed to approve a 50 per cent increase to the
International Monetary Fund (IMF) quota. Under the agreement, Australia’s quota will
increase from Special Drawing Rights (SDR) 6.6 billion (approximately A$13.3 billion as
at 14 March 2024) to SDR 9.9 billion (approximately A$19.9 billion as at 14 March 2024).
This increase maintains Australia’s voting power at the IMF and share of any future
SDR allocation and increases access to fund financing. The timing of the contribution
is uncertain, it will come into effect no earlier than 15 November 2024 and is subject to
conditions including consent by members representing 85 per cent of existing quota.
25 per cent of the increase, SDR 821.55 million (approximately A$1.7 billion as
at 14 March 2024), will be made in foreign currency (in consultation with the IMF) and
the remainder will be covered by Australian dollar denominated promissory notes. If the
IMF quota increase is implemented it will be largely offset by reductions in Australia’s
other IMF commitments.
International Monetary Fund – New Arrangements to Borrow & Bilateral
Borrowing Agreement
Australia has made a line of credit available to the International Monetary Fund (IMF)
under its New Arrangements to Borrow since 1998. This is a contingent loan to help ensure
that the IMF has the resources available to maintain stability in the global economy.
On 8 October 2020, the Treasurer advised the IMF that Australia consented to the
New Arrangements to Borrow decision and, on 26 January 2020, the IMF Executive Board
approved amendments to the New Arrangements to Borrow decision, including increasing
the credit arrangements of all participants and extending the arrangement from
1 January 2021 to 31 December 2025. The value of Australia’s New Arrangements to
Borrow credit arrangement stands at around Special Drawing Rights (SDR) 4.4 billion
(estimated value A$9.0 billion at 14 March 2024). If the IMF quota increase is implemented,
the value of Australia’s NAB contribution will decrease by SDR 0.7 billion to SDR
3.7 billion (approximately A$7.5 billion as at 14 March 2024).
Australia has also made available approximately SDR 2.0 billion (estimated as
approximately A$4.0 billion at 14 March 2024) through a contingent bilateral loan to the
IMF, known as a Bilateral Borrowing Agreement (BBA). This contingent bilateral loan is
on terms consistent with other bilateral loans and note purchase agreements between the
IMF and other contributing countries. The contingent bilateral loan will be drawn upon
by the IMF only if needed to supplement the IMF’s quota and New Arrangements to
Borrow resources, and any drawings on loans would be repaid in full, with interest. On
26 July 2023, Australia agreed to extend the BBA by one year through to 31 December 2024.
If the IMF quota increase is implemented in 2024, Australia’s BBA will be allowed to expire.
If the implementation of the quota increased is delayed beyond end-2024, the IMF may seek
to negotiate a transitional BBA with Australia.
| Budget Paper No. 1
Page 332 | Statement 9: Statement of Risks
International Monetary Fund – Poverty Reduction and Growth Trust
The Australian Government has entered into agreements to make a line of credit available
to the International Monetary Fund (IMF) under the Poverty Reduction and Growth Trust
through to 31 December 2029. The Poverty Reduction and Growth Trust provides
concessional financial support to low-income countries to help them achieve, maintain, or
restore a stable and sustainable macroeconomic position. Poverty Reduction and Growth
Trust funds are drawn upon by the IMF as needed and will be repaid in full, with interest.
Through these agreements, the Government has made available Special Drawing Rights
(SDR) 1 billion (approximately A$2.0 billion as at 14 March 2024) to loan to the IMF under
the Poverty Reduction and Growth Trust. As at 30 June 2024, SDR 257.0 million
(approximately A$518.6 million) has been drawn down, leaving SDR 743.01 million
(approximately A$1.5 billion) available to the IMF under the Poverty Reduction and
Growth Trust.
International Monetary Fund – Resilience and Sustainability Trust
On 11 October 2022, the Australian Government entered into an agreement to make a line
of credit of Special Drawing Rights (SDR) 760 million (approximately A$1.5 billion as at
14 March 2024) available to the IMF under the Resilience and Sustainability Trust through
to 30 November 2030. The Resilience and Sustainability Trust will provide affordable
long-term financing to help vulnerable countries build resilience and sustainability to
address the risks stemming from climate change and pandemic preparedness. Resilience
and Sustainability Trust line of credit funds are drawn upon by the IMF as needed and
will be repaid in full, with interest. As at 30 June 2024, SDR 14.2 million (approximately
A$28.6 million as at 14 March 2024) has been drawn down, leaving SDR 745.8 million
(approximately A$1.5 billion as at 14 March 2024) available to the IMF under the Resilience
and Sustainability Trust.
Budget Paper No. 1 |
Statement 9: Statement of Risks | Page 333
Veterans’ Affairs
Fiscal Risk
Defence Service Homes Insurance Scheme
The Defence Service Homes Insurance Scheme (DSH Insurance) was established in 1919
under the Defence Service Homes Act 1918. DSH Insurance offers personal insurance products
to eligible serving Australian Defence Force members, veterans and widow(er)s.
It underwrites home building insurance and offers a range of personal insurance products
(such as contents and motor vehicle insurance) underwritten by QBE Insurance (Australia)
Limited (QBE).
DSH Insurance is funded by premiums collected from policy holders, commissions from
QBE and returns on investments. Due to the nature of insurance, DSH Insurance’s financial
performance can be volatile from year to year. The last few years have been challenging
for DSH Insurance due to increases in claims from extreme weather events (including
bushfires, hailstorms and floods), combined with low investment returns and increased
pricing on reinsurance premiums. These are industry-wide challenges affecting all
general insurers.
DSH Insurance manages the volatility of the insurance cycle by aiming for an appropriate
level of capital (that is, reserves) consistent with the regulations placed on insurers and
monitored by the Australian Prudential Regulation Authority. DSH Insurance also has a
comprehensive reinsurance program in place, reducing the exposure to loss by passing part
of the risk of loss to a group of reinsurers. Nevertheless, there remains a risk that additional
Government contributions could be required should these reserves be insufficient to cover
the liabilities of DSH Insurance.
| Budget Paper No. 1
Page 334 | Statement 9: Statement of Risks
Government loans
Loans are recorded as financial assets. Accordingly, the amounts advanced and repaid do
not normally affect the Budget aggregates of fiscal balance and underlying cash balance.
Loans that are concessional (lower than market interest rate) or are agreed to be written off,
result in an impact on the fiscal balance.
The Government makes loans for policy purposes. All loans contain some element of credit
risk that they will not be repaid in full, although in many cases this risk is small. Table 9.3
summarises Government loans estimated to exceed $200 million at 30 June 2024.
Statement 9: Statement of Risks
| Page 335
Budget Paper No. 1 |
Table 9.3: Summary of Australian Government loans meeting the materiality threshold
Portfolio
Loan amount
(a)
($m)
Borrower
Interest rate
Term
Status
(b)
Agriculture, Fisheries and Forestry
Drought-related and farm finance
concessional loans – Agriculture
165
State Governments (that through their
delivery agencies, on-lend to eligible
farm businesses)
Various
Various
Modified
Farm Investment Loans, Drought
Loans, AgriStarter Loans, AgBiz
Drought Loans and AgRebuild Loans
2,745
Eligible Australian farm businesses
and related small businesses, through
the Regional Investment Corporation
4.99 per cent for
all loans
Up to 10 years
for all loans
Modified
Climate Change, Energy, the Environment and Water
Clean Energy Finance Corporation
2,830
Approved entities undertaking clean
energy technology projects
Approximately
4.5 per cent
weighted average
Predominately
5-15 years
Unchanged
Education
Higher Education Loan Program
43,200
Eligible higher education students
The lower of
Wage Price Index
(WPI) or
Consumer Price
Index (CPI)
growth
9.6 years
(average)
Modified
Employment and Workplace Relations
Australian Apprenticeship Support
Loans Program
987
Eligible Australian Apprentices
The lower of WPI
or CPI growth
Modified
VET Student Loans Program
3,300
Eligible diploma and above students
The lower of WPI
or CPI growth
Modified
Foreign Affairs and Trade
Government support for PsiQuantum
Pty Ltd
Commercial-
in-confidence
PsiQuantum Pty Ltd
Commercial-
in-confidence
Commercial-in-
confidence
New
Telstra acquisition of Digicel Pacific
2,029
Telstra
Commercial-
in-confidence
Various
Modified
Industry, Science and Resources
National Reconstruction Fund
Corporation
(c)
Various
To be determined
To be
determined
To be
determined
Modified
Page 336 | Statement 9: Statement
of Risks
Page 336 | Statement 9: Statement of Risks
| Budget Paper No. 1
Table 9.3: Summary of Australian Government loans meeting the materiality threshold (continued)
Portfolio
Loan amount
(a)
($m)
Borrower
Interest rate
Term
Status
(b)
Infrastructure, Transport, Regional Development, Communications and the Arts
NBN Co Loan
-
NBN Co Limited
3.96 per cent
30 June 2024
Removed
Northern Australia Infrastructure
Facility Loans
1,500
Northern Australia jurisdictions
(Western Australia, Queensland or
the Northern Territory) for on lending
to project proponents. The NAIF
Investment Mandate Direction 2021
additionally allows for provision of
financial assistance directly to
other entities
Various (circa.
5 per cent)
Various
Modified
WestConnex Stage 2 Concessional
Loan
2,266
WCX M5 Finco Pty Ltd
3.36 per cent
November 2015
to July 2034
Unchanged
Prime Minister and Cabinet
Indigenous home ownership, business
development and assistance
1,028
Eligible Indigenous persons
1.64 per cent –
6.14 per cent
Up to 32 years
Unchanged
Voyages Indigenous Tourism Australia
Pty Ltd
335
Voyages Indigenous Tourism Australia
Pty Ltd
90 Day bank bill
swap reference
rate plus
5 per cent
(on $176 million
of principal)
9 years,
11 months
Unchanged
Social Services
Home Equity Access Scheme
401
Eligible older Australians who meet
residency requirements and own
suitable real estate in Australia to use
as security.
3.95 per cent
Various
Unchanged
Student Financial Supplement Scheme
181
Eligible recipients of Youth Allowance
(student), Austudy and ABSTUDY
recipients
CPI growth
Various
Unchanged
Student Start-up Loan
839
Eligible Youth Allowance (student),
Austudy and ABSTUDY Living
Allowance recipients
The lower of WPI
or CPI growth
Various
Modified
Statement 9: Statement of Risks
| Page 337
Budget Paper No. 1 |
Table 9.3: Summary of Australian Government loans meeting the materiality threshold (continued)
Portfolio
Loan amount
(a)
($m)
Borrower
Interest rate
Term
Status
(b)
Treasury
Affordable Housing Bond Aggregator
80
Housing Australia
Commonwealth cost
of borrowing
Various
Unchanged
Commonwealth-State financing
arrangements – housing and specific
purpose capital
1,300
State and Northern Territory
governments
4.0 per cent –
6.0 per cent
Up to
30 June 2042
Unchanged
International Monetary Fund –
New Arrangements to Borrow
-
International Monetary Fund
IMF Special Drawing
Rights (SDR) interest rate
10 years
Removed
International Monetary Fund –
Poverty Reduction and Growth Trust
519
International Monetary Fund
IMF SDR interest rate
10 years
Unchanged
International Monetary Fund –
Resilience and Sustainability Trust
29
International Monetary Fund
IMF SDR interest rate
20 years
Unchanged
Loan Agreement between the
Australian Government and the
Government of Indonesia
895
Government of Indonesia
Commonwealth cost
of borrowing plus
0.5 per cent
15 years
Unchanged
2020 Loan Agreement between the
Australian Government and the
Government of Papua New Guinea
286
Government of Papua New Guinea
Commonwealth cost
of borrowing plus
0.5 per cent
15 years
Unchanged
2021 Loan Agreement between the
Australian Government and the
Government of Papua New Guinea
307
Government of Papua New Guinea
Commonwealth cost
of borrowing plus
0.5 per cent
20 years
Unchanged
2022 Loan Agreement between the
Australian Government and the
Government of Papua New Guinea
350
Government of Papua New Guinea
Commonwealth cost
of borrowing
20 years
Modified
2023 Loan Agreement between the
Australian Government and the
Government of Papua New Guinea
344
Government of Papua New Guinea
Commonwealth cost
of borrowing
20 years
New
a) Loan amount is the estimated loan program amounts outstanding as at 30 June 2024 in $ million.
b) Status of loan items are considered ‘unchanged’ unless there are modifications to respective interest rates and/or loan term.
c) The Government has established the National Reconstruction Fund, which will offer loans and guarantees and make equity investments in a range of emerging
technologies and technically complex projects. These investments carry the inherent risks associated with investing in a large and diverse portfolio of financial
assets. Details will be provided in this disclosure once loans, guarantees and investments are made.
Note: The Australian Government will provide Snowy Hydro Limited with a loan of up to $4.5 billion on commercial terms to put towards completion of Snowy
2.0. The loan will commence in 2024–25 and is expected to be refinanced by Snowy Hydro from 2029–30 onwards, once Snowy 2.0 is operational.
| Budget Paper No. 1
Page 338 | Statement 9: Statement of Risks
Agriculture, Fisheries and Forestry
Drought-related and farm finance concessional loans – Agriculture
As at 30 June 2024, the fair value of farm business, drought and dairy farm related loans is
estimated to total $164.6 million.
Drought Recovery and Dairy Recovery Concessional Loans Scheme: The drought
recovery component of this scheme provided loans to farm businesses affected by
unprecedented drought or, where applicable, Queensland farm businesses directly
impacted by the combined effects of drought and the mid-2011 disruption to live cattle
exports to Indonesia. The loans funded planting and restocking activities and associated
expenses when seasonal conditions allowed. The loans were available from January 2015
and, in 2014–15, operated in Queensland and New South Wales. In 2015–16, drought
recovery concessional loans were available in Queensland, New South Wales, South
Australia and Tasmania.
The dairy recovery component of this scheme provided concessional loans to dairy farm
businesses affected by the 2016 reduction in farm gate milk prices by Murray Goulburn,
Fonterra and National Dairy Products. Loans were available for debt restructuring,
providing new debt for operating expenses or productivity enhancement activities, or a
combination of these purposes. Dairy recovery concessional loans became available in
Victoria, New South Wales, South Australia and Tasmania from June 2016. Applications
closed on 31 October 2016. A dairy recovery concessional loan product was available under
the Farm Business Concessional Loans Scheme until 30 June 2018.
As at 1 February 2024, the scheme’s interest rate was 4.06 per cent, reviewed on a
six-monthly basis and revised in accordance with changes in the ten-year Australian
Government bond rate. Loans have a maximum term of ten years with interest-only
payments required for the first five years. Principal and interest repayments will be made
in the remaining five years of the loan term.
Farm Business Concessional Loans Scheme: This scheme provided three types of
concessional loans: drought assistance, dairy recovery and business improvement. This
scheme was designed to cover a farmer’s short-term needs when income was tight and to
supplement, rather than replace, commercial finance. Loans under the scheme were first
available in November 2016. Applications for loans under the scheme closed on
30 June 2018.
Drought assistance concessional loans were available in Queensland, New South Wales,
Victoria, South Australia, Tasmania and the Northern Territory. Loans were available for
debt restructuring, operating expenses, drought preparedness activities or drought
recovery activities or a combination of these purposes.
Business improvement concessional loans were available in Queensland, New South Wales,
Victoria, South Australia, Tasmania and the Northern Territory. Loans were available for
eligible Farm Household Allowance (FHA) recipients who were recovering from financial
Budget Paper No. 1 |
Statement 9: Statement of Risks | Page 339
hardship and had exhausted or would exhaust their FHA 1,095-day income support
entitlement by 30 June 2018. These loans were for debt restructuring only.
Dairy recovery concessional loans were available in New South Wales, Victoria,
South Australia and Tasmania to eligible suppliers of Murray Goulburn, Fonterra and
National Dairy Products. Loans were available for debt restructuring, providing new
debt for operating expenses, productivity enhancement activities or a combination of
these purposes.
As at 1 February 2024, the interest rate was 4.46 per cent, reviewed on a six-monthly basis
and revised in accordance with changes in the ten-year Australian Government bond rate.
Loans have a maximum term of ten years.
Farm Finance Concessional Loans Scheme: This scheme provided concessional loans
to eligible farm businesses experiencing financial difficulties that were considered
commercially viable in the long-term, and were for productivity enhancements and debt
restructuring. Applications for Farm Finance Concessional Loans closed on 30 June 2015.
Farm Investment Loans, Drought Loans, AgriStarter Loans, AgBiz Drought
Loans and AgRebuild Loans
The Regional Investment Corporation commenced operations on 1 July 2018.
There are three loan products currently available to farm businesses: Farm Investment
Loans, Drought Loans and AgriStarter Loans. In addition, AgBiz Drought Loans are
available for small businesses. AgRebuild Loans (North Queensland flood) closed on
30 June 2020.
The Farm Investment, Drought, AgriStarter and AgBiz Drought loan products provide
concessional loans to eligible businesses experiencing financial difficulties and are
considered financially viable in the long term (additional criteria apply for each product,
and terms and conditions may vary). All products are for farm businesses, except for
AgBiz Drought Loans which are for small businesses that provide primary production
related goods and services for drought affected farm businesses.
As at 1 February 2024, the variable interest rate was 4.99 per cent for the Farm Investment,
Drought, AgriStarter and AgBiz Drought loan products. Interest rates are revised on
a 6-monthly basis in line with any material changes to the Australian Government
10-year bond rate where a material change is taken to be a movement of more than
ten basis points (0.1 per cent). The next update will be on 1 August 2024.
Interest is not payable during the first two years of the AgRebuild Loan, or on the
Drought Loans and AgBiz Drought Loans for loan applications that were received before
30 September 2020.
Loans have a maximum term of ten years.
| Budget Paper No. 1
Page 340 | Statement 9: Statement of Risks
Climate Change, Energy, the Environment and Water
Clean Energy Finance Corporation
The Clean Energy Finance Corporation (CEFC) has developed a portfolio of loans and
investments across the spectrum of clean energy technologies, as required by the
Clean Energy Finance Corporation Act 2012 and the Clean Energy Finance Corporation
Investment Mandate Direction 2023 (the Investment Mandate), comprising the General
Portfolio, Rewiring the Nation Fund and Specialised Investment Funds.
The CEFC’s loan portfolio consists of predominantly senior-ranking secured loans, bonds
and secured project finance facilities, typically secured against energy generating assets
such as wind or solar farms or energy efficiency assets.
The CEFC’s Rewiring the Nation Fund is expected to deliver concessional finance,
including loans, for projects that support grid transformation. This portfolio of loans is
expected to be predominately comprised of unsecured corporate facilities, as well as senior
ranking secured loans and secured project finance facilities.
The CEFC’s Specialised Investment Funds portfolio of loans (consisting of the Clean Energy
Innovation Fund, the Advancing Hydrogen Fund, the Powering Australia Technology
Fund and the Household Energy Upgrades Fund) are expected to be predominantly
unsecured corporate facilities, senior-ranking secured loans, bonds and secured project
finance facilities.
The targeted level of risk for each of these portfolios is set out in the Investment Mandate.
For all but the Rewiring the Nation Fund, the CEFC Board seeks to develop a portfolio of
loans and investments that, in aggregate, has an acceptable but not excessive level of risk
relative to the sector and the specific focus of each of the Funds. For the Rewiring the
Nation Fund, the Board must seek to develop a portfolio that, in aggregate, has an
acceptable level of risk relative to the sector and the focus of the Rewiring the Nation Fund.
The Rewiring the Nation Fund investments may increase the CEFC’s overall exposure to
risk as the scale, concentration, loan tenor and nature of these investments will have a
higher risk profile. The Specialised Investment Funds may also have a higher risk profile
than the General Portfolio, however they are a relatively smaller component of the CEFC’s
overall exposure.
The CEFC has predominantly made loans as a co-financier either jointly or in consortiums
with private sector financial institutions. Interest rates vary with a current average expected
return of approximately 4.5 per cent. Loans have various maturity dates, typically in the
range of 5 to 15 years, although it is anticipated that loan tenors will extend with the
introduction of the Rewiring the Nation Fund. As at 30 June 2024, loans contracted and
outstanding are estimated to total $2.8 billion and are almost exclusively in the General
Portfolio.
Budget Paper No. 1 |
Statement 9: Statement of Risks | Page 341
Education
Higher Education Loan Program
The Higher Education Loan Program (HELP) is an income-contingent loan program that
assists eligible higher education students with the cost of their student contribution
amounts and tuition fees. As at 30 June 2024, the fair value of HELP debt outstanding is
estimated to be $43.2 billion. The fair value takes into account the concessionality of HELP
loans and makes an allowance for debt not expected to be repaid.
Debts outstanding for more than 11 months are indexed annually. From 1 June 2023,
subject to the passage of legislation, indexation will be based on the lower of the
Wage Price Index or the Consumer Price Index. The Australian Taxation Office collects
repayment of these debts through the tax system. Repayment of debts commence when
an individual debtor’s income reaches the repayment threshold.
There were 2,952,715 HELP debtors as at 30 June 2023. The repayment term of a HELP
debt can only be determined for people who have fully repaid their debt. As at the end of
June 2023, the average time taken to repay HELP debts was 9.6 years.
Employment and Workplace Relations
Australian Apprenticeship Support Loans Program
The Australian Apprenticeship Support Loans Program (formerly Trade Support Loans
Program) is an income-contingent, concessional loan program that assists eligible
Australian apprentices by providing financial support of up to $24,492 (for 2023–24) to
assist with the costs of living, learning and undertaking an apprenticeship, and helping
apprentices to focus on completing a qualification listed on the Australian Apprenticeships
Priority List.
An eligible Australian Apprentice can access up to $816.41 per month in the first year of
their apprenticeship, $612.31 per month in the second year, $408.20 per month in the third
year, and $204.10 per month in the fourth year.
The loan amounts provided are higher in the early years of training to compensate for
lower wages. The lifetime limit of $24,492 was indexed on 1 July 2023 using the Consumer
Price Index and will continue to be indexed annually on 1 July to maintain its real value.
As an incentive to encourage completion of training, apprentices who successfully
complete their apprenticeships are eligible for a 20 per cent discount on their loan. The
loans become repayable at the same thresholds as the Higher Education Loan Program,
which is $51,550 for the 2023–24 income year. This is a demand driven program. As at
30 June 2024, the fair value of the Australian Apprenticeship Support Loans debt
outstanding is estimated to be $987.2 million. The fair value takes into account the
concessionality of Australian Apprenticeship Support Loans and makes an allowance for
debt not expected to be repaid.
| Budget Paper No. 1
Page 342 | Statement 9: Statement of Risks
VET Student Loans Program
The VET Student Loans (VSL) Program is an income contingent loan program that assists
eligible tertiary education students with the cost of their fees when undertaking approved
higher-level Vocational Education and Training (VET) courses (diploma and above).
Debts outstanding for more than 11 months are indexed annually. From 1 June 2023,
subject to the passage of legislation, indexation will be based on the lower of Wage Price
Index or Consumer Price Index. The Australian Taxation Office collects repayment of these
debts through the tax system. Repayment of debts commences when an individual debtor’s
income reaches the repayment threshold. Debtors must pay Higher Education Loan
Program (HELP) debts before they repay VSL debts.
There were 129,357 VSL debtors as at 30 June 2023. The repayment term of a VSL debt can
only be determined for people who have fully repaid their debt. There is insufficient data
for post 1 July 2019 VSL to determine the average time to repay.
Prior to the commencement of the VSL Program, loans for VET students were available
through the VET-FEE HELP (VFH) scheme, which closed to new students on
31 December 2016. As at 30 June 2024, the fair value of both VFH debt and VSL debt
outstanding is estimated to be $3.3 billion. The fair value takes into account the
concessionality of VSL loans and makes an allowance for debt not expected to be repaid.
To support students affected by the delayed transfer of historical VET loans, accessed
under the former VFH scheme and the current VSL program, the Australian Government
agreed to waive historical indexation for affected loans and the entirety of affected VFH
debts for study prior to 2017.
Foreign Affairs and Trade
Government support for PsiQuantum Pty Ltd
The Australian Government has agreed to provide a financing package through Export
Finance Australia to PsiQuantum Pty Ltd to support the construction and operation of
quantum computing capabilities and associated investment in industry and research
development in Brisbane. The package includes loans and equity investments. The
Australian Government is supporting the project jointly with the Queensland Government.
Funding has yet to be provided and will be subject to terms and conditions.
Telstra acquisition of Digicel Pacific
The Australian Government provided Telstra a financing package through Export Finance
Australia for Telstra’s acquisition of Digicel Pacific. Telstra now owns and operates Digicel
Pacific. This package includes debt and equity, such as securities designed to secure the
Government a long-term return. It is estimated that by 30 June 2024, US$1.443 billion
(around A$2.029 billion) in funds will have been drawn down.
Budget Paper No. 1 |
Statement 9: Statement of Risks | Page 343
Industry, Science and Resources
National Reconstruction Fund Corporation
The National Reconstruction Fund Corporation Act 2023 (NRFC Act) commenced on
18 September 2023, establishing the National Reconstruction Fund Corporation (NRFC) to
facilitate increased flows of finance into priority areas of the Australian economy.
The NRFC offers loans and guarantees and makes equity investments in priority areas of
the economy consistent with the NRFC Act and the associated instrument. The NRFC will
make a range of investments, including in emerging technologies and technically complex
projects that carry higher risk. There are also risks inherent in investing in a large and
diverse portfolio of financial assets. In practice, this will involve some short-term volatility
in the NRFC’s returns, including the possibility of credit losses across the portfolio.
While the NRFC has been established in 2023–24, the risk around revenue and loss
projections are unquantifiable at this time.
The NRFC Board develops the NRFC’s investment portfolio with an appropriate risk
tolerance relative to the National Reconstruction Fund priority areas as required by the
National Reconstruction Fund Corporation (Investment Mandate) Direction 2023 and the National
Reconstruction Fund Corporation (Priority Areas) Declaration 2023.
Infrastructure, Transport, Regional Development, Communications and
the Arts
Northern Australia Infrastructure Facility Loans
The Northern Australia Infrastructure Facility (NAIF) is a lending facility established by
the Australian Government under the Northern Australia Infrastructure Facility Act 2016 and
will continue to make investment decisions until 30 June 2026. The primary purpose of the
NAIF is to provide loans or alternative financing mechanisms to infrastructure projects.
The infrastructure that NAIF can finance is wide ranging and includes assets that facilitate
the establishment or enhancement of business activity or increase economic activity in
a region.
To be eligible for a loan from the NAIF, including up to 100 per cent of the project’s debt,
project proponents must meet the mandatory criteria outlined in the NAIF Investment
Mandate that commenced on 15 December 2023. Since its establishment, the NAIF has been
amended to:
• expand the eligibility for NAIF financing to include non-construction activities
associated with the development of economic infrastructure
• provide NAIF with expanded debt tools, including the ability to provide letters of
credit, guarantees and lend in foreign currency, finance smaller loans through working
with financing partnerships, and in certain circumstances provide financing directly to
proponents rather than via the States or Northern Territory
| Budget Paper No. 1
Page 344 | Statement 9: Statement of Risks
• make equity investments subject to a cap of $50 million and a minimum of $5 million
per investment, for non-controlling interest
• enhance the potential to deliver significant public benefit to northern Australia by
removing the prohibition against the Australian Government assuming the majority
risk in any project. The new requirement is that the financial risk be acceptable but
not excessive
• legislate the requirement to earmark $500 million of its $7 billion appropriation to go
towards realising the Government’s Critical Minerals Strategy and create alignment of
investment decisions to Government Policy Priorities
• add further areas to be considered as part of NAIF’s Risk Appetite Statement –
including risk sharing between NAIF and the Australian Government, climate change
related risks and net zero transition risks
• extend NAIF’s internal and external reporting on investments
• further tighten NAIFs Direct Financing powers and a greater emphasis on
consulting/collaborating with other Commonwealth entities/Specialist
Investment Vehicles.
The Australian Government updated the Investment Mandate to give effect to these changes.
WestConnex Stage 2 Concessional Loan
The WestConnex concessional loan is a $2 billion loan facility provided to deliver
WestConnex Stage 2. The concessional loan enabled Stage 2 to be brought forward,
allowing Stages 1 and 2 to proceed in parallel. This resulted in significant time savings
compared to the original approach where these stages progressed in sequence.
WestConnex Stage 2 includes the King Georges Road Interchange Upgrade (completed in
2016) and construction of new twin tunnels from Kingsgrove to a new St Peters
interchange, providing motorway connections to Alexandria and Mascot, the M4-M5 Link
(completed in January 2023) and the future Sydney Gateway.
The concessional loan agreement requires that the loan be repaid between September 2029
and July 2034.
Prime Minister and Cabinet
Indigenous home ownership, business development and assistance
Indigenous Business Australia delivers flexible loans with concessional interest rates
to improve Indigenous home ownership across Australia, including in remote
Indigenous communities. Indigenous Business Australia also provides concessional
interest rate business loans and business support to increase Indigenous ownership
of small-to-medium-sized enterprises and support their sustainability and growth.
Budget Paper No. 1 |
Statement 9: Statement of Risks | Page 345
As at 30 June 2024, the expected fair value of outstanding loans for Indigenous home
ownership and business development and assistance is estimated to total $1,027.5 million.
Voyages Indigenous Tourism Australia Pty Ltd
The Indigenous Land and Sea Corporation purchased Ayers Rock Resort for $291.2 million
in May 2011 and immediately on-sold it to its wholly owned subsidiary, Voyages
Indigenous Tourism Australia Pty Ltd, creating an inter-company loan that is partly
funded by borrowings. The interest rate is set at the 90-day bank bill swap reference rate
plus 5 per cent, and is reset 6-monthly. As at 30 June 2024, the outstanding loan balance is
estimated to total $335.4 million.
Social Services
Home Equity Access Scheme
The Home Equity Access Scheme (HEAS) is a voluntary arrangement which allows eligible
older Australians to receive a non-taxable loan from the Australian Government. The loan
can be paid as regular fortnightly instalments or capped lump sum advance payments, or
both, for people of Age Pension age who meet certain residency criteria and own suitable
real estate in Australia.
Any amount received under HEAS, and any interest and costs accrued, is attributed as a
debt against real estate assets provided as collateral by the participant. The loan can be paid
back at any time or is recovered on the sale of the secured real estate or from the person’s
estate. Additionally, since 1 July 2022, a No Negative Equity Guarantee applies to HEAS
loans, limiting the recoverable debt to the equity in the property used to secure the loan.
Student Financial Supplement Scheme
The Student Financial Supplement Scheme (SFSS) commenced in January 1993 and closed
on 31 December 2003. It was a voluntary income-contingent loan scheme for tertiary
students (primarily Austudy and ABSTUDY) to help cover their living expenses while
studying. Under the scheme, eligible students were able to trade one dollar of income
support entitlement for two dollars in loans. Debtors are required to start repaying their
SFSS loan once they earn $51,550 for 2023–24 and only after they have repaid any Higher
Education Loan Program and Vocational Education and Training student loan debt.
The estimated fair value of SFSS loans outstanding is $180.5 million at 30 June 2024.
Student Start-up Loan
The Student Start-up Loan (SSL) is a voluntary income-contingent loan for student
payment (Youth Allowance (student), Austudy and ABSTUDY Living Allowance)
recipients undertaking higher education. Introduced on 1 January 2016, the SSL is paid a
maximum of twice a year and each SSL payment is valued at $1,273 (in 2024). The SSL is
repayable under similar arrangements to Higher Education Loan Program (HELP) debts.
Students are required to start repaying their SSL once they earn over $51,550 for 2023–24,
| Budget Paper No. 1
Page 346 | Statement 9: Statement of Risks
and only after they have repaid any HELP and Vocational Education Training student loan
debt. When it commenced, the SSL was initially for new student payment recipients
undertaking higher education. From 1 July 2017, with the closure of the Student Start-up
Scholarship, the SSL has become available to all eligible student payment recipients
undertaking higher education.
The estimated fair value of the SSL is $839.3 million at 30 June 2024.
Treasury
Affordable Housing Bond Aggregator
The Australian Government, through the Treasury, has made available a line of credit for
the Housing Australia Affordable Housing Bond Aggregator. As part of the 2024–25
Budget, the Government announced that the line of credit will be increased by $3 billion to
a total of $4 billion. The provision of funds will be in accordance with appropriations under
the Housing Australia Act 2018. The line of credit is ongoing, and funds borrowed will be
repaid with interest. The Treasury manages the receipt of interest and principal repayments
from Housing Australia. As at 30 June 2024, the value of outstanding advances issued to
Housing Australia from the line of credit is expected to be $80.4 million.
Commonwealth-State financing arrangements – housing and specific
purpose capital
From 1945 to 1989, the Australian Government made concessional advances to the state and
Northern Territory governments under Commonwealth–state financing arrangements for
housing and for specific purpose capital. The advances were concessional fixed-rate loans
to be repaid over 53 years, with the last loans maturing in 2042. Annual payments,
comprising both interest and principal repayment, are made to the Commonwealth.
As at 30 June 2023, the amortised value of the advances was $1.3 billion (and principal
value of $1.4 billion).
The Australian Office of Financial Management manages the receipt of interest and
principal repayments from the state and Northern Territory governments to the
Commonwealth.
International Monetary Fund – Poverty Reduction and Growth Trust
The Australian Government has entered into two agreements to make a line of credit of
Special Drawing Rights (SDR) 1 billion (approximately A$2.0 billion as at 14 March 2024)
available to the International Monetary Fund (IMF) under the Poverty Reduction and
Growth Trust (PRGT) through to 31 December 2029.
The PRGT provides concessional financial support to low-income countries to help them
achieve, maintain, or restore a stable and sustainable macroeconomic position. PRGT funds
are drawn upon by the IMF as needed and will be repaid in full with interest.
Budget Paper No. 1 |
Statement 9: Statement of Risks | Page 347
The estimated value of loans outstanding to Australia was SDR 257.0 million
(approximately A$518.4 million as at 14 March 2024).
On 11 October 2022, the Government entered into an agreement to lend SDR 1 billion
(approximately A$2.0 billion as at 14 March 2024) to the PRGT Pooled Investments,
in order to provide subsidy resources to the PRGT of SDR 36 million (approximately
A$72.6 million as at 14 March 2024). This loan was drawn down by the IMF on
21 October 2022. On 30 October 2023 the Government advised the IMF that it would
increase the subsidy resources provided to SDR 82 million (approximately A$165.4 million
as at 14 March 2024).
PRGT Pooled Investments funds will be repaid in full, with interest.
International Monetary Fund – Resilience and Sustainability Trust
On 11 October 2022, the Australian Government entered into an agreement to make
a Special Drawing Rights (SDR) 760 million (approximately A$1.5 billion as at
14 March 2024) line of credit available to the International Monetary Fund (IMF) under
the Resilience and Sustainability Trust’s Loan Account through to 30 November 2030. The
Resilience and Sustainability Trust Loan Account provides affordable long-term financing
to help vulnerable countries build economic resilience and sustainability to address the
risks stemming from climate change and pandemics. Resilience and Sustainability Trust
Loan Account funds are drawn upon by the IMF as needed and will be repaid in full, with
interest. As at 14 March 2024, SDR 14.2 million (approximately A$28.7 million) has been
drawn down, leaving SDR 745.8 million (approximately A$1.5 billion) available to the IMF
under the Resilience and Sustainability Trust.
Additionally, on 11 October 2022, the Australian Government entered into an agreement
to–lend SDR 152 million (approximately A$306.6 million as at 14 March 2024) to the
Resilience–and Sustainability Trust Deposit Account through to 30 November 2050, and
SDR 15.2 million (approximately A$30.7 million as at 14 March 2024) to the Resilience and
Sustainability Trust Reserve Account through to liquidation of the Trust. Resilience and
Sustainability Trust Deposit Account funds will be repaid in full, with interest. Resilience
and Sustainability Trust Reserve Account funds will be repaid upon liquidation of the
Trust and will not accrue interest. These additional contributions will enable the IMF to
build sufficient reserves over time to manage risks associated with Resilience and
Sustainability Trust lending such as potential late payments.
Loan Agreement between the Australian Government and the Government
of Indonesia
On 12 November 2020, Australia entered into a A$1.5 billion loan agreement with
Indonesia. This agreement is part of a multilateral action to support Indonesia led by the
Asian Development Bank and includes the Asian Infrastructure Investment Bank, the Japan
International Cooperation Agency and the German state-owned KfW Development Bank.
The funds are being used to support Indonesia’s COVID-19 response, including social
protection initiatives and health system development.
| Budget Paper No. 1
Page 348 | Statement 9: Statement of Risks
2020 Loan Agreement between the Australian Government and the Government
of Papua New Guinea
On 22 November 2020, the Australian Government entered into a loan agreement for
US$400 million (approximately A$558 million) in 2020–21 to the Government of Papua
New Guinea (PNG). The loan refinances the US$300 million short-term loan made
in 2019–20 and a further A$140 million loan for budget support, including PNG’s response
to COVID-19. The previous short-term loan was made to support budget sustainability,
assist in the delivery of core government services, support longer term economic reforms,
and increase the availability of foreign exchange in the country. The Australian
Government had agreed with PNG to temporarily suspend principal and interest
repayments for the loan consistent with the Debt Service Suspension Initiative of
G20 nations to support low-income nations during the COVID-19 pandemic. This
suspension has now ended.
2021 Loan Agreement between the Australian Government and the Government
of Papua New Guinea
On 10 December 2021, the Australian Government entered into a loan agreement for
A$650 million in 2021–22 to the Government of Papua New Guinea (PNG). The loan was
provided in response to a request from the PNG Prime Minister for further support to
enable the PNG Government to meet required expenditure in its 2021 Budget, including on
the health and economic response to the COVID-19 pandemic. The loan is also provided to
help PNG continue progress on economic reforms under the second International
Monetary Fund Staff-Monitored Program.
2022 Loan Agreement between the Australian Government and the Government
of Papua New Guinea
On 15 December 2022, the Australian Government entered into a loan agreement for
A$750 million in 2022–23 to the Government of Papua New Guinea (PNG). The loan was
provided in response to a request from the PNG Treasurer for financial assistance to enable
the PNG Government to meet required expenditure in its 2022 Budget and support the
delivery of reform actions under multilateral development programs, including a new
International Monetary Fund program established in 2023.
2023 Loan Agreement between the Australian Government and the Government
of Papua New Guinea
On 8 December 2023, the Australian Government entered into a loan agreement for
A$600 million in 2023–24 to the Government of Papua New Guinea (PNG). The loan was
provided in response to a request from the PNG Prime Minister, to support PNG to meet its
estimated 2023 budget financing shortfall. The loan will also assist PNG in delivering
economic reforms under the International Monetary Fund Extended Credit Facility and
Extended Fund Facility Program.
Statement 10: Australian Government Budget Financial Statements | Page 349
Statement 10:
Australian Government Budget Financial
Statements
Consistent with the Charter of Budget Honesty Act 1998 (the Charter), the Government has
produced a set of financial statements for the Australian Government general government
sector (GGS), the public non-financial corporations (PNFC) sector, the total non-financial
public sector (NFPS) and the public financial corporations (PFC) sector. The financial
statements comply with both the Australian Bureau of Statistics’ (ABS) accrual Government
Finance Statistics (GFS) and Australian Accounting Standards (AAS), with departures
disclosed. These statements are:
• an operating statement, including other economic flows, which shows net operating
balance and net lending/borrowing (fiscal balance)
• a balance sheet, which shows net worth, net financial worth, net financial liabilities
and net debt
• a cash flow statement, which includes the calculation of the underlying cash balance.
In addition to these general purpose statements, notes to the financial statements are
required. These notes include a summary of accounting policies, disaggregated information
and other disclosures required by AAS.
The statements reflect the Government’s policy that the ABS GFS remains the basis of
budget accounting policy, except where AAS is applied because it provides a better
conceptual basis for presenting information of relevance to users of public sector
financial reports.
The Australian, state and territory governments have an agreed framework – the Uniform
Presentation Framework (UPF) – for the presentation of government financial information
on a basis broadly consistent with the Australian Accounting Standard AASB 1049.
The financial statements are consistent with the requirements of the UPF.
Statement 10: Australian Government Budget Financial Statements | Page 351
Statement contents
Statement 10: Australian Government Budget Financial Statements ................. 353
Notes to the general government sector financial statements ................................................... 369
Appendix A: Financial reporting standards and budget concepts ...................... 385
AASB 1049 Conceptual framework ........................................................................................... 385
Appendix B: Assets and Liabilities ......................................................................... 393
Statement 10: Australian Government Budget Financial Statements | Page 353
Statement 10: Australian Government
Budget Financial Statements
Table 10.1: Australian Government general government sector operating
statement
Estimates
2023-24
2024-25
2025-26
2026-27
2027-28
Note
$m
$m
$m
$m
$m
Revenue
Taxation revenue
3
656,039
658,962
679,469
721,170
762,990
Sales of goods and services
4
20,274
21,636
22,555
23,525
23,869
Interest income
5
11,131
10,276
9,998
10,573
11,338
Dividend and distribution income
5
5,798
6,815
7,188
7,552
8,029
Other
6
13,635
13,815
13,531
13,418
13,403
Total revenue
706,877
711,505
732,740
776,239
819,628
Expenses
Gross operating expenses
Wages and salaries(a)
7
27,326
29,440
29,282
29,256
29,659
Superannuation
7
9,042
8,301
8,560
8,989
9,315
Depreciation and amortisation
8
12,889
13,003
13,200
13,380
13,501
Supply of goods and services
9
194,974
211,694
223,794
230,947
243,589
Other operating expenses(a)
7
9,248
9,925
14,442
12,184
12,414
Total gross operating expenses
253,478
272,364
289,279
294,756
308,477
Superannuation interest expense
7
13,374
14,620
15,126
15,610
16,054
Interest expenses
10
27,667
33,414
34,300
39,085
41,190
Current transfers
Current grants
11
203,194
208,915
216,098
223,666
231,953
Subsidy expenses
19,613
18,791
18,943
19,487
20,957
Personal benefits
12
152,866
161,051
171,210
179,664
191,598
Total current transfers
375,674
388,757
406,251
422,817
444,508
Capital transfers
11
Mutually agreed write-downs
3,039
5,137
3,318
3,510
3,726
Other capital grants
17,838
20,226
19,017
17,988
15,798
Total capital transfers
20,877
25,364
22,334
21,497
19,525
Total expenses
691,070
734,518
767,290
793,765
829,755
Net operating balance
15,807
-23,014
-34,550
-17,526
-10,127
Other economic flows –
included in operating result
Net write-downs of assets
-10,994
-11,427
-11,335
-11,981
-12,823
Assets recognised for the first time
298
316
335
356
377
Actuarial revaluations
652
-20
-18
-23
-29
Net foreign exchange gains
188
5
0
0
0
Net swap interest received
-347
-24
-7
3
-1
Market valuation of debt
-10,639
-13,050
-11,690
-10,140
-9,304
Other gains/(losses)
9,262
9,093
9,357
10,319
11,148
Total other economic flows –
included in operating result
-11,578
-15,107
-13,359
-11,466
-10,631
Operating result(b)
4,228
-38,120
-47,908
-28,992
-20,758
| Budget Paper No. 1
Page 354 | Statement 10: Australian Government Budget Financial Statements
Table 10.1: Australian Government general government sector operating
statement (continued)
Estimates
2023-24
2024-25
2025-26
2026-27
2027-28
Note
$m
$m
$m
$m
$m
Non-owner movements in equity
Revaluation of equity investments
-785
-392
0
0
0
Actuarial revaluations
-1,002
-228
-230
-231
-233
Other economic revaluations
736
2,228
165
188
175
Total other economic flows -
included in equity
-1,051
1,608
-65
-43
-58
Comprehensive result –
Total change in net worth
3,177
-36,512
-47,974
-29,035
-20,816
Net operating balance
15,807
-23,014
-34,550
-17,526
-10,127
Net acquisition of non-financial
assets
Purchases of non-financial assets
21,771
21,960
20,556
21,785
24,917
less Sales of non-financial assets
777
2,407
67
0
5
less Depreciation
12,889
13,003
13,200
13,380
13,501
plus Change in inventories
-351
-242
766
583
489
plus Other movements in non-financial assets
-1
-5
0
0
0
Total net acquisition of
non-financial assets
7,754
6,303
8,055
8,988
11,899
Fiscal balance
(Net lending/borrowing)(c)
8,053
-29,316
-42,604
-26,514
-22,026
a) Consistent with the ABS GFS classification, other employee related expenses are classified separately
from wages and salaries under other operating expenses. Total employee expenses equal wages and
salaries plus other operating expenses.
b) Operating result under AAS.
c) The term fiscal balance is not used by the ABS.
Budget Paper No. 1 |
Statement 10: Australian Government Budget Financial Statements | Page 355
Table 10.2: Australian Government general government sector balance sheet
Estimates
2023-24
2024-25
2025-26
2026-27
2027-28
Note
$m
$m
$m
$m
$m
Assets
Financial assets
Cash and deposits
89,311
61,997
57,532
54,634
49,732
Advances paid
13
67,539
73,193
83,592
94,634
105,091
Investments, loans and placements
14
242,528
249,588
257,386
267,513
278,151
Other receivables
13
79,105
84,638
91,128
97,971
105,736
Equity investments
Investments in other public sector
entities
44,934
51,451
55,807
57,352
57,842
Equity accounted investments
5,894
6,025
6,136
6,149
6,111
Investments – shares
84,931
91,336
98,980
106,828
114,856
Total financial assets
614,242
618,227
650,560
685,082
717,520
Non-financial assets
15
Land
13,506
13,473
13,399
13,481
13,643
Buildings
50,673
52,246
53,585
55,466
57,806
Plant, equipment and infrastructure
110,044
114,335
118,812
124,311
132,680
Inventories
11,763
12,007
12,605
13,095
13,417
Intangibles
12,697
14,280
15,091
15,190
15,165
Investment properties
220
227
227
227
227
Biological assets
5
5
5
5
5
Heritage and cultural assets
12,664
12,687
12,685
12,683
12,684
Assets held for sale
102
94
89
89
89
Other non-financial assets
14
9
9
9
9
Total non-financial assets
211,687
219,362
226,506
234,556
245,726
Total assets
825,929
837,590
877,066
919,637
963,247
Liabilities
Interest bearing liabilities
Deposits held
415
415
415
415
415
Government securities
847,774
885,886
962,711
1,026,120
1,080,171
Loans
16
31,772
32,360
33,379
33,786
33,779
Lease liabilities
19,302
18,649
17,484
16,508
16,115
Total interest bearing liabilities
899,263
937,310
1,013,988
1,076,829
1,130,480
| Budget Paper No. 1
Page 356 | Statement 10: Australian Government Budget Financial Statements
Table 10.2: Australian Government general government sector balance sheet
(continued)
Estimates
2023-24
2024-25
2025-26
2026-27
2027-28
Note
$m
$m
$m
$m
$m
Provisions and payables
Superannuation liability
17
294,654
304,384
314,814
323,741
332,739
Other employee liabilities
17
42,228
41,848
43,042
44,195
44,992
Suppliers payables
18
13,305
13,582
13,753
14,042
14,573
Personal benefits payables
18
3,991
4,096
4,598
4,570
4,406
Subsidies payables
18
550
535
528
519
519
Grants payables
18
3,658
4,178
3,761
3,457
3,633
Other payables
18
7,115
4,797
4,886
4,912
4,922
Provisions
18
69,787
71,994
70,804
69,513
69,940
Total provisions and payables
435,287
445,413
456,185
464,950
475,725
Total liabilities
1,334,550
1,382,723
1,470,173
1,541,779
1,606,205
Net worth(a)
-508,621
-545,133
-593,107
-622,142
-642,958
Net financial worth(b)
-720,309
-764,495
-819,613
-856,698
-888,684
Net financial liabilities(c)
765,243
815,947
875,420
914,050
946,526
Net debt(d)
499,886
552,532
615,478
660,048
697,505
a) Net worth equals total assets minus total liabilities.
b) Net financial worth equals total financial assets minus total liabilities.
c) Net financial liabilities equals total liabilities less financial assets other than investments in other public
sector entities.
d) Net debt is the sum of interest bearing liabilities less the sum of selected financial assets (cash and
deposits, advances paid and investments, loans and placements).
Budget Paper No. 1 |
Statement 10: Australian Government Budget Financial Statements | Page 357
Table 10.3: Australian Government general government sector cash flow
statement
(a)
Estimates
2023-24
2024-25
2025-26
2026-27
2027-28
$m
$m
$m
$m
$m
Cash receipts from operating activities
Taxes received
638,750
642,542
661,583
702,278
742,299
Receipts from sales of goods and services
19,938
21,396
22,549
23,506
23,888
Interest receipts
10,404
9,275
8,705
9,051
9,591
Dividends, distributions and
income tax equivalents
5,918
6,789
7,160
7,522
8,001
Other receipts
14,298
18,231
19,118
17,611
17,880
Total operating receipts
689,309
698,233
719,114
759,968
801,658
Cash payments for operating activities
Payments to employees(b)
-43,641
-46,840
-47,519
-48,535
-50,205
Payments for goods and services
-192,077
-210,763
-224,689
-230,996
-243,315
Grants and subsidies paid
-239,842
-251,111
-256,411
-263,351
-268,068
Interest paid
-22,685
-23,824
-27,502
-29,833
-35,585
Personal benefit payments
-152,828
-161,714
-171,442
-180,398
-192,456
Other payments(b)
-9,923
-10,389
-13,328
-11,062
-11,303
Total operating payments
-660,997
-704,641
-740,890
-764,175
-800,933
Net cash flows from operating activities
28,312
-6,408
-21,777
-4,207
725
Cash flows from investments in
non-financial assets
Sales of non-financial assets
2,999
213
240
41
153
Purchases of non-financial assets
-19,450
-19,501
-18,700
-19,956
-22,670
Net cash flows from investments in
non-financial assets
-16,451
-19,288
-18,460
-19,914
-22,516
Net cash flows from investments in
financial assets for policy purposes
-2,879
-18,916
-20,932
-20,130
-17,676
Net cash flows from investments in
financial assets for liquidity purposes
-16,684
-4,050
-4,644
-5,676
-5,958
Cash receipts from financing activities
Borrowing
168,884
528,678
809,085
919,481
806,142
Other financing
6,487
127
148
165
88
Total cash receipts from financing
activities
175,371
528,805
809,234
919,646
806,231
Cash payments for financing activities
Borrowing
-156,674
-502,500
-743,001
-868,160
-762,796
Other financing
-11,397
-4,957
-4,885
-4,457
-2,911
Total cash payments for financing
activities
-168,072
-507,456
-747,886
-872,617
-765,707
Net cash flows from financing activities
7,300
21,348
61,348
47,029
40,524
Net increase/(decrease) in cash held
-402
-27,314
-4,465
-2,899
-4,902
| Budget Paper No. 1
Page 358 | Statement 10: Australian Government Budget Financial Statements
Table 10.3: Australian Government general government sector cash flow
statement (continued)
(a)
Estimates
2023-24
2024-25
2025-26
2026-27
2027-28
$m
$m
$m
$m
$m
GFS cash surplus(+)/deficit(-)(c)
11,861
-25,696
-40,237
-24,121
-21,791
plus Principal payments of
lease liabilities(d)
-2,515
-2,590
-2,601
-2,591
-2,554
Equals underlying cash balance(e)
9,346
-28,286
-42,838
-26,713
-24,345
plus Net cash flows from investments in
financial assets for policy purposes
-2,879
-18,916
-20,932
-20,130
-17,676
Equals headline cash balance
6,467
-47,202
-63,770
-46,843
-42,022
a) A positive number denotes a cash inflow; a negative number denotes a cash outflow.
b) Consistent with the ABS GFS classification, other employee related payments are classified separately
from wages and salaries under other payments.
c) GFS cash surplus/deficit equals net cash flows from operating activities and investments in
non-financial assets.
d) Principal payments of lease liabilities, which are financing cash payments, are deducted in the
calculation of the underlying cash balance to maintain consistency of measure following the
implementation of AASB 16.
e) The term underlying cash balance is not used by the ABS.
Budget Paper No. 1 |
Statement 10: Australian Government Budget Financial Statements | Page 359
Table 10.4: Australian Government public non-financial corporations sector
operating statement
Estimates
2023-24
2024-25
$m
$m
Revenue
Grants and subsidies
183
156
Sales of goods and services
21,221
22,566
Interest income
50
28
Other
96
81
Total revenue
21,551
22,831
Expenses
Gross operating expenses
Wages and salaries(a)
4,898
5,005
Superannuation
526
544
Depreciation and amortisation
4,532
4,425
Supply of goods and services
10,233
10,710
Other operating expenses(a)
773
705
Total gross operating expenses
20,963
21,390
Interest expenses
2,037
2,173
Other property expenses
249
250
Current transfers
Tax expenses
213
199
Total current transfers
213
199
Total expenses
23,461
24,011
Net operating balance
-1,910
-1,180
Other economic flows
-1,250
-584
Comprehensive result – Total change in net worth
excluding contribution from owners
-3,161
-1,764
Net acquisition of non-financial assets
Purchases of non-financial assets
11,308
12,375
less Sales of non-financial assets
82
62
less Depreciation
4,532
4,425
plus Change in inventories
-24
2
plus Other movements in non-financial assets
0
1
Total net acquisition of non-financial assets
6,670
7,892
Fiscal balance (Net lending/borrowing)(b)
-8,580
-9,072
a) Consistent with the ABS GFS classification, other employee related expenses are classified separately
from wages and salaries under other operating expenses. Total employee expenses equal wages and
salaries plus other operating expenses.
b) The term fiscal balance is not used by the ABS.
| Budget Paper No. 1
Page 360 | Statement 10: Australian Government Budget Financial Statements
Table 10.5: Australian Government public non-financial corporations sector
balance sheet
Estimates
2023-24
2024-25
$m
$m
Assets
Financial assets
Cash and deposits
1,335
1,533
Investments, loans and placements
743
1,169
Other receivables
6,163
6,216
Equity investments
324
340
Total financial assets
8,566
9,258
Non-financial assets
Land and other fixed assets
72,134
79,382
Other non-financial assets(a)
3,940
4,103
Total non-financial assets
76,074
83,485
Total assets
84,640
92,743
Liabilities
Interest bearing liabilities
Deposits held
7
14
Advances received and loans
34,563
37,463
Lease liabilities
13,547
13,877
Total interest bearing liabilities
48,117
51,353
Provisions and payables
Superannuation liability
10
10
Other employee liabilities
1,919
1,953
Other payables
6,450
6,602
Other provisions(a)
1,223
1,156
Total provisions and payables
9,601
9,721
Total liabilities
57,718
61,074
Shares and other contributed capital
26,921
31,669
Net worth(b)
26,921
31,669
Net financial worth(c)
-49,152
-51,817
Net debt(d)
46,038
48,651
a) Excludes the impact of commercial taxation adjustments.
b) Under AASB 1049, net worth equals total assets minus total liabilities. Under the ABS GFS, net worth
equals total assets minus total liabilities minus shares and other contributed capital. The AASB 1049
method is used in this table.
c) Under AASB 1049, net financial worth equals total financial assets minus total liabilities. Under the
ABS GFS, net financial worth equals total financial assets minus total liabilities minus shares and other
contributed capital. The AASB 1049 method is used in this table.
d) Net debt is the sum of interest bearing liabilities less the sum of selected financial assets (cash and
deposits and investments, loans and placements).
Budget Paper No. 1 |
Statement 10: Australian Government Budget Financial Statements | Page 361
Table 10.6: Australian Government public non-financial corporations sector cash
flow statement
(a)
Estimates
2023-24
2024-25
$m
$m
Cash receipts from operating activities
Receipts from sales of goods and services
22,509
24,350
Grants and subsidies received
76
82
GST input credit receipts
1,180
1,149
Other receipts
127
71
Total operating receipts
23,892
25,652
Cash payments for operating activities
Payments to employees(b)
-5,431
-5,570
Payment for goods and services
-11,786
-12,325
Interest paid
-2,311
-2,457
GST payments to taxation authority
-981
-1,044
Distributions paid
-249
-248
Other payments(b)
-880
-876
Total operating payments
-21,637
-22,521
Net cash flows from operating activities
2,255
3,131
Cash flows from investments in non-financial assets
Sales of non-financial assets
64
60
Purchases of non-financial assets
-9,469
-11,849
Net cash flows from investments in non-financial assets
-9,405
-11,789
Net cash flows from investments in financial assets
for policy purposes
-8
-3
Net cash flows from investments in financial assets
for liquidity purposes
71
-194
Net cash flows from financing activities
Borrowing (net)
3,308
2,997
Other financing (net)
3,011
6,057
Net cash flows from financing activities
6,319
9,054
Net increase/(decrease) in cash held
-767
198
Cash at the beginning of the year
2,103
1,335
Cash at the end of the year
1,335
1,533
GFS cash surplus(+)/deficit(-)(c)
-7,150
-8,658
plus Principal payments of lease liabilities(d)
-555
-378
Adjusted GFS cash surplus(+)/deficit(-)(d)
-7,706
-9,036
a) A positive number denotes a cash inflow; a negative number denotes a cash outflow.
b) Consistent with the ABS GFS classification, other employee related payments are classified separately
from wages and salaries under other payments.
c) GFS cash surplus/deficit equals net cash flows from operating activities and investments in non-financial
assets.
d) Principal payments of lease liabilities, which are financing cash payments, are deducted in the
calculation of the GFS cash surplus/deficit to maintain consistency of measure following the
implementation of AASB 16.
| Budget Paper No. 1
Page 362 | Statement 10: Australian Government Budget Financial Statements
Table 10.7: Australian Government total non-financial public sector operating
statement
Estimates
2023-24
2024-25
$m
$m
Revenue
Taxation revenue
655,293
657,982
Sales of goods and services
40,429
42,895
Interest income
10,947
10,287
Dividend and distribution income
5,549
6,572
Other
13,734
13,896
Total revenue
725,953
731,630
Expenses
Gross operating expenses
Wages and salaries(a)
32,224
34,445
Superannuation
9,568
8,845
Depreciation and amortisation
17,421
17,428
Supply of goods and services
204,123
221,079
Other operating expenses(a)
10,021
10,637
Total gross operating expenses
273,357
292,434
Superannuation interest expense
13,374
14,620
Interest expenses
29,470
35,569
Current transfers
Current grants
203,194
208,915
Subsidy expenses
18,822
17,966
Personal benefits
152,866
161,051
Total current transfers
374,883
387,932
Capital transfers
20,742
25,258
Total expenses
711,826
755,813
Net operating balance
14,126
-24,183
Other economic flows
-12,716
-13,772
Comprehensive result – Total change in net worth
1,410
-37,955
Net acquisition of non-financial assets
Purchases of non-financial assets
33,087
34,334
less Sales of non-financial assets
859
2,469
less Depreciation
17,421
17,428
plus Change in inventories
-375
-240
plus Other movements in non-financial assets
-1
-4
Total net acquisition of non-financial assets
14,431
14,193
Fiscal balance (Net lending/borrowing)(b)
-305
-38,376
a) Consistent with the ABS GFS classification, other employee related expenses are classified separately
from wages and salaries under other operating expenses. Total employee expenses equal wages and
salaries plus other operating expenses.
b) The term fiscal balance is not used by the ABS.
Budget Paper No. 1 |
Statement 10: Australian Government Budget Financial Statements | Page 363
Table 10.8: Australian Government total non-financial public sector balance sheet
Estimates
2023-24
2024-25
$m
$m
Assets
Financial assets
Cash and deposits
90,646
63,530
Advances paid
67,240
72,664
Investments, loans and placements
243,235
250,717
Other receivables
84,198
89,475
Equity investments
93,415
100,281
Total financial assets
578,734
576,667
Non-financial assets
Land and other fixed assets
270,781
284,126
Other non-financial assets
17,028
18,769
Total non-financial assets
287,810
302,895
Total assets
866,544
879,562
Liabilities
Interest bearing liabilities
Deposits held
421
428
Government securities
847,774
885,886
Advances received and loans
66,000
69,254
Lease liabilities
32,849
32,526
Total interest bearing liabilities
947,044
988,093
Provisions and payables
Superannuation liability
294,664
304,393
Other employee liabilities
44,146
43,802
Other payables
34,919
33,357
Other provisions
69,934
72,035
Total provisions and payables
443,663
453,587
Total liabilities
1,390,707
1,441,680
Net worth(a)
-524,163
-562,118
Net financial worth(b)
-811,973
-865,013
Net debt(c)
545,924
601,183
a) Under AASB 1049, net worth equals total assets minus total liabilities. Under the ABS GFS, net worth
equals total assets minus total liabilities minus shares and other contributed capital. The AASB 1049
method is used in this table.
b) Under AASB 1049, net financial worth equals total financial assets minus total liabilities. Under the
ABS GFS, net financial worth equals total financial assets minus total liabilities minus shares and other
contributed capital. The AASB 1049 method is used in this table.
c) Net debt is the sum of interest bearing liabilities less the sum of selected financial assets (cash and
deposits, advances paid and investments, loans and placements).
| Budget Paper No. 1
Page 364 | Statement 10: Australian Government Budget Financial Statements
Table 10.9: Australian Government total non-financial public sector cash
flow statement
(a)
Estimates
2023-24
2024-25
$m
$m
Cash receipts from operating activities
Taxes received
638,801
642,363
Receipts from sales of goods and services
39,381
42,294
Interest receipts
10,236
9,285
Dividends, distributions and income tax equivalents
5,670
6,548
Other receipts
14,256
18,181
Total operating receipts
708,343
718,672
Cash payments for operating activities
Payments to employees(b)
-49,072
-52,410
Payments for goods and services
-200,587
-219,558
Grants and subsidies paid
-239,706
-250,951
Interest paid
-24,776
-26,263
Personal benefit payments
-152,828
-161,714
Other payments(b)
-10,819
-11,073
Total operating payments
-677,788
-721,969
Net cash flows from operating activities
30,555
-3,297
Cash flows from investments in non-financial assets
Sales of non-financial assets
3,063
273
Purchases of non-financial assets
-28,907
-31,331
Net cash flows from investments in non-financial assets
-25,844
-31,058
Net cash flows from investments in financial assets
for policy purposes
-4,870
-12,191
Net cash flows from investments in financial assets
for liquidity purposes
-16,613
-4,244
Net cash flows from financing activities
Borrowing (net)
21,038
28,949
Other financing (net)
-5,437
-5,274
Net cash flows from financing activities
15,602
23,675
Net increase/(decrease) in cash held
-1,170
-27,115
Cash at the beginning of the year
91,816
90,646
Cash at the end of the year
90,646
63,530
Budget Paper No. 1 |
Statement 10: Australian Government Budget Financial Statements | Page 365
Table 10.9: Australian Government total non-financial public sector cash flow
statement (continued)
(a)
Estimates
2023–24
2024–25
$m
$m
GFS cash surplus(+)/deficit(-)(c)
4,711
-34,356
plus Principal payments of lease liabilities(d)
-3,070
-2,968
Adjusted GFS cash surplus(+)/deficit(-)(d)
1,641
-37,323
a) A positive number denotes a cash inflow; a negative number denotes a cash outflow.
b) Consistent with the ABS GFS classification, other employee related payments are classified separately
from wages and salaries under other payments.
c) GFS cash surplus/deficit equals net cash flows from operating activities and investments in non-financial
assets.
d) Principal payments of lease liabilities, which are financing cash payments, are deducted in the
calculation of the GFS cash surplus/deficit to maintain consistency of measure following the
implementation of AASB 16.
| Budget Paper No. 1
Page 366 | Statement 10: Australian Government Budget Financial Statements
Table 10.10: Australian Government public financial corporations sector
operating statement
Estimates
2023–24
2024–25
$m
$m
Revenue
Grants and subsidies
233
252
Sales of goods and services
1,580
1,375
Interest income
11,116
9,974
Other
5
5
Total revenue
12,934
11,605
Expenses
Gross operating expenses
Wages and salaries(a)
320
360
Superannuation
51
41
Depreciation and amortisation
61
61
Supply of goods and services
995
1,155
Other operating expenses(a)
76
84
Total gross operating expenses
1,503
1,701
Interest expenses
18,324
12,101
Other property expenses
9
7
Current transfers
Tax expenses
9
9
Total current transfers
9
9
Total expenses
19,845
13,818
Net operating balance
-6,911
-2,213
Other economic flows
9,952
4,615
Comprehensive result – Total change in net worth
excluding contribution from owners
3,042
2,402
Net acquisition of non-financial assets
Purchases of non-financial assets
29
10
less Sales of non-financial assets
0
0
less Depreciation
61
61
plus Change in inventories
-56
0
plus Other movements in non-financial assets
0
0
Total net acquisition of non-financial assets
-88
-51
Fiscal balance (Net lending/borrowing)(b)
-6,823
-2,162
a) Consistent with the ABS GFS classification, other employee related expenses are classified separately
from wages and salaries under other operating expenses. Total employee expenses equal wages and
salaries plus other operating expenses.
b) The term fiscal balance is not used by the ABS.
Budget Paper No. 1 |
Statement 10: Australian Government Budget Financial Statements | Page 367
Table 10.11: Australian Government public financial corporations sector
balance sheet
(a)
Estimates
2023–24
2024–25
$m
$m
Assets
Financial assets
Cash and deposits
1,203
1,248
Investments, loans and placements
533,029
539,853
Other receivables
371
523
Equity investments
1,466
1,600
Total financial assets
536,068
543,225
Non-financial assets
Land and other fixed assets
906
908
Other non-financial assets(b)
66
66
Total non-financial assets
973
973
Total assets
537,041
544,198
Liabilities
Interest bearing liabilities
Deposits held
525,312
525,312
Borrowing
11,063
15,361
Total interest bearing liabilities
536,375
540,673
Provisions and payables
Superannuation liability
0
0
Other employee liabilities
194
195
Other payables
10,088
10,069
Other provisions(b)
2,586
2,888
Total provisions and payables
12,868
13,153
Total liabilities
549,243
553,825
Shares and other contributed capital
-12,202
-9,627
Net worth(c)
-12,202
-9,627
Net financial worth(d)
-13,175
-10,600
Net debt(e)
2,143
-429
a) Assumes no valuation or currency movement.
b) Excludes the impact of commercial taxation adjustments.
c) Under AASB 1049, net worth equals total assets minus total liabilities. Under the ABS GFS, net worth
equals total assets minus total liabilities minus shares and other contributed capital. The AASB 1049
method is used in this table.
d) Under AASB 1049, net financial worth equals total financial assets minus total liabilities. Under the
ABS GFS, net financial worth equals total financial assets minus total liabilities minus shares and other
contributed capital. The AASB 1049 method is used in this table.
e) Net debt is the sum of interest bearing liabilities less the sum of selected financial assets (cash and
deposits and investments, loans and placements).
| Budget Paper No. 1
Page 368 | Statement 10: Australian Government Budget Financial Statements
Table 10.12: Australian Government public financial corporations sector cash
flow statement
(a)
Estimates
2023–24
2024–25
$m
$m
Cash receipts from operating activities
Receipts from sales of goods and services
1,591
1,153
Grants and subsidies received
233
252
GST input credit receipts
3
2
Interest receipts
10,684
9,941
Other receipts
265
17
Total operating receipts
12,776
11,366
Cash payments for operating activities
Payments to employees(b)
-367
-403
Payment for goods and services
-1,133
-1,368
Interest paid
-18,452
-11,959
GST payments to taxation authority
-3
0
Distributions paid
-19
-17
Other payments(b)
-87
-84
Total operating payments
-20,062
-13,831
Net cash flows from operating activities
-7,286
-2,465
Cash flows from investments in non-financial assets
Sales of non-financial assets
0
0
Purchases of non-financial assets
-6
-10
Net cash flows from investments in non-financial assets
-6
-10
Net cash flows from investments in financial assets
for policy purposes
-748
-3,671
Net cash flows from investments in financial assets
for liquidity purposes(c)
87,655
1,275
Net cash flows from financing activities
Borrowing and deposits received (net)(c)
-73,217
4,793
Other financing (net)
-6,558
124
Net cash flows from financing activities
-79,775
4,917
Net increase/(decrease) in cash held
-159
45
Cash at the beginning of the year
1,362
1,203
Cash at the end of the year
1,203
1,248
GFS cash surplus(+)/deficit(-)(d)
-7,291
-2,475
plus Principal payments of lease liabilities(e)
-18
5
Adjusted GFS cash surplus(+)/deficit(-)(e)
-7,309
-2,470
a) A positive number denotes a cash inflow; a negative number denotes a cash outflow.
b) Consistent with the ABS GFS classification, other employee related payments are classified separately
from wages and salaries under other payments.
c) Assumes no cash flows associated with valuation or currency movements.
d) GFS cash surplus/deficit equals net cash flows from operating activities and investments in non-financial
assets.
e) Principal payments of lease liabilities, which are financing cash payments, are deducted in the
calculation of the GFS cash surplus/deficit to maintain consistency of measure following the
implementation of AASB 16.
Budget Paper No. 1 |
Statement 10: Australian Government Budget Financial Statements | Page 369
Notes to the general government sector financial statements
Note 1: External reporting standards and accounting policies
The Charter of Budget Honesty Act 1998 (the Charter) requires that the Budget be based on
external reporting standards and that departures from applicable external reporting
standards be identified.
The external standards used for budget reporting purposes are:
• the Australian Bureau of Statistics’ (ABS) accrual Government Finance Statistics (GFS)
publication, Australian System of Government Finance Statistics: Concepts, Sources and
Methods, 2015 (cat. no. 5514.0), which is based on the International Monetary Fund (IMF)
accrual GFS framework
• the Australian Accounting Standards (AAS), issued by the Australian Accounting
Standards Board (AASB), which includes International Financial Reporting Standards as
adopted in Australia for use by the not-for-profit sector and specific standards such as
AASB 1049 Whole of Government and General Government Sector Financial Reporting
(AASB 1049).
The financial statements have been prepared on an accrual basis that complies with both
the ABS GFS and AAS, except for departures disclosed at Note 2. A more detailed
description of the AAS and the ABS GFS frameworks, in addition to definitions of key
terms used in these frameworks, can be found in Appendix A. Detailed accounting policies,
as well as a set of notes and other disclosures as required by AAS, are disclosed in the
Australian Government Consolidated Financial Statements.
Fiscal reporting focuses on the general government sector (GGS). The GGS provides public
services that are mainly non-market in nature and for the collective consumption of the
community, or involve the transfer or redistribution of income. These services are largely
financed through taxes and other compulsory levies. This sector comprises all government
departments, offices and some other bodies. In preparing financial statements for the GGS,
all material transactions and balances between entities within the GGS have been
eliminated.
The Government’s key fiscal aggregates are based on the ABS GFS concepts and
definitions, including the ABS GFS cash surplus/deficit and net financial worth.
AASB 1049 requires the disclosure of other ABS GFS fiscal aggregates, including the net
operating balance, net lending/borrowing (fiscal balance) and net worth. In addition to
these ABS GFS aggregates, the Uniform Presentation Framework (UPF) requires disclosure
of net debt, net financial worth and net financial liabilities.
AASB 1049 and the UPF also provide a basis for reporting the public non-financial
corporations (PNFC) and public financial corporations (PFC) sectors and the total
non-financial public sector (NFPS).
| Budget Paper No. 1
Page 370 | Statement 10: Australian Government Budget Financial Statements
AASB 1049 requires disaggregated information, by ABS GFS function, for expenses and
total assets to be disclosed where they are reliably attributable. The ABS GFS does not
require total assets to be attributed to functions. In accordance with the ABS GFS,
disaggregated information for expenses and net acquisition of non-financial assets by
function is disclosed in Statement 6: Expenses and Net Capital Investment. In accordance with
the UPF, purchases of non-financial assets by function are also disclosed in Statement 6.
AASB 1055 Budgetary Reporting requires major variances between original budget estimates
and outcomes to be explained in the financial statements. Explanations of variances in fiscal
balance, revenue, expenses, net capital investment, cash flows, net debt, net financial worth
and net worth since the 2023–24 Budget are disclosed in the Statement 3: Fiscal Strategy and
Outlook, with decisions taken since the Mid-Year Economic and Fiscal Outlook 2023–24
(MYEFO) disclosed in Budget Paper No. 2 Budget Measures 2024–25. All policy decisions
taken between the 2023–24 Budget and the 2023–24 MYEFO are disclosed in Appendix A of
MYEFO.
Details of the Australian Government’s GGS contingent liabilities are disclosed in
Statement 9: Statement of Risks.
Note 2: Departures from external reporting standards
The Charter requires that departures from applicable external reporting standards be
identified. The major differences between AAS and the ABS GFS treatments of transactions
are outlined in Table 10.13.
AASB 1049 requires AAS measurement of items to be disclosed on the face of the financial
statements with reconciliation to the ABS GFS measurement of key fiscal aggregates, where
different, in notes to the financial statements. Only one measure of each aggregate has been
included on the face statements to avoid confusion.
Further information on the differences between the two systems is provided in the ABS
publication Australian System of Government Finance Statistics: Concepts, Sources and Methods,
2015 (cat. no. 5514.0).
Budget Paper No. 1 |
Statement 10: Australian Government Budget Financial Statements | Page 371
Table 10.13: Major differences between AAS and ABS GFS
Issue
AAS treatment
ABS GFS treatment
Treatment
adopted
Circulating coins –
seigniorage
The profit between the cost
and sale of circulating coins
(seigniorage) is treated as
revenue.
Circulating coins is treated as
a liability, and the cost of
producing the coins is treated
as an expense.
AAS
Valuation of loans
Changes in the valuation of
loans are treated as a revenue
or an expense.
In some circumstances
recognition as a revenue or an
expense is delayed until the
loan ends or is transferred.
Changes in the valuation of
loans (excluding mutually
agreed write-downs) are
treated as an ‘other
economic flow’.
ABS GFS
Timing recognition
of Boosting Cash
Flow for Employers
Expense recognition is based
on underlying economic
activity that gives rise to the
Cash Flow Boost payment.
Recognised when the
businesses receive payments
after submitting their activity
statements and having met all
requirements.
AAS
Leases
AASB 16 introduced a single
lease accounting framework
for lessees, which replaced the
distinction between operating
and finance leases. Right of
use assets and lease liabilities
are recognised on the balance
sheets for leases that were
previously accounted for as
operating expense.
The distinction between
operating leases and finance
leases is continued for
lessees.
AAS
Concessional loans
Concessional elements are
treated as an expense on initial
recognition and unwound over
the loan term.
Concessional elements are
treated as an ‘other economic
flow’.
AAS
Investment in other
public sector
entities
Valued at fair value in the
balance sheet as long as it can
be reliably measured,
otherwise net assets is
permissible.
Unlisted entities are valued
based on their net assets in
the balance sheet.
AAS
Provision for
restoration,
decommissioning
and make-good
Capitalised when the asset is
acquired.
Capitalised when make-good
activity takes place.
AAS
Renewable Energy
Certificates (RECs)
The issuance and registration
of RECs is considered to be an
administrative function and
does not result in the
recognition of assets or
liabilities and, consequently, no
revenue or expenses are
recognised.
The issuance and registration
of RECs is considered to be
government financial
transactions resulting in the
recognition of assets, liabilities,
revenue and expenses.
AAS
Dividends paid by
public corporations
Treated as an equity
distribution. Equity distributions
are treated as a distribution of
profits, as opposed to an
expense.
Dividends are treated as
an expense.
ABS GFS
| Budget Paper No. 1
Page 372 | Statement 10: Australian Government Budget Financial Statements
Table 10.13: Major differences between AAS and ABS GFS (continued)
Issue
AAS treatment
ABS GFS treatment
Treatment
adopted
Dividends paid by
the Reserve Bank
of Australia
Dividends are recognised in
the year profit was earned.
Dividends are recognised
when the Treasurer makes a
determination.
AAS
National Disability
Insurance Scheme
(NDIS) revenue
Funding contributions by the
state and territory governments
to NDIS are treated as sales of
goods and services revenue.
In-kind disability services
provided by the state and
territory governments are
treated as other revenue.
Funding contributions by the
state and territory governments
to NDIS are treated as grants
revenue.
In-kind disability services
provided by the state and
territory governments are
treated as sales of goods and
services revenue.
AAS
Commercial tax
effect accounting
assets and
liabilities
Corporations in the PNFC and
PFC sectors record tax
expenses on a commercial
basis.
Deferred tax assets and
liabilities are reversed so that
corporations record tax
expenses on a consistent
basis to the Australian
Taxation Office.
ABS GFS
Timing recognition
of vaccine expense
Recognised when vaccines are
delivered to the states and
territories.
Recognised when the vaccine
doses are administered.
Vaccine wastage after
distributions are recognised as
an ‘other economic flow’.
AAS
Regional
Broadband
Scheme
The revenue from the levy on
internet service providers
(ISPs) and the associated
subsidy expense to NBN Co
for the provision of regional
broadband services are
recorded separately on a gross
basis.
The revenue from the levy on
ISPs and the associated
subsidy expense to NBN Co
are recorded on a net basis.
AAS
Fiscal aggregates differences
Net worth of PNFC
and PFC sectors
Calculated as assets less
liabilities.
Calculated as assets less
liabilities less shares and other
contributed capital.
AAS
Net financial worth
of PNFC and PFC
sectors
Calculated as financial assets
less total liabilities.
Calculated as financial assets
less total liabilities less shares
and contributed capital.
AAS
Classification differences
Prepayments
Treated as a non-financial
asset.
Treated as a financial asset.
ABS GFS
Budget Paper No. 1 |
Statement 10: Australian Government Budget Financial Statements | Page 373
Table 10.13: Major differences between AAS and ABS GFS (continued)
Issue
AAS treatment
ABS GFS treatment
Treatment
adopted
Spectrum sales
Recognise non-financial asset
sale for fiscal balance when
licences take effect, which may
be after the auction of licences,
as this is regarded as the point
at which control is transferred.
Recognise cash at the time
of receipt.
Recognise non-financial asset
sale for fiscal balance at time
of auction as this is regarded
as the point at which control is
transferred. Recognise cash at
the time of receipt.
AAS
Classification of
Australian
Government
funding of
non-government
schools
Direct grants to states and
territories made in accordance
with bilateral agreements with
the Commonwealth and
consistent with section 96 of
the Constitution.
Personal benefit payments –
indirect included in goods and
services expenses.
AAS
| Budget Paper No. 1
Page 374 | Statement 10: Australian Government Budget Financial Statements
Note 3: Taxation revenue by type
Memorandum:
Total excise
30,020
31,250
32,670
34,110
35,420
Total customs duty
14,640
16,030
16,210
16,030
14,790
Capital gains tax(b)
26,400
23,600
23,800
24,800
26,100
a) ‘Other alcoholic beverages’ are those not exceeding 10 per cent by volume of alcohol (excluding beer,
brandy and wine).
b) ‘Capital gains tax’ is part of gross other individuals, company tax and superannuation fund taxes.
Estimates
2023-24
2024-25
2025-26
2026-27
2027-28
$m
$m
$m
$m
$m
Individuals and other withholding taxes
Gross income tax withholding
299,400
293,700
308,500
327,100
349,900
Gross other individuals
81,500
82,500
85,900
89,900
98,200
less: Refunds
37,500
40,600
41,700
42,800
44,300
Total individuals and other withholding tax
343,400
335,600
352,700
374,200
403,800
Fringe benefits tax
4,280
4,130
4,040
4,090
4,300
Company tax
144,900
141,200
136,000
146,400
153,000
Superannuation fund taxes
11,780
19,830
21,380
24,230
23,080
Petroleum resource rent tax
1,430
2,590
2,080
1,730
1,840
Income taxation revenue
505,790
503,350
516,200
550,650
586,020
Goods and services tax
90,180
92,070
97,290
103,050
109,000
Wine equalisation tax
1,090
1,150
1,220
1,280
1,350
Luxury car tax
1,290
1,110
1,200
1,270
1,330
Excise and Custom duty
Petrol
6,950
7,150
7,550
7,800
8,000
Diesel
16,210
17,040
17,750
18,620
19,370
Other fuel products
2,120
2,190
2,230
2,280
2,340
Tobacco
10,500
11,550
11,500
11,100
10,700
Beer
2,650
2,660
2,870
3,020
3,190
Spirits
3,370
3,590
3,770
3,970
4,170
Other alcoholic beverages(a)
1,680
1,750
1,810
1,910
2,010
Other customs duty
Textiles, clothing and footwear
160
170
170
190
150
Passenger motor vehicles
380
380
370
330
110
Other imports
1,490
1,530
1,590
1,650
900
less: Refunds and drawbacks
850
730
730
730
730
Total excise and customs duty
44,660
47,280
48,880
50,140
50,210
Major bank levy
1,660
1,740
1,800
1,880
1,980
Agricultural levies
618
627
645
641
645
Visa application charges
3,290
3,882
4,096
4,315
4,484
Other taxes
7,461
7,753
8,139
7,945
7,970
Mirror taxes
838
878
920
970
1,021
less: Transfers to states in relation to
mirror tax revenue
838
878
920
970
1,021
Mirror tax revenue
0
0
0
0
0
Indirect taxation revenue
150,249
155,612
163,269
170,520
176,970
Taxation revenue
656,039
658,962
679,469
721,170
762,990
Budget Paper No. 1 |
Statement 10: Australian Government Budget Financial Statements | Page 375
Note 3(a): Taxation revenue by source
Note 4: Sales of goods and services revenue
Estimates
2023-24
2024-25
2025-26
2026-27
2027-28
$m
$m
$m
$m
$m
Taxes on income, profits and capital gains
Income and capital gains levied on individuals
347,680
339,730
356,740
378,290
408,100
Income and capital gains levied on enterprises
158,110
163,620
159,460
172,360
177,920
Total taxes on income, profits and
capital gains
505,790
503,350
516,200
550,650
586,020
Taxes on employers’ payroll and labour force
1,943
2,087
2,252
2,106
2,179
Taxes on the provision of goods and services
Sales/goods and services tax
92,560
94,330
99,710
105,600
111,680
Excises and levies
30,638
31,877
33,315
34,751
36,065
Taxes on international trade
14,640
16,030
16,210
16,030
14,790
Total taxes on the provision of
goods and services
137,838
142,237
149,235
156,381
162,535
Taxes on the use of goods and performance of
activities
10,468
11,288
11,782
12,033
12,255
Total taxation revenue
656,039
658,962
679,469
721,170
762,990
Estimates
2023-24
2024-25
2025-26
2026-27
2027-28
$m
$m
$m
$m
$m
Sales of goods
1,487
1,508
1,568
1,653
1,687
Rendering of services
15,596
16,818
17,751
18,367
18,877
Lease rental
397
368
443
458
492
Fees from regulatory services
2,793
2,942
2,793
3,047
2,812
Total sales of goods and services revenue
20,274
21,636
22,555
23,525
23,869
| Budget Paper No. 1
Page 376 | Statement 10: Australian Government Budget Financial Statements
Note 5: Interest and dividend and distribution revenue
Estimates
2023-24
2024-25
2025-26
2026-27
2027-28
$m
$m
$m
$m
$m
Interest from other governments
State and territory debt
15
11
10
8
4
Housing agreements
67
62
57
53
48
Total interest from other governments
82
73
67
60
52
Interest from other sources
Advances
821
807
1,177
1,620
1,968
Deposits
3,654
2,974
2,141
2,079
2,168
Indexation of HELP receivable and other
student loans
2,139
1,335
1,273
1,226
1,230
Other
4,435
5,088
5,339
5,588
5,919
Total interest from other sources
11,049
10,203
9,930
10,513
11,286
Total interest
11,131
10,276
9,998
10,573
11,338
Dividends and distributions
Dividends from other public sector entities
266
258
255
243
273
Other dividends and distributions
5,532
6,557
6,933
7,309
7,755
Total dividends and distributions
5,798
6,815
7,188
7,552
8,029
Total interest and dividend and
16,929
17,091
17,185
18,125
19,366
distribution revenue
Note 6: Other sources of non-taxation revenue
Estimates
2023-24
2024-25
2025-26
2026-27
2027-28
$m
$m
$m
$m
$m
Industry contributions
84
90
110
115
120
Royalties
1,056
958
756
596
568
Seigniorage
62
52
47
44
44
Other
12,433
12,715
12,617
12,663
12,671
Total other sources of non-taxation revenue
13,635
13,815
13,531
13,418
13,403
Budget Paper No. 1 |
Statement 10: Australian Government Budget Financial Statements | Page 377
Note 7: Employee and superannuation expense
Note 8: Depreciation and amortisation expense
Estimates
2023-24
2024-25
2025-26
2026-27
2027-28
$m
$m
$m
$m
$m
Depreciation
Specialist military equipment
5,020
4,887
5,002
5,119
5,238
Buildings
4,011
4,021
4,050
4,056
4,070
Other infrastructure, plant and equipment
2,622
2,798
2,872
2,952
2,951
Heritage and cultural assets
65
66
67
67
67
Other
5
5
5
5
4
Total depreciation(a)
11,725
11,777
11,996
12,198
12,331
Total amortisation
1,165
1,227
1,205
1,182
1,170
Total depreciation and amortisation expense
12,889
13,003
13,200
13,380
13,501
Memorandum:
Depreciation relating to right of use assets
Specialist military equipment
31
31
31
31
31
Buildings
2,354
2,347
2,244
2,213
2,166
Other infrastructure, plant and equipment
279
291
291
288
281
Other
5
5
5
5
4
Total depreciation of right of use assets
2,670
2,675
2,571
2,536
2,483
a) Includes depreciation of right of use (leased) assets, resulting from implementation of AASB 16.
.
Estimates
2023-24
2024-25
2025-26
2026-27
2027-28
$m
$m
$m
$m
$m
Wages and salaries expenses
27,326
29,440
29,282
29,256
29,659
Other operating expenses
Leave and other entitlements
3,362
3,580
3,583
3,643
3,738
Separations and redundancies
58
105
85
87
87
Workers compensation premiums and claims
2,765
3,238
7,682
5,136
5,261
Other
3,063
3,003
3,091
3,318
3,328
Total other operating expenses
9,248
9,925
14,442
12,184
12,414
Superannuation expenses
Superannuation
9,042
8,301
8,560
8,989
9,315
Superannuation interest cost
13,374
14,620
15,126
15,610
16,054
Total superannuation expenses
22,416
22,921
23,687
24,599
25,369
Total employee and superannuation expense
58,989
62,286
67,411
66,039
67,442
| Budget Paper No. 1
Page 378 | Statement 10: Australian Government Budget Financial Statements
Note 9: Supply of goods and services expense
Note 10: Interest expense
Estimates
2023-24
2024-25
2025-26
2026-27
2027-28
$m
$m
$m
$m
$m
Interest on debt
Government securities(a)
22,533
24,083
28,259
32,422
35,733
Loans
146
165
202
262
249
Other
1,133
873
847
850
866
Total interest on debt
23,813
25,120
29,309
33,533
36,849
Interest on lease liabilities
422
419
412
403
417
Other financing costs
3,433
7,875
4,579
5,149
3,925
Total interest expense
27,667
33,414
34,300
39,085
41,190
a) Public debt interest estimates are calculated using the contract interest rates incurred on existing
Australian Government Securities (AGS), previously referred to as Commonwealth Government
Securities, when issued and on technical assumptions, based on prevailing market interest rates across
the yield curve, for yields on future AGS issuance.
Estimates
2023-24
2024-25
2025-26
2026-27
2027-28
$m
$m
$m
$m
$m
Supply of goods and services
50,641
56,804
57,637
56,145
58,674
Lease expenses
196
229
191
212
316
Personal benefits – indirect
135,652
146,289
157,575
165,933
174,536
Health care payments
5,506
5,492
5,585
5,689
5,826
Other
2,978
2,880
2,806
2,968
4,236
Total supply of goods and services expense
194,974
211,694
223,794
230,947
243,589
Budget Paper No. 1 |
Statement 10: Australian Government Budget Financial Statements | Page 379
Note 11: Current and capital grants expense
Estimates
2023-24
2024-25
2025-26
2026-27
2027-28
$m
$m
$m
$m
$m
Current grants expense
State and territory governments
159,102
167,269
172,099
180,040
187,753
Private sector
6,193
6,650
5,669
5,172
4,598
Overseas
4,342
5,139
4,479
4,768
4,973
Non-profit organisations
14,194
14,382
13,093
12,510
12,989
Multi-jurisdictional sector
12,778
13,840
14,476
14,795
15,334
Other
6,586
1,634
6,282
6,382
6,307
Total current grants expense
203,194
208,915
216,098
223,666
231,953
Capital grants expense
Mutually agreed write-downs
3,039
5,137
3,318
3,510
3,726
Other capital grants
State and territory governments
15,598
17,755
16,789
15,828
13,655
Local governments
1,372
907
1,007
900
947
Non-profit organisations
647
1,252
902
820
552
Private sector
50
78
66
58
116
Multi-jurisdictional sector
0
4
0
0
0
Overseas
3
5
0
0
0
Other
168
226
251
381
529
Total capital grants expense
20,877
25,364
22,334
21,497
19,525
Total grants expense
224,072
234,278
238,433
245,164
251,478
Note 12: Personal benefits expense
Estimates
2023-24
2024-25
2025-26
2026-27
2027-28
$m
$m
$m
$m
$m
Social welfare – assistance to the aged
59,160
61,633
64,404
67,091
69,953
Assistance to veterans and dependants
4,498
4,383
4,271
4,156
4,057
Assistance to people with disabilities
32,306
33,673
35,032
36,295
38,016
Assistance to families with children
29,369
31,231
32,944
34,168
34,702
Assistance to the unemployed
14,737
16,100
16,562
16,760
16,297
Student assistance
2,729
2,909
3,038
3,165
3,310
Other welfare programs
833
938
966
962
947
Financial and fiscal affairs
1,118
1,200
1,290
1,109
1,121
Vocational and industry training
213
381
397
251
233
Other
7,906
8,604
12,306
15,706
22,964
Total personal benefits expense
152,866
161,051
171,210
179,664
191,598
| Budget Paper No. 1
Page 380 | Statement 10: Australian Government Budget Financial Statements
Note 13: Advances paid and other receivables
Estimates
2023-24
2024-25
2025-26
2026-27
2027-28
$m
$m
$m
$m
$m
Advances paid
Loans to state and territory governments
1,544
1,428
1,300
1,121
951
Student loans
48,623
47,329
48,661
50,440
52,549
Other
18,018
25,705
35,031
44,555
53,149
less Impairment allowance
646
1,268
1,400
1,482
1,558
Total advances paid
67,539
73,193
83,592
94,634
105,091
Other receivables
Goods and services receivable
1,518
1,547
1,564
1,587
1,578
Recoveries of benefit payments
6,379
6,566
6,745
6,874
6,949
Taxes receivable
44,026
48,933
54,024
59,548
65,671
Prepayments
6,278
6,468
6,788
7,028
7,483
Other
25,123
25,442
26,421
27,439
28,644
less Impairment allowance
4,219
4,318
4,414
4,505
4,590
Total other receivables
79,105
84,638
91,128
97,971
105,736
Note 14: Investments, loans and placements
Estimates
2023-24
2024-25
2025-26
2026-27
2027-28
$m
$m
$m
$m
$m
Investments – deposits
6,318
5,749
5,299
5,034
5,001
IMF quota and SDR holdings
23,638
23,643
23,643
23,728
23,814
Structured finance securities
416
775
869
969
1,068
Collective investment vehicles
120,469
126,832
133,568
141,756
150,503
Other interest bearing securities
62,414
63,367
64,398
65,535
66,810
Other
29,272
29,223
29,610
30,491
30,955
Total investments, loans and placements
242,528
249,588
257,386
267,513
278,151
Budget Paper No. 1 |
Statement 10: Australian Government Budget Financial Statements | Page 381
Note 15: Non-financial assets
Estimates
2023-24
2024-25
2025-26
2026-27
2027-28
$m
$m
$m
$m
$m
Land and buildings
Land
13,506
13,473
13,399
13,481
13,643
Buildings
50,673
52,246
53,585
55,466
57,806
Total land and buildings
64,178
65,719
66,983
68,947
71,449
Plant, equipment and infrastructure
Specialist military equipment
89,424
92,193
95,262
99,277
106,977
Other plant, equipment and infrastructure
20,620
22,142
23,550
25,034
25,703
Total plant, equipment and infrastructure
110,044
114,335
118,812
124,311
132,680
Inventories
Inventories held for sale
409
385
389
371
361
Inventories not held for sale
11,354
11,622
12,216
12,724
13,056
Total inventories
11,763
12,007
12,605
13,095
13,417
Intangibles
Computer software
6,721
7,825
8,324
8,422
8,403
Other
5,977
6,455
6,767
6,768
6,762
Total intangibles
12,697
14,280
15,091
15,190
15,165
Total investment properties
220
227
227
227
227
Total biological assets
5
5
5
5
5
Total heritage and cultural assets
12,664
12,687
12,685
12,683
12,684
Total assets held for sale
102
94
89
89
89
Total other non-financial assets
14
9
9
9
9
Total non-financial assets(a)
211,687
219,362
226,506
234,556
245,726
Memorandum:
Total relating to right of use assets
Land
150
146
141
137
134
Buildings
15,789
15,189
14,171
13,429
12,738
Specialist military equipment
279
281
282
284
286
Other plant, equipment and infrastructure
1,236
1,086
964
790
1,154
Total right of use assets
17,454
16,702
15,559
14,641
14,312
a) Includes right of use (leased) assets, resulting from implementation of AASB 16.
| Budget Paper No. 1
Page 382 | Statement 10: Australian Government Budget Financial Statements
Note 16: Loans
Note 17: Employee and superannuation liabilities
Estimates
2023-24
2024-25
2025-26
2026-27
2027-28
$m
$m
$m
$m
$m
Total superannuation liability(a)
294,654
304,384
314,814
323,741
332,739
Other employee liabilities
Leave and other entitlements
9,900
10,193
10,435
10,672
10,894
Accrued salaries and wages
845
922
990
1,005
669
Workers compensation claims
1,984
1,998
2,010
2,026
2,048
Military compensation
28,873
28,094
28,950
29,823
30,695
Other
625
642
657
670
686
Total other employee liabilities
42,228
41,848
43,042
44,195
44,992
Total employee and
superannuation liabilities
336,882
346,232
357,856
367,936
377,732
a) For budget reporting purposes, a discount rate of 5.0 per cent determined by actuaries in preparing the
2020 Long Term Cost Reports is used to value the superannuation liability. This reflects the average
annual rate estimated to apply over the term of the liability and it reduces the volatility in reported
liabilities that would occur from year to year if the spot rates on long-term government bonds were used.
Consistent with AAS, the superannuation liability for the 2022–23 Final Budget Outcome (FBO) was
calculated using the spot rates on long-term government bonds as at 30 June 2023 that best matched
each individual scheme’s liability duration. These rates were between 4.0 and 4.4 per cent per annum.
Estimates
2023-24
2024-25
2025-26
2026-27
2027-28
$m
$m
$m
$m
$m
Promissory notes
9,444
9,356
9,356
9,356
9,356
Special drawing rights
19,047
19,051
19,051
19,051
19,051
Other
3,282
3,953
4,972
5,380
5,372
Total loans
31,772
32,360
33,379
33,786
33,779
Budget Paper No. 1 |
Statement 10: Australian Government Budget Financial Statements | Page 383
Note 18: Provisions and payables
Estimates
2023-24
2024-25
2025-26
2026-27
2027-28
$m
$m
$m
$m
$m
Suppliers payables
Trade creditors
8,424
8,567
8,882
9,153
9,577
Lease rental payable
1
1
1
1
1
Personal benefits payables – indirect
1,948
2,056
1,910
1,918
2,011
Other creditors
2,933
2,958
2,961
2,971
2,984
Total suppliers payables
13,305
13,582
13,753
14,042
14,573
Total personal benefits payables – direct
3,991
4,096
4,598
4,570
4,406
Total subsidies payable
550
535
528
519
519
Grants payables
State and territory governments
325
192
183
174
179
Non-profit organisations
556
554
555
554
557
Private sector
253
247
247
247
247
Overseas
1,521
2,177
1,767
1,477
1,645
Local governments
0
0
0
0
0
Other
1,003
1,007
1,009
1,005
1,006
Total grants payables
3,658
4,178
3,761
3,457
3,633
Total other payables
7,115
4,797
4,886
4,912
4,922
Provisions
Provisions for tax refunds
2,214
2,204
2,194
2,184
2,174
Grants provisions
14,134
10,166
7,342
4,308
3,855
Personal benefits provisions – direct
6,704
6,787
6,875
6,941
6,974
Personal benefits provisions – indirect
4,257
4,827
5,419
6,065
6,759
Provisions for subsidies
7,621
7,855
8,088
8,412
8,740
Other
34,856
40,154
40,886
41,604
41,437
Total provisions
69,787
71,994
70,804
69,513
69,940
| Budget Paper No. 1
Page 384 | Statement 10: Australian Government Budget Financial Statements
Note 19: Reconciliation of cash
Estimates
2023-24
2024-25
2025-26
2026-27
2027-28
$m
$m
$m
$m
$m
Net operating balance (revenues less expenses)
15,807
-23,014
-34,550
-17,526
-10,127
less Revenues not providing cash
Other
3,004
2,884
3,180
3,286
3,478
Total revenues not providing cash
3,004
2,884
3,180
3,286
3,478
plus Expenses not requiring cash
Increase/(decrease) in employee entitlements
9,100
9,103
11,376
9,826
9,567
Depreciation/amortisation expense
12,889
13,003
13,200
13,380
13,501
Mutually agreed write-downs
3,039
5,137
3,318
3,510
3,726
Other
4,057
8,112
5,400
7,839
4,238
Total expenses not requiring cash
29,085
35,355
33,294
34,555
31,032
plus Cash provided/(used) by working
capital items
Decrease/(increase) in inventories
-563
-717
-1,098
-1,017
-878
Decrease/(increase) in receivables
-13,654
-14,538
-15,130
-16,190
-17,537
Decrease/(increase) in other financial assets
-587
373
-707
-585
-858
Decrease/(increase) in other non-financial
assets
596
969
2
184
-78
Increase/(decrease) in benefits, subsidies and
grants payable
2,017
-2,591
-1,786
-2,159
515
Increase/(decrease) in suppliers’ liabilities
146
-425
8
145
119
Increase/(decrease) in other provisions and
payables
-1,532
1,064
1,371
1,672
2,017
Net cash provided/(used) by working capital
-13,577
-15,865
-17,340
-17,950
-16,700
equals (Net cash from/(to) operating activities)
28,312
-6,408
-21,777
-4,207
725
plus (Net cash from/(to) investing activities)
-36,014
-42,253
-44,036
-45,720
-46,151
Net cash from operating activities and
investment
-7,702
-48,662
-65,813
-49,927
-45,425
plus (Net cash from/(to) financing activities)
7,300
21,348
61,348
47,029
40,524
equals Net increase/(decrease) in cash
-402
-27,314
-4,465
-2,899
-4,902
Cash at the beginning of the year
89,713
89,311
61,997
57,532
54,634
Net increase/(decrease) in cash
-402
-27,314
-4,465
-2,899
-4,902
Cash at the end of the year
89,311
61,997
57,532
54,634
49,732
Budget Paper No. 1 |
Statement 10: Australian Government Budget Financial Statements | Page 385
Appendix A: Financial reporting standards
and budget concepts
The Budget primarily focuses on the financial performance and position of the general
government sector (GGS). The GGS provides public services that are mainly non-market in
nature and for the collective consumption of the community, or involve the transfer or
redistribution of income. These services are largely financed through taxes and other
compulsory levies. AASB 1049 recognises the GGS as a reporting entity.
AASB 1049 Conceptual framework
AASB 1049 seeks to ‘harmonise’ the ABS GFS and AAS.
The reporting framework for AASB 1049 requires the preparation of accrual-based general
purpose financial reports, showing government assets, liabilities, revenue, expenses and
cash flows. GGS reporting under AASB 1049 aims to provide users with information about
the stewardship of each government in relation to its GGS and accountability for the
resources entrusted to it; information about the financial position, performance and cash
flows of each government’s GGS; and information that facilitates assessments of the
macroeconomic impact. AASB 1049 also provides a basis for whole-of-government
reporting, including for the PNFC and PFC sectors.
AASB 1049 has adopted the AAS conceptual framework and principles for the recognition
of assets, liabilities, revenues and expenses and their presentation, measurement and
disclosure. In addition, AASB 1049 has broadly adopted the ABS GFS conceptual
framework for presenting government financial statements. In particular, AASB 1049
requires the GGS to prepare a separate set of financial statements, overriding AASB 10
Consolidated Financial Statements. AASB 1049 also follows the ABS GFS by requiring changes
in net worth to be split into either transactions or ‘other economic flows’ and for this to be
presented in a single operating statement. AASB 1049 is therefore broadly consistent with
international statistical standards and the International Monetary Fund’s (IMF) Government
Finance Statistics Manual 2014.
41
—
41
Additional information on the Australian accrual GFS framework is available in the ABS
publication Australian System of Government Finance Statistics: Concepts, Sources and
Methods, 2015 (cat. no. 5514.0).
| Budget Paper No. 1
Page 386 | Statement 10: Australian Government Budget Financial Statements
All financial data presented in the financial statements are recorded as either stocks
(assets and liabilities) or flows (classified as either transactions or ‘other economic flows’).
Transactions result from a mutually agreed interaction between economic entities.
Despite their compulsory nature, taxes are transactions deemed to occur by mutual
agreement between the government and the taxpayer. Transactions that increase or
decrease net worth (assets less liabilities) are reported as revenues and expenses
respectively in the operating statement.
42
A change to the value or volume of an asset or liability that does not result from a
transaction is an ‘other economic flow’. This can include changes in values from market
prices, most actuarial valuations and exchange rates, and changes in volumes from
discoveries, depletion and destruction. All ‘other economic flows’ are reported in the
operating statement.
Consistent with the ABS GFS framework, and in general AAS, the financial statements
record flows in the period in which they occur. As a result, prior period outcomes may be
revised for classification changes relating to information that could reasonably have been
expected to be known in the past, is material in at least one of the affected periods and can
be reliably assigned to the relevant period(s).
Operating statement
The operating statement presents details of transactions in revenues, expenses, the net
acquisition of non-financial assets (net capital investment) and other economic flows for an
accounting period.
Revenues arise from transactions that increase net worth and expenses arise from
transactions that decrease net worth. Revenues less expenses gives the net operating
balance. The net operating balance is similar to the National Accounts concept of
government saving plus capital transfers.
The net acquisition of non-financial assets (net capital investment) equals gross fixed capital
formation, less depreciation, plus changes (investment) in inventories, plus other
transactions in non-financial assets.
‘Other economic flows’ are presented in the operating statement and outline changes in net
worth that are driven by economic flows other than revenues and expenses. Revenues,
expenses and ‘other economic flows’ sum to the total change in net worth during a period.
The majority of ‘other economic flows’ for the Australian Government GGS arise from price
movements in its assets and liabilities.
—
42
Not all transactions impact net worth. For example, transactions in financial assets and
liabilities do not impact net worth as they represent the swapping of assets and liabilities
on the balance sheet.
Budget Paper No. 1 |
Statement 10: Australian Government Budget Financial Statements | Page 387
Net operating balance
The net operating balance is the excess of revenue from transactions over expenses from
transactions. The net operating balance excludes expenditure on the acquisition of capital
assets but includes non-cash costs such as accruing superannuation entitlements and the
consumption of capital (depreciation). By including all accruing costs, including
depreciation, the net operating balance encompasses the full current cost of providing
government services. This makes it a measure of the sustainability of the government’s
fiscal position over time and provides an indication of the sustainability of the existing level
of government services.
Fiscal balance
The fiscal balance (or net lending/borrowing) is the net operating balance less net capital
investment. The fiscal balance includes the impact of net expenditure (effectively purchases
less sales) on non-financial assets rather than consumption (depreciation) of non-financial
assets.
43
The fiscal balance measures the Australian Government’s investment-saving balance.
It measures in accrual terms the gap between government savings plus net capital transfers
and investment in non-financial assets. As such, it approximates the contribution of the
Australian Government GGS to the balance on the current account in the balance of
payments.
Balance sheet
The balance sheet shows stocks of assets, liabilities and net worth. In accordance with the
UPF, net debt, net financial worth and net financial liabilities are also reported in the
balance sheet.
Net worth
The net worth of the GGS, PNFC and PFC sectors is defined as assets less liabilities.
This differs from the ABS GFS definition for the PNFC and PFC sectors where net worth is
defined as assets less liabilities less shares and other contributed capital. Net worth is an
economic measure of wealth, reflecting the Australian Government’s contribution to the
wealth of Australia.
—
43
The net operating balance includes consumption of non-financial assets because depreciation
is an expense. Depreciation is deducted in the calculation of net capital investment as the full
investment in non-financial assets is included in the calculation of fiscal balance.
| Budget Paper No. 1
Page 388 | Statement 10: Australian Government Budget Financial Statements
Net financial worth
Net financial worth measures a government’s net holdings of financial assets. It is
calculated from the balance sheet as financial assets minus liabilities. This differs from the
ABS GFS definition of net financial worth for the PNFC and PFC sectors, defined as
financial assets, less liabilities, less shares and other contributed capital. Net financial worth
is a broader measure than net debt, in that it incorporates provisions made (such as
superannuation) as well as equity holdings. Net financial worth includes all classes of
financial assets and all liabilities, only some of which are included in net debt.
As non-financial assets are excluded from net financial worth, this is a narrower measure
than net worth. However, it avoids the concerns inherent with the net worth measure
relating to the valuation of non-financial assets and their availability to offset liabilities.
Net financial liabilities
Net financial liabilities comprises total liabilities less financial assets but excludes equity
investments in the other sectors of the jurisdiction. Net financial liabilities is a more
accurate indicator than net debt of a jurisdiction’s fiscal position as it includes substantial
non-debt liabilities such as accrued superannuation and long service leave entitlements.
Excluding the net worth of other sectors of government results in a purer measure of
financial worth than net financial worth as, in general, the net worth of other sectors of
government, in particular the PNFC sector, is backed by physical assets.
Net debt
Net debt is the sum of interest bearing liabilities less the sum of selected financial assets
(cash and deposits, advances paid and investments, loans and placements). Financial assets
include the Future Fund’s investments in interest bearing securities and collective
investment vehicles (CIVs). CIVs enable investors to pool their money and invest the
pooled funds, rather than buying securities directly. Net debt does not include
superannuation related liabilities. Net debt is a common measure of the strength of a
government’s financial position. High levels of net debt impose a call on future revenue
flows to service that debt.
The 2015 ABS GFS Manual presents debt in a matrix format, with no single net debt
aggregate identified. The Australian Government continues to report net debt in
accordance with the UPF as described above.
Budget Paper No. 1 |
Statement 10: Australian Government Budget Financial Statements | Page 389
Cash flow statement
The cash flow statement identifies how cash is generated and applied in a single accounting
period. The cash flow statement reflects a cash basis of recording (rather than an accrual
basis) where information is derived indirectly from underlying accrual transactions and
movements in balances. This, in effect, means that transactions are captured when cash is
received or when cash payments are made. Cash transactions are specifically identified
because cash management is considered an integral function of accrual budgeting.
Underlying cash balance
The underlying cash balance is the cash counterpart of the fiscal balance, reflecting the
Australian Government’s cash investment-saving balance.
For the GGS, the underlying cash balance is calculated as shown below:
Net cash flows from operating activities
plus
Net cash flows from investments in non-financial assets
equals
ABS GFS cash surplus/deficit
plus
Principal payments of lease liabilities
equals
Underlying cash balance
Under the Future Fund Act 2006, earnings are required to be reinvested to meet the
Government’s future public sector superannuation liabilities. The Government excluded
net Future Fund cash earnings from the calculation of the underlying cash balance between
2005–06 and 2019–20. From 2020–21 onwards, net Future Fund cash earnings have been
included in the calculation of the underlying cash balance because the Future Fund became
available to meet the Government’s superannuation liabilities from this year.
In contrast, net Future Fund earnings have been included in the net operating balance and
fiscal balance for all years because superannuation expenses relating to future cash
payments are recorded in the net operating balance and fiscal balance.
Net Future Fund earnings are separately identified in the historical tables in Statement 11:
Historical Australian Government Data.
| Budget Paper No. 1
Page 390 | Statement 10: Australian Government Budget Financial Statements
Headline cash balance
The headline cash balance is calculated by adding net cash flows from investments in
financial assets for policy purposes to the underlying cash balance.
Net cash flows from investments in financial assets for policy purposes include equity
transactions and advances paid. Equity transactions include equity injections into
controlled businesses and privatisations of government businesses. Advances paid include
net loans to the states and net loans to students.
Sectoral classifications
To assist in analysing the public sector, data are presented by institutional sector as shown
in Figure A10.1. The ABS GFS defines the GGS, PNFC and PFC sectors. AASB 1049 has also
adopted this sectoral reporting.
Figure A10.1: Institutional structure of the public sector
Total public sector
Public financial corporations
sector
Total non-financial
public sector
(Includes Reserve Bank of
Australia and other
borrowing authorities)
General government sector
Public non-financial
corporations sector
(Government departments and
agencies that provide
non-market public services, or
involve the transfer or
redistribution of income, and are
funded mainly through taxes)
(Provide goods and services to
consumers on a commercial
basis, are funded largely by the
sale of these goods and
services and are generally
legally distinguishable from the
governments that own them)
All entities are classified as GGS entities except for the following list of portfolio entities
that are classified as PFC or PNFC (Table A10.1).
A table which provides a full list of public sector principal entities under the current
portfolio structure is available on the Department of Finance website at
https://www.finance.gov.au/government/managing-commonwealth-resources/structure
-australian-government-public-sector/pgpa-act-flipchart-and-list.
Budget Paper No. 1 |
Statement 10: Australian Government Budget Financial Statements | Page 391
Table A10.1: Entities outside of the general government sector – 2023–24
Public financial corporations
Employment and Workplace Relations Portfolio
• Coal Mining Industry (Long Service Leave Funding) Corporation
Foreign Affairs and Trade Portfolio
• Export Finance and Insurance Corporation (Export Finance Australia)
Industry, Science and Resources Portfolio
• CSIRO Coinvestment Fund Pty Ltd
• CSIRO FollowOn Services Pty Ltd
• CSIRO FollowOn Services 2 Pty Ltd
• CSIRO General Partner Pty Ltd
• CSIRO General Partner 2 Pty Ltd
• CSIROGP Fund 2 Pty Ltd
• MS GP Fund 3 Pty Ltd
• MS NGS Pty Ltd
• MS Opportunity Fund Pty Ltd
• MS Parallel Fund Pty Ltd
Treasury Portfolio
• Australian Reinsurance Pool Corporation
• Housing Australia*
• Reserve Bank of Australia
| Budget Paper No. 1
Page 392 | Statement 10: Australian Government Budget Financial Statements
Table A10.1: Entities outside of the general government sector – 2023–24
(continued)
Public non-financial corporations
Climate Change, Energy, the Environment and Water Portfolio
• Snowy Hydro Limited
Finance Portfolio
†
• ASC Pty Ltd
• Australian Naval Infrastructure Pty Ltd
Industry, Science and Resources Portfolio
• ANSTO Nuclear Medicine Pty Ltd
‡
Infrastructure, Transport, Regional Development, Communications and the Arts
Portfolio
• Airservices Australia
• Australian Postal Corporation (Australia Post)
• Australian Rail Track Corporation Limited
• National Intermodal Corporation Limited
• NBN Co Limited
• WSA Co Ltd
Prime Minister and Cabinet Portfolio
• Voyages Indigenous Tourism Australia Pty Ltd
Social Services Portfolio
• Australian Hearing Services (Hearing Australia)
* In October 2023, the National Housing Finance and Investment Corporation was renamed Housing
Australia. Housing Australia, a corporate Commonwealth entity, operates an affordable housing bond
aggregator to encourage greater private and institutional investment and provide cheaper and longer
term finance to registered providers of affordable housing. The Housing Australia Bond Aggregator is a
PFC. Housing Australia also administers the National Housing Infrastructure Facility (the Facility).
The Facility is included in the GGS.
†
On 28 July 2023, the Australian Government acquired a non-controlling (minority) ownership interest in
CEA Technologies Pty Limited (CEA). The Australian Government’s ownership interest in CEA will
increase in 2024-25, and CEA will become majority owned Commonwealth company from 2024-25.
‡
ANSTO Nuclear Medicine Pty Ltd is scheduled to cease before 30 June 2024.
Statement 10: Australian Government Budget Financial Statements | Page 393
Appendix B: Assets and Liabilities
Overview
This appendix provides an overview and commentary on Statement 10: Australian
Government Budget Financial Statements including estimates of the Australian Government’s
budgeted assets and liabilities at 30 June for the current year, budget year and three
forward years.
Changes in the balance sheet reflect movements in the budgeted operating result and
balance sheet transactions.
A more detailed explanation of major assets and liabilities held by Commonwealth entities,
which form part of the Australian Government’s balance sheet, can be found in the
Commonwealth Balance Sheet User Guide, published on the Finance website.
Further information on the Government’s fiscal strategy in relation to the balance sheet can
be found in Statement 3: Fiscal Strategy and Outlook.
The Australian Government’s assets and liabilities
Assets
The Government’s total assets were $790.3 billion at 30 June 2023, and are estimated to be
$825.9 billion at 30 June 2024 and $963.2 billion at 30 June 2028.
| Budget Paper No. 1
Page 394 | Statement 10: Australian Government Budget Financial Statements
The composition of Australian Government GGS assets at 30 June 2024 is presented below
in Chart 10B.1.
Chart 10B.1: Australian Government GGS asset composition
Note: Other financial assets includes cash and deposits and other receivables.
Australian Government assets over the forward estimates
The Government’s total assets are expected to grow over the forward estimates due to
increased advances paid, investments and acquisitions of non-financial assets.
Budget Paper No. 1 |
Statement 10: Australian Government Budget Financial Statements | Page 395
The budgeted composition of assets on the Australian Government’s balance sheet is
provided in Chart 10B.2 below.
Chart 10B.2: Australian Government assets over the forward estimates
Note: Other financial assets includes cash and deposits and other receivables.
| Budget Paper No. 1
Page 396 | Statement 10: Australian Government Budget Financial Statements
Financial assets
The Government’s financial assets are estimated to be $614.2 billion at 30 June 2024,
increasing to $717.5 billion by 30 June 2028.
Chart 10B.3: Financial assets over the forward estimates
Advances paid
Advances paid is comprised of the Higher Education Loan Program and other student loan
schemes and loans to state and territory governments. The value of advances paid is
estimated to grow over the forward estimates predominantly due to expected growth in
student loans.
Further details on loans made by the Government are provided in Statement 9: Statement
of Risks.
Investments, loans and placements
Investments, loans and placements is predominantly comprised of investments held in
relation to the Australian Government Investment Funds, which includes the Future Fund,
as well as by other entities, such as the Australian Office of Financial Management, the
Treasury and specialist investment vehicles.
Specialist investment vehicles include for example the National Reconstruction Fund
Corporation, Clean Energy Finance Corporation, Northern Australia Infrastructure Facility
and the Regional Investment Corporation, which provide loans, guarantees and equity
injections for projects that deliver public value.
Budget Paper No. 1 |
Statement 10: Australian Government Budget Financial Statements | Page 397
The value of total Australian Government investments, loans and placements is expected to
increase steadily over the forward estimates due to forecast investment returns and the
investment activities of the Australian Government Investment Funds and specialist
investment vehicles.
A breakdown of investments, loans and placements is provided in Note 14 to Statement 10:
Australian Government Budget Financial Statements and further information on the Australian
Government Investment Funds is provided below. Further details on loans made by the
Government is provided in Statement 9: Statement of Risks.
Australian Government Investment Funds
The Australian Government Investment Funds are the: Future Fund, DisabilityCare
Australia Fund, Medical Research Future Fund, Aboriginal and Torres Strait Islander Land
and Sea Future Fund, Future Drought Fund, Disaster Ready Fund and the Housing
Australia Future Fund. Investments held in relation to the Australian Government
Investment Funds are predominantly collective investment vehicles, other interest bearing
securities and equity investments.
The budgeted value of Australian Government Investment Funds is provided in
Table 10B.1.
Table 10B.1: Australian Government Investment Funds balances
Estimates
 
2023-24
2024-25
2025-26
2026-27
2027-28
 
$m
$m
$m
$m
$m
Future Fund
223,602
239,192
255,866
273,702
292,784
DisabilityCare Australia Fund
17,726
14,452
11,041
7,487
3,787
Medical Research Future Fund
22,664
23,291
23,856
24,451
25,130
Aboriginal and Torres Strait
Islander Land and Sea Future
Fund
2,220
2,267
2,319
2,360
2,406
Future Drought Fund
4,813
4,957
5,119
5,264
5,424
Disaster Ready Fund
4,549
4,782
5,038
5,282
5,546
Housing Australia Future Fund
(a)
10,291
10,303
10,338
10,323
10,323
Total investment funds
285,865
299,244
313,577
328,869
345,400
a) The Housing Australia Future Fund was established on 1 November 2023.
Future Fund
The Future Fund was established in 2006 to accumulate financial assets and invest them on
behalf of the Australian Government to address the Government’s unfunded
superannuation liability.
The Investment Mandate for the Future Fund sets a benchmark rate of return of at least CPI
plus 4.0 to 5.0 per cent per annum over the long-term. The Investment Mandate gives
guidance to the Future Fund Board of Guardians (the Future Fund Board) in relation to its
| Budget Paper No. 1
Page 398 | Statement 10: Australian Government Budget Financial Statements
investment strategy. The Board is independently responsible for the investment decisions
of the Future Fund. The Investment Mandate also requires the Board to take an acceptable,
but not excessive, level of risk for the Future Fund, measured in terms such as the
probability of losses in a particular year.
Between establishment and 31 March 2024, the average return has been
7.8 per cent per annum against the benchmark return of 7.0 per cent. For the 12-month
period ending 31 March 2024, the Future Fund return was 10.1 per cent against a
benchmark return of 7.6 per cent. The Future Fund was valued at $223.4 billion as at
31 March 2024.
The Future Fund Board continues to maintain clear objectives and manage the portfolio in
line with its mandate and strategy. Table 10B.2 shows changes in the asset allocation of the
Future Fund since 31 March 2023.
Table 10B.2: Asset allocation of the Future Fund
 
31-Mar-24
31-Mar-24
31-Mar-23
31-Mar-23
Asset class
$m
% of Fund
$m
% of Fund
Australian equities
22,523
10.1
17,913
8.8
Global equities
 
 
 
 
Developed markets
45,409
20.3
34,536
17.0
Emerging markets
15,159
6.8
11,955
5.9
Private equity
33,490
15.0
33,320
16.4
Property
12,744
5.7
13,118
6.5
Infrastructure & Timberland
21,280
9.5
19,166
9.4
Debt securities
24,675
11.0
16,706
8.2
Alternative assets
32,799
14.7
34,616
17.1
Cash
15,272
6.8
21,488
10.6
Total Future Fund assets
223,350
100
202,818
100
Note: Figures may not sum due to rounding.
DisabilityCare Australia Fund
The DisabilityCare Australia Fund (DCAF) was established on 1 July 2014 to assist the
Commonwealth and the state and territory governments with spending directly related to
the National Disability Insurance Scheme.
The DCAF is funded by revenue raised from the 0.5 per cent increase in the Medicare levy
to 2.0 per cent, set in 2014–15. As at 31 March 2024, the DCAF had received credits totalling
$39.0 billion. Since inception to 31 March 2024, $24.4 billion has been paid from the DCAF.
The investments of the DCAF are managed by the Future Fund Board. The Investment
Mandate for the DCAF provides guidance to the Future Fund Board in relation to its
investment strategy for the DCAF. The DCAF Investment Mandate sets a benchmark return
of the Australian 3-month bank bill swap rate plus 0.3 per cent per annum calculated on a
rolling 12-month basis (net of fees). In achieving its objectives, the Board must invest in
such a way as to minimise the probability of capital losses over a 12-month horizon.
Budget Paper No. 1 |
Statement 10: Australian Government Budget Financial Statements | Page 399
For the 12-month period ending 31 March 2024, the DCAF return was 5.1 per cent against
the benchmark return of 4.5 per cent. The DCAF was valued at $16.8 billion as at
31 March 2024.
Medical Research Future Fund
The Medical Research Future Fund (MRFF) was established on 26 August 2015 to provide
additional funding for medical research and medical innovation.
The investments of the MRFF are managed by the Future Fund Board. The Investment
Mandate for the MRFF provides broad direction to the Future Fund Board in relation to its
investment strategy. The MRFF Investment Mandate sets a benchmark return of the
Reserve Bank of Australia’s Cash Rate target plus 1.5 to 2.0 per cent per annum, net of
costs, over a rolling 10-year term.
Since inception to 31 March 2024, MRFF investments have returned 4.5 per cent per annum
against a benchmark return of 3.0 per cent. For the 12-month period ending 31 March 2024,
the MRFF’s return was 8.4 per cent against the benchmark return of 5.7 per cent. The MRFF
was valued at $23.0 billion as at 31 March 2024.
Aboriginal and Torres Strait Islander Land and Sea Future Fund
The Aboriginal and Torres Strait Islander Land and Sea Future Fund (ATSILSFF) was
established on 1 February 2019 to support payments to the Indigenous Land and Sea
Corporation.
The ATSILSFF was seeded with the capital of the former Aboriginal and Torres Strait
Islander Land Account (Land Account) – approximately $2.0 billion. The Land Account
was abolished on the establishment of the ATSILSFF.
The investments of the ATSILSFF are managed by the Future Fund Board. The Investment
Mandate for the ATSILSFF provides broad direction to the Future Fund Board in relation to
its investment strategy. The ATSILSFF Investment Mandate sets a long-term benchmark
return of CPI plus 2.0 to 3.0 per cent per annum, net of costs.
Since inception to 31 March 2024, ATSILSFF investments have returned 5.3 per cent
per annum against a benchmark return of 5.8 per cent. For the 12-month period ending
31 March 2024, the ATSILSFF returned 9.4 per cent against a benchmark return of
5.6 per cent. The ATSILSFF was valued at $2.2 billion as at 31 March 2024.
Future Drought Fund
The Future Drought Fund (FDF) was established on 1 September 2019 to fund initiatives
that enhance future drought resilience, preparedness and response across Australia.
The FDF provides disbursements of $100.0 million per annum, with the first disbursement
made in July 2020.
| Budget Paper No. 1
Page 400 | Statement 10: Australian Government Budget Financial Statements
The investments of the FDF are managed by the Future Fund Board. The Investment
Mandate for the FDF provides broad direction to the Future Fund Board in relation to its
investment strategy. The FDF Investment Mandate sets a long-term benchmark return of
CPI plus 2.0 to 3.0 per cent per annum, net of costs.
Since inception to 31 March 2024, FDF investments have returned 7.3 per cent per annum
against a benchmark return of 6.0 per cent. For the 12-month period ending 31 March 2024,
the FDF returned 9.5 per cent against the benchmark return of 5.6 per cent. The FDF was
valued at $4.8 billion as at 31 March 2024.
Disaster Ready Fund
The Disaster Ready Fund (DRF) was initially established as the Emergency Response Fund
(ERF) on 12 December 2019 and provided up to $150 million per year for emergency
response and recovery, and up to $50 million per year for natural disaster resilience and
risk reduction.
On 1 March 2023, legislative changes took effect that renamed the ERF as the DRF and
allowed up to $200 million per annum to be drawn from the DRF to fund natural disaster
resilience and risk reduction from 2023–24 onwards.
The investments of the DRF are managed by the Future Fund Board. The Investment
Mandate for the DRF provides broad direction to the Future Fund Board in relation to its
investment strategy. The DRF Investment Mandate sets a long-term benchmark return of
CPI plus 2.0 to 3.0 per cent per annum, net of costs.
Since inception to 31 March 2024, DRF investments have returned 7.3 per cent per annum
against a benchmark return of 6.0 per cent. For the 12-month period ending 31 March 2024,
the DRF returned 9.5 per cent against the benchmark return of 5.6 per cent. The DRF was
valued at $4.6 billion as at 31 March 2024.
Housing Australia Future Fund
The Housing Australia Future Fund (HAFF) was established on 1 November 2023 and
credited with $10.0 billion. The HAFF is an investment vehicle dedicated to supporting and
increasing social and affordable housing, as well as supporting other acute housing needs
such as Indigenous communities and housing services for women, children and veterans.
The investments of the HAFF are managed by the Future Fund Board. The Investment
Mandate for the HAFF provides broad direction to the Future Fund Board in relation to its
investment strategy. The HAFF Investment Mandate sets a long-term benchmark return of
CPI plus 2.0 to 3.0 per cent per annum, net of costs.
Since inception to 31 March 2024, HAFF investments have returned 1.9 per cent. The HAFF
was valued at $10.3 billion as at 31 March 2024.
Budget Paper No. 1 |
Statement 10: Australian Government Budget Financial Statements | Page 401
Equity investments
Equity investments is comprised of three components:
• investments in those Government Business Enterprises that are public non-financial
corporations including NBN Co, Snowy Hydro Limited and the Australian Rail Track
Corporation.
• investments in other public sector entities outside the GGS, including certain
components of specialist investment vehicles such as Export Finance Australia and
Housing Australia, and investments held by specialist investment vehicles inside the
GGS, such as the Clean Energy Finance Corporation and the National Reconstruction
Fund Corporation.
• investments held in relation to the Australian Government Investment Funds, such as
shares, which are expected to increase steadily over the forward estimates due to
additional contributions from Government and expected investment returns over time.
Government Business Enterprises
Government Business Enterprises (GBEs) represent a significant proportion of equity
investments held by the Australian Government.
These are commercially-focused government owned businesses that are established to fulfil
an Australian Government purpose. They make a substantial contribution to the Australian
economy by supporting productivity, job creation and Government policy objectives.
Further information on the financial performance of individual GBEs is included in the
annual report for each entity, including details of equity contributed by the Australian
Government. GBE valuations are updated annually in accordance with Australian
Accounting Standards and reported by the relevant portfolio department in its annual
report.
Specialist investment vehicles
Specialist investment vehicles make investments in projects, businesses and joint ventures
to directly address Australian Government policy objectives. These investments include for
example concessional loans, debt issuances and equity investments. Specialist investment
vehicles include the National Reconstruction Fund Corporation, Clean Energy Finance
Corporation, Regional Investment Corporation, Export Finance Australia, Housing
Australia, the Australian Renewable Energy Agency, the Northern Australian
Infrastructure Facility and the Australian Infrastructure Financing Facility for the Pacific
supported by Export Finance Australia.
| Budget Paper No. 1
Page 402 | Statement 10: Australian Government Budget Financial Statements
Clean Energy Finance Corporation
The Clean Energy Finance Corporation (CEFC) was established as a Commonwealth
Authority in August 2012 through the Clean Energy Finance Corporation Act 2012
(CEFC Act).
Under the CEFC Act, the CEFC has been provided $10.0 billion to invest in renewable
energy, low emissions technology and energy efficiency projects.
The Government has also provided CEFC with an additional $20.5 billion to support the
Government’s policy priorities. This comprises $19 billion for rewiring the nation, to
expand and modernise Australia’s electricity grids and $500.0 million, (to combine with
$500.0 million from the private sector), to establish a $1.0 billion Powering Australia
Technology Fund. It also includes $1.0 billion to support household energy efficiency
upgrades.
The CEFC continues to invest funds and manage its investments. Investment decisions are
made by an independent board consistent with the CEFC Act and the CEFC’s investment
mandate.
National Reconstruction Fund Corporation
The National Reconstruction Fund Corporation (NRFC) was established as a corporate
Commonwealth entity by the National Reconstruction Fund Corporation Act 2023 (NRFC Act)
to support, diversify and transform Australian industry and the economy.
The NRFC will make $15.0 billion of targeted co-investments through independently
assessed projects in priority sectors including resources, transport, medical science,
renewables and low emission technology, defence capability, enabling capabilities and
agriculture, forestry and fisheries.
Export Finance Australia
At the Australian Government’s direction, Export Finance Australia (EFA) can make
export-focussed investments that are in the national interest. As part of the Future Made in
Australia policy, the Government will expand EFA’s mandate on the National Interest
Account to support key domestic-focussed projects that align with a National Interest
Framework and are in scope sectors.
Non-financial assets
The Government’s non-financial assets are estimated to be $211.7 billion at 30 June 2024,
increasing to $245.7 billion by 30 June 2028.
Non-financial assets comprise assets such as land, buildings and property, plant and
equipment and right-of-use lease assets. Non-financial assets are expected to grow
consistently over the forward estimates predominantly due to increased investments in
Specialised Military Equipment.
Budget Paper No. 1 |
Statement 10: Australian Government Budget Financial Statements | Page 403
Liabilities
The Government’s total liabilities were $1.3 trillion at 30 June 2023, and are expected to
increase to around $1.6 trillion by 30 June 2028.
The composition of Australian Government GGS liabilities at 30 June 2024 is presented
below in Chart 10B.4.
Chart 10B.4: Australian government liabilities composition
The Government’s major liabilities are Australian Government securities on issue (see
Statement 7: Debt Statement for further information) and public sector employee
superannuation liabilities.
Further information on the Government’s borrowings is provided in
Statement 7: Debt Statement.
| Budget Paper No. 1
Page 404 | Statement 10: Australian Government Budget Financial Statements
Australian Government liabilities over the forward estimates
The budgeted composition of liabilities on the Australian Government’s balance sheet is
provided in Chart 10B.5 below.
Chart 10B.5: Composition of Australian Government liabilities over the forward
estimates
Note: Other interest bearing liabilities includes deposits held, loans and lease liabilities. Other provisions
and payables includes other employee liabilities, suppliers payable, personal benefits payable,
subsidies payable, grants payable, other payables and provisions.
Total liabilities are expected to grow consistently over the forward estimates, which is
predominantly due to growth in government securities on issue and superannuation
liabilities.
Government securities
Government securities on the Australian Government’s balance sheet reflect the market
value of the Australian Government securities on issue, consistent with external reporting
standards. Further detail on the face value of Australian Government securities can be
found in Statement 7: Debt Statement.
Public sector employee superannuation liabilities
Public sector employee superannuation entitlements relating to past and present civilian
employees and military personnel are a financial liability on the Government’s balance
sheet. Total superannuation liabilities are projected to be $294.7 billion at 30 June 2024,
$332.7 billion at 30 June 2028 and approximately $506.2 billion at 30 June 2060.
Budget Paper No. 1 |
Statement 10: Australian Government Budget Financial Statements | Page 405
These liabilities represent the present value of future unfunded superannuation benefits
relating to past and present employees and are based on an actuarially determined
discount rate. The long-term nature of the unfunded superannuation liabilities requires the
use of a discount rate that best matches the duration of the liabilities. The use of a long-term
discount rate for budget purposes avoids the volatility that would occur by using current
market yields on Government bonds. The value recorded on the balance sheet is highly
sensitive to the discount rate used.
In preparing the latest Long Term Cost Reports for the civilian and military schemes, the
scheme actuaries determined that a discount rate of 5.0 per cent should be applied.
The Australian Government has never fully funded its defined benefit scheme
superannuation liabilities. However, the Future Fund was established in 2006 to help
finance the Government’s unfunded superannuation liabilities.
For civilian employees, the major defined benefit schemes are the Commonwealth
Superannuation Scheme and the Public Sector Superannuation Scheme. These schemes
were closed to new members in 1990 and 2005 respectively. The Public Sector
Superannuation Accumulation Plan was introduced on 1 July 2005 and provides fully
funded accumulation benefits for new civilian employees from that date.
For military personnel, the defined benefit schemes are the Defence Force Retirement and
Death Benefits Scheme, the Defence Forces Retirement Benefits Scheme and the Military
Superannuation and Benefits Scheme (MSBS). Following the closure of the MSBS on
30 June 2016, all defined benefit military schemes are now closed to new members. A new
military superannuation accumulation scheme, Australian Defence Force (ADF) Super,
commenced on 1 July 2016. ADF Super is accompanied by a statutory death and disability
arrangement ADF cover.
While there have not been any new members to the public service and military defined
benefit schemes since closure in 2005 and 2016 respectively, the Government’s unfunded
superannuation liabilities are expected to grow as current members continue to accrue
benefits prior to retirement. Consistent with the 2020 Long-Term Cost Reports, the
unfunded liability for public service defined benefit schemes is projected to peak in the mid
2030’s, whilst the unfunded liability for military defined benefit schemes is projected to
continue to increase over time to 2060. The present value of the superannuation liability is
also sensitive to changes in the discount rate.
As the superannuation liabilities are included in the Government’s net worth and
net financial worth aggregates, revaluations of the liabilities have an impact on
these aggregates.
| Budget Paper No. 1
Page 406 | Statement 10: Australian Government Budget Financial Statements
The value of superannuation liabilities by scheme is provided in Table 10B.3 below.
Table 10B.3: Superannuation liabilities by scheme
Estimates
 
2023-24
2024-25
2025-26
2026-27
2027-28
 
$m
$m
$m
$m
$m
Civilian superannuation schemes
Commonwealth Superannuation Scheme
62,612
61,099
59,489
57,787
55,999
Public Sector Superannuation Scheme
96,691
102,271
108,537
113,238
117,994
Parliamentary Contributory Superannuation
Scheme
819
812
801
790
777
Governors--General Scheme
14
23
23
22
22
Judges’ Pensions Scheme
1,244
1,286
1,329
1,374
1,421
Division 2 Judges of the Federal Circuit
and Family Court of Australia Death
and Disability Scheme
1
2
2
3
4
Total civilian schemes
161,380
165,492
170,181
173,214
176,218
Military superannuation schemes
Military Superannuation and Benefits Scheme
96,437
100,934
105,251
109,403
113,379
Defence Force Retirement and Death Benefits
Scheme
31,392
31,021
30,593
30,112
29,591
Defence Forces Retirement Benefits Scheme
229
212
196
181
167
Australian Defence Force Cover
4,982
6,483
8,340
10,576
13,194
Total military schemes
133,040
138,650
144,380
150,272
156,330
Other schemes
234
242
253
255
191
Total
294,654
304,384
314,814
323,741
332,739
Other provisions and payables
Other provisions and payables includes all other Government liabilities including lease
liabilities, provisions for other employee entitlements such as leave, unpaid grants,
subsidies, personal benefits, and payments to suppliers.
Statement 11: Historical Australian Government Data | Page 407
Statement 11
Historical Australian Government Data
This statement reports historical data for the Australian Government fiscal aggregates
across the general government, public non-financial corporations and non-financial public
sectors.
Statement 11: Historical Australian Government Data | Page 409
Statement contents
Statement 11: Historical Australian Government Data ......................................... 411
Data sources ............................................................................................................................. 411
Comparability of data across years ........................................................................................... 411
Revisions to previously published data ..................................................................................... 413
Statement 11: Historical Australian Government Data | Page 411
Statement 11: Historical Australian
Government Data
Statement 11 reports historical data for the Australian Government fiscal aggregates across
the general government, public non-financial corporations and non-financial public sectors.
Data sources
Data are sourced from Australian Government Final Budget Outcomes, the
Australian Bureau of Statistics (ABS), the Australian Office of Financial Management and
Australian Government Consolidated Financial Statements.
• Accrual data from 1996–97 onwards and cash data, net debt data, net financial worth
data and net worth data from 1999–2000 onwards are sourced from
Australian Government Final Budget Outcomes. Back-casting adjustments for accounting
classification changes and other revisions have been made from 1998–99 onwards where
applicable.
• Cash data prior to 1999–2000 are sourced from ABS data, which have been calculated
using methodology consistent with that used for later years in
ABS cat. no. 5512.0 Government Finance Statistics.
• Net debt data prior to 1999–2000 are from ABS cat. no. 5512.0 Government Finance
Statistics 2003–04 in 1998–99, ABS cat. no. 5501.0 Government Financial Estimates
1999–2000 and ABS cat. no. 5513.0 Public Sector Financial Assets and Liabilities 1998 from
1987–88 to 1997–98, and Treasury estimates (see Treasury’s Economic Roundup,
Spring 1996, pages 97–103) prior to 1987–88.
Comparability of data across years
The data set contains a number of structural breaks owing to accounting classification
differences and changes to the structure of the budget which cannot be eliminated through
back-casting because of data limitations. These breaks can affect the comparability of data
across years, especially when the analysis is taken over a large number of years. Specific
factors causing structural breaks include:
• Most recent accounting classification changes that require revisions to the historical
series have been back-cast (where applicable) to 1998–99, ensuring that data are
consistent across the accrual period from 1998–99 onwards. However, because of data
limitations, these changes have not been back-cast to earlier years.
• From 2019–20 onwards, as a result of the implementation of the accounting standard
AASB 16 Leases, the distinction between operating and finance leases for lessees has
been removed. This change impacted a number of budget aggregates, in particular net
debt and net financial worth. Due to data limitations, these changes have not been
back-cast to earlier years.
| Budget Paper No. 1
Page 412 | Statement 11: Historical Australian Government Data
• From 2005–06 onwards, underlying Government Finance Statistics (GFS) data are
provided by agencies in accordance with Australian Accounting Standards (AAS),
which include International Financial Reporting Standards (IFRS) as adopted in
Australia. Prior to 2005–06, underlying GFS data are based on data provided by
agencies applying AAS prior to the adoption of IFRS.
• Prior to 1999–2000, Australian Government general government sector debt instruments
are valued at historic cost, whereas from 1999–2000 onwards they are valued at market
prices (consistent with accrual GFS standards). This affects net debt and net interest
payments.
• Cash data up to and including 1997–98 are calculated under a cash accounting
framework, while cash data from 1998–99 onwards are derived from an accrual
accounting framework.
44
Although the major methodological differences associated
with the move to the accrual framework have been eliminated through back-casting,
comparisons across the break may still be affected by changes to some data sources and
collection methodologies.
• Adjustments in the coverage of agencies are included in the accounts of the different
sectors. These include the reclassification of Central Banking Authorities from the
general government to the public financial corporations sector in 1998–99, and
subsequent back-casting to account for this change.
• Changes have been made in arrangements for transfer payments, where tax concessions
or rebates are replaced by payments through the social security system. This has the
effect of increasing both cash receipts and payments, as compared with earlier periods,
but not changing cash balances. Changes in the opposite direction reduce both cash
payments and receipts.
• Classification differences in the data relating to the period prior to 1976–77 mean that
earlier data may not be entirely consistent with data for 1976–77 onwards.
—
44
Prior to the 2008–09 Budget, cash data calculated under the cash accounting framework were
used up to and including 1998–99. In the 2008–09 Budget, cash data prior to 1998–99 have
been replaced by ABS data derived from the accrual framework.
Budget Paper No. 1 |
Statement 11: Historical Australian Government Data | Page 413
Revisions to previously published data
Under the accrual GFS framework and generally under AAS, flows are recorded in the
period in which they occurred. As a result, prior period outcomes may be revised for
classification changes relating to information that could reasonably have been expected to
be known in the past, is material in at least one of the affected periods, and can be reliably
assigned to the relevant period(s).
There have been no material classification changes that have resulted in back-casting in this
update.
| Budget Paper No. 1
Page 414 | Statement 11: Historical Australian Government Data
Table 11.1: Australian Government general government sector receipts,
payments, net Future Fund earnings and underlying cash balance
(a)
Net Future
Underlying
Fund
cash
Receipts(b)
Payments(c)
earnings
balance(d)
Per cent
Per cent real
Per cent
Per cent
$m
of GDP
$m
growth(f)
of GDP
$m
$m
of GDP
1970-71
8,290
20.5
7,389
na
18.3
-
901
2.2
1971-72
9,135
20.5
8,249
4.1
18.5
-
886
2.0
1972-73
9,735
19.5
9,388
7.7
18.8
-
348
0.7
1973-74
12,228
20.3
11,078
4.2
18.4
-
1,150
1.9
1974-75
15,643
22.0
15,463
19.9
21.7
-
181
0.3
1975-76
18,727
22.5
20,225
15.7
24.3
-
-1,499
-1.8
1976-77
21,890
22.8
23,157
0.6
24.1
-
-1,266
-1.3
1977-78
24,019
22.9
26,057
2.7
24.8
-
-2,037
-1.9
1978-79
26,129
22.0
28,272
0.3
23.8
-
-2,142
-1.8
1979-80
30,321
22.5
31,642
1.5
23.5
-
-1,322
-1.0
1980-81
35,993
23.6
36,176
4.6
23.7
-
-184
-0.1
1981-82
41,499
23.6
41,151
2.9
23.4
-
348
0.2
1982-83
45,463
24.0
48,810
6.3
25.8
-
-3,348
-1.8
1983-84
49,981
23.4
56,990
9.4
26.7
-
-7,008
-3.3
1984-85
58,817
25.0
64,853
9.1
27.5
-
-6,037
-2.6
1985-86
66,206
25.4
71,328
1.5
27.3
-
-5,122
-2.0
1986-87
74,724
26.1
77,158
-1.1
26.9
-
-2,434
-0.8
1987-88
83,491
25.7
82,039
-0.9
25.3
-
1,452
0.4
1988-89
90,748
24.6
85,326
-3.1
23.2
-
5,421
1.5
1989-90
98,625
24.4
92,684
0.6
22.9
-
5,942
1.5
1990-91
100,227
24.1
100,665
3.1
24.2
-
-438
-0.1
1991-92
95,840
22.6
108,472
5.7
25.6
-
-12,631
-3.0
1992-93
97,633
22.0
115,751
5.6
26.1
-
-18,118
-4.1
1993-94
103,824
22.3
122,009
3.5
26.1
-
-18,185
-3.9
1994-95
113,458
22.9
127,619
1.4
25.7
-
-14,160
-2.9
1995-96
124,429
23.5
135,538
1.9
25.6
-
-11,109
-2.1
1996-97
133,592
24.0
139,689
1.7
25.1
-
-6,099
-1.1
1997-98
140,736
23.9
140,587
0.6
23.9
-
149
0.0
1998-99
152,063
24.5
148,175
4.1
23.8
-
3,889
0.6
1999-00
166,199
25.1
153,192
1.0
23.1
-
13,007
2.0
2000-01
182,996
25.9
177,123
9.1
25.0
-
5,872
0.8
2001-02
187,588
24.8
188,655
3.5
24.9
-
-1,067
-0.1
2002-03
204,613
25.5
197,243
1.4
24.6
-
7,370
0.9
2003-04
217,775
25.2
209,785
3.9
24.3
-
7,990
0.9
2004-05
235,984
25.5
222,407
3.5
24.0
-
13,577
1.5
2005-06
255,943
25.6
240,136
4.6
24.0
51
15,757
1.6
2006-07
272,637
25.0
253,321
2.5
23.3
2,127
17,190
1.6
2007-08
294,917
25.0
271,843
3.8
23.0
3,319
19,754
1.7
2008-09
292,600
23.2
316,046
12.7
25.1
3,566
-27,013
-2.1
2009-10
284,662
21.8
336,900
4.2
25.8
2,256
-54,494
-4.2
Budget Paper No. 1 |
Statement 11: Historical Australian Government Data | Page 415
Table 11.1: Australian Government general government sector receipts,
payments, net Future Fund earnings and underlying cash balance
(a)
(continued)
Net Future
Underlying
Fund
cash
Receipts(b)
Payments(c)
earnings
balance(d)
Per cent
Per cent real
Per cent
Per cent
$m
of GDP
$m
growth(f)
of GDP
$m
$m
of GDP
2010-11
302,024
21.3
346,102
-0.4
24.4
3,385
-47,463
-3.3
2011-12
329,874
22.0
371,032
4.8
24.7
2,203
-43,360
-2.9
2012-13
351,052
22.8
367,204
-3.2
23.9
2,682
-18,834
-1.2
2013-14
360,322
22.5
406,430
7.8
25.4
2,348
-48,456
-3.0
2014-15
378,301
23.3
412,079
-0.3
25.4
4,089
-37,867
-2.3
2015-16
386,924
23.3
423,328
1.3
25.5
3,202
-39,606
-2.4
2016-17
409,868
23.3
439,375
2.0
25.0
3,644
-33,151
-1.9
2017-18
446,905
24.2
452,742
1.1
24.5
4,305
-10,141
-0.5
2018-19
485,286
24.9
478,098
3.9
24.5
7,878
-690
0.0
2019-20
469,398
23.7
549,634
13.4
27.7
5,036
-85,272
-4.3
2020-21
519,913
24.9
654,084
17.1
31.3
6,619
-134,171
-6.4
2021-22
584,358
25.0
616,320
-9.8
26.4
7,677
-31,962
-1.4
2022-23
649,477
25.3
627,413
-4.9
24.5
4,960
22,064
0.9
2023-24 (e)
692,307
25.8
682,961
4.5
25.4
6,299
9,346
0.3
2024-25 (e)
698,446
25.3
726,732
3.6
26.4
7,080
-28,286
-1.0
2025-26 (e)
719,353
25.1
762,192
1.8
26.6
7,445
-42,838
-1.5
2026-27 (e)
760,010
25.1
786,722
0.8
26.0
7,960
-26,713
-0.9
2027-28 (e)
801,811
25.2
826,157
2.4
26.0
8,504
-24,345
-0.8
a) Data have been revised in the 2024–25 Budget to improve accuracy and comparability through time.
b) Receipts are equal to cash receipts from operating activities and sales of non-financial assets.
c) Payments are equal to cash payments for operating activities, purchases of non-financial assets and net
cash flows from financing activities for leases.
d) Between 2005–06 and 2019–20, the underlying cash balance is equal to receipts less payments, less
net Future Fund earnings. In all other years, the underlying cash balance is equal to receipts
less payments.
e) Estimates.
f) Real spending growth is calculated using the Consumer Price Index as the deflator.
| Budget Paper No. 1
Page 416 | Statement 11: Historical Australian Government Data
Table 11.2: Australian Government general government sector net cash flows
from investments in financial assets for policy purposes and headline
cash balance
(a)
Net cash flows
from investments in
Headline
financial assets for
cash
Receipts
Payments
policy purposes(b)
balance(c)
Per cent
Per cent
$m
$m
$m
of GDP
$m
of GDP
1970-71
8,290
7,389
-851
-2.1
50
0.1
1971-72
9,135
8,249
-987
-2.2
-101
-0.2
1972-73
9,735
9,388
-977
-2.0
-629
-1.3
1973-74
12,228
11,078
-1,275
-2.1
-125
-0.2
1974-75
15,643
15,463
-2,648
-3.7
-2,467
-3.5
1975-76
18,727
20,225
-2,040
-2.4
-3,539
-4.2
1976-77
21,890
23,157
-1,530
-1.6
-2,796
-2.9
1977-78
24,019
26,057
-1,324
-1.3
-3,361
-3.2
1978-79
26,129
28,272
-1,074
-0.9
-3,216
-2.7
1979-80
30,321
31,642
-702
-0.5
-2,024
-1.5
1980-81
35,993
36,176
-962
-0.6
-1,146
-0.8
1981-82
41,499
41,151
-1,008
-0.6
-660
-0.4
1982-83
45,463
48,810
-1,363
-0.7
-4,711
-2.5
1983-84
49,981
56,990
-1,136
-0.5
-8,144
-3.8
1984-85
58,817
64,853
-922
-0.4
-6,959
-3.0
1985-86
66,206
71,328
-810
-0.3
-5,932
-2.3
1986-87
74,724
77,158
-545
-0.2
-2,979
-1.0
1987-88
83,491
82,039
657
0.2
2,109
0.6
1988-89
90,748
85,326
168
0.0
5,589
1.5
1989-90
98,625
92,684
1,217
0.3
7,159
1.8
1990-91
100,227
100,665
1,563
0.4
1,125
0.3
1991-92
95,840
108,472
2,156
0.5
-10,475
-2.5
1992-93
97,633
115,751
2,471
0.6
-15,647
-3.5
1993-94
103,824
122,009
3,447
0.7
-14,738
-3.2
1994-95
113,458
127,619
1,546
0.3
-12,614
-2.5
1995-96
124,429
135,538
5,188
1.0
-5,921
-1.1
1996-97
133,592
139,689
7,241
1.3
1,142
0.2
1997-98
140,736
140,587
15,154
2.6
15,303
2.6
1998-99
152,063
148,175
6,948
1.1
10,837
1.7
1999-00
166,199
153,192
9,500
1.4
22,507
3.4
2000-01
182,996
177,123
5,673
0.8
11,545
1.6
2001-02
187,588
188,655
3,422
0.5
2,355
0.3
2002-03
204,613
197,243
-229
0.0
7,141
0.9
2003-04
217,775
209,785
-452
-0.1
7,538
0.9
2004-05
235,984
222,407
-1,139
-0.1
12,438
1.3
2005-06
255,943
240,136
-1,647
-0.2
14,160
1.4
2006-07
272,637
253,321
7,403
0.7
26,720
2.5
2007-08
294,917
271,843
5,108
0.4
28,181
2.4
2008-09
292,600
316,046
-7,889
-0.6
-31,336
-2.5
2009-10
284,662
336,900
-4,278
-0.3
-56,516
-4.3
Budget Paper No. 1 |
Statement 11: Historical Australian Government Data | Page 417
Table 11.2: Australian Government general government sector net cash
flows from investments in financial assets for policy purposes and headline
cash balance
(a)
(continued)
Net cash flows
from investments in
Headline
financial assets for
cash
Receipts
Payments
policy purposes(b)
balance(c)
Per cent
Per cent
$m
$m
$m
of GDP
$m
of GDP
2010-11
302,024
346,102
-7,028
-0.5
-51,106
-3.6
2011-12
329,874
371,032
-5,866
-0.4
-47,023
-3.1
2012-13
351,052
367,204
-4,802
-0.3
-20,954
-1.4
2013-14
360,322
406,430
-6,371
-0.4
-52,479
-3.3
2014-15
378,301
412,079
-5,158
-0.3
-38,936
-2.4
2015-16
386,924
423,328
-12,684
-0.8
-49,088
-3.0
2016-17
409,868
439,375
-13,501
-0.8
-43,008
-2.4
2017-18
446,905
452,742
-20,041
-1.1
-25,878
-1.4
2018-19
485,286
478,098
-14,387
-0.7
-7,199
-0.4
2019-20
469,398
549,634
-13,632
-0.7
-93,868
-4.7
2020-21
519,913
654,084
-3,364
-0.2
-137,535
-6.6
2021-22
584,358
616,320
-1,340
-0.1
-33,302
-1.4
2022-23
649,477
627,413
-7,962
-0.3
14,103
0.6
2023-24 (e)
692,307
682,961
-2,879
-0.1
6,467
0.2
2024-25 (e)
698,446
726,732
-18,916
-0.7
-47,202
-1.7
2025-26 (e)
719,353
762,192
-20,932
-0.7
-63,770
-2.2
2026-27 (e)
760,010
786,722
-20,130
-0.7
-46,843
-1.5
2027-28 (e)
801,811
826,157
-17,676
-0.6
-42,022
-1.3
a) Data have been revised in the 2024–25 Budget to improve accuracy and comparability through time.
b) Prior to 1999–2000, net cash flows from investments in financial assets for policy purposes were referred
to as ‘net advances’. A negative number reflects a cash outflow, while a positive number reflects a cash
inflow.
c) Headline cash balance is equal to receipts less payments, plus net cash flows from investments in
financial assets for policy purposes. Receipts and payments are identical to Table 11.1.
e) Estimates.
| Budget Paper No. 1
Page 418 | Statement 11: Historical Australian Government Data
Table 11.3: Australian Government general government sector taxation receipts,
non-taxation receipts and total receipts
(a)
Taxation receipts
Non-taxation receipts
Total receipts(b)
Per cent
Per cent
Per cent
$m
of GDP
$m
of GDP
$m
of GDP
1970-71
7,193
17.8
1,097
2.7
8,290
20.5
1971-72
7,895
17.7
1,240
2.8
9,135
20.5
1972-73
8,411
16.9
1,324
2.7
9,735
19.5
1973-74
10,832
17.9
1,396
2.3
12,228
20.3
1974-75
14,141
19.8
1,502
2.1
15,643
22.0
1975-76
16,920
20.3
1,807
2.2
18,727
22.5
1976-77
19,714
20.5
2,176
2.3
21,890
22.8
1977-78
21,428
20.4
2,591
2.5
24,019
22.9
1978-79
23,409
19.7
2,720
2.3
26,129
22.0
1979-80
27,473
20.4
2,848
2.1
30,321
22.5
1980-81
32,641
21.4
3,352
2.2
35,993
23.6
1981-82
37,880
21.5
3,619
2.1
41,499
23.6
1982-83
41,025
21.7
4,438
2.3
45,463
24.0
1983-84
44,849
21.0
5,132
2.4
49,981
23.4
1984-85
52,970
22.5
5,847
2.5
58,817
25.0
1985-86
58,841
22.6
7,365
2.8
66,206
25.4
1986-87
66,467
23.2
8,257
2.9
74,724
26.1
1987-88
75,076
23.1
8,415
2.6
83,491
25.7
1988-89
83,452
22.7
7,296
2.0
90,748
24.6
1989-90
90,773
22.4
7,852
1.9
98,625
24.4
1990-91
92,739
22.3
7,488
1.8
100,227
24.1
1991-92
87,364
20.6
8,476
2.0
95,840
22.6
1992-93
88,760
20.0
8,873
2.0
97,633
22.0
1993-94
93,362
20.0
10,462
2.2
103,824
22.3
1994-95
104,921
21.2
8,537
1.7
113,458
22.9
1995-96
115,700
21.9
8,729
1.7
124,429
23.5
1996-97
124,559
22.4
9,033
1.6
133,592
24.0
1997-98
130,984
22.2
9,752
1.7
140,736
23.9
1998-99
138,420
22.3
13,643
2.2
152,063
24.5
1999-00
151,313
22.8
14,887
2.2
166,199
25.1
2000-01
170,354
24.1
12,641
1.8
182,996
25.9
2001-02
175,371
23.2
12,218
1.6
187,588
24.8
2002-03
192,391
24.0
12,222
1.5
204,613
25.5
2003-04
206,734
23.9
11,041
1.3
217,775
25.2
2004-05
223,986
24.2
11,999
1.3
235,984
25.5
2005-06
241,987
24.2
13,956
1.4
255,943
25.6
2006-07
258,252
23.7
14,385
1.3
272,637
25.0
2007-08
279,317
23.7
15,600
1.3
294,917
25.0
2008-09
273,674
21.7
18,926
1.5
292,600
23.2
2009-10
262,167
20.1
22,495
1.7
284,662
21.8
Budget Paper No. 1 |
Statement 11: Historical Australian Government Data | Page 419
Table 11.3: Australian Government general government sector taxation receipts,
non-taxation receipts and total receipts
(a)
(continued)
Taxation receipts
Non-taxation receipts
Total receipts(b)
Per cent
Per cent
Per cent
$m
of GDP
$m
of GDP
$m
of GDP
2010-11
282,106
19.9
19,918
1.4
302,024
21.3
2011-12
311,269
20.7
18,606
1.2
329,874
22.0
2012-13
327,835
21.3
23,218
1.5
351,052
22.8
2013-14
340,283
21.3
20,038
1.3
360,322
22.5
2014-15
353,927
21.8
24,374
1.5
378,301
23.3
2015-16
362,445
21.8
24,480
1.5
386,924
23.3
2016-17
379,336
21.6
30,532
1.7
409,868
23.3
2017-18
418,118
22.7
28,787
1.6
446,905
24.2
2018-19
448,654
23.0
36,631
1.9
485,286
24.9
2019-20
431,854
21.8
37,544
1.9
469,398
23.7
2020-21
473,941
22.7
45,972
2.2
519,913
24.9
2021-22
536,586
23.0
47,772
2.0
584,358
25.0
2022-23
601,300
23.5
48,177
1.9
649,477
25.3
2023-24 (e)
638,750
23.8
53,557
2.0
692,307
25.8
2024-25 (e)
642,542
23.3
55,904
2.0
698,446
25.3
2025-26 (e)
661,583
23.1
57,770
2.0
719,353
25.1
2026-27 (e)
702,278
23.2
57,732
1.9
760,010
25.1
2027-28 (e)
742,299
23.3
59,513
1.9
801,811
25.2
a) Data have been revised in the 2024–25 Budget to improve accuracy and comparability through time.
b) Receipts are equal to receipts from operating activities and sales of non-financial assets. Receipts are
identical to Table 11.1.
e) Estimates.
| Budget Paper No. 1
Page 420 | Statement 11: Historical Australian Government Data
Table 11.4: Australian Government general government sector net debt and net
interest payments
(a)
Net debt(b)
Net interest payments(c)
$m
Per cent of GDP
$m
Per cent of GDP
1970-71
344
0.9
-189
-0.5
1971-72
-496
-1.1
-245
-0.5
1972-73
-790
-1.6
-252
-0.5
1973-74
-1,851
-3.1
-286
-0.5
1974-75
-1,901
-2.7
-242
-0.3
1975-76
-341
-0.4
-330
-0.4
1976-77
898
0.9
-62
-0.1
1977-78
2,896
2.8
4
0.0
1978-79
4,983
4.2
254
0.2
1979-80
6,244
4.6
440
0.3
1980-81
6,356
4.2
620
0.4
1981-82
5,919
3.4
680
0.4
1982-83
9,151
4.8
896
0.5
1983-84
16,015
7.5
1,621
0.8
1984-85
21,896
9.3
2,813
1.2
1985-86
26,889
10.3
3,952
1.5
1986-87
29,136
10.2
4,762
1.7
1987-88
27,344
8.4
4,503
1.4
1988-89
21,981
6.0
4,475
1.2
1989-90
16,123
4.0
4,549
1.1
1990-91
16,915
4.1
3,636
0.9
1991-92
31,041
7.3
3,810
0.9
1992-93
55,218
12.4
3,986
0.9
1993-94
70,223
15.0
5,628
1.2
1994-95
83,492
16.8
7,292
1.5
1995-96
95,831
18.1
8,861
1.7
1996-97
96,281
17.3
9,489
1.7
1997-98
82,935
14.1
8,279
1.4
1998-99
72,065
11.6
8,649
1.4
1999-00
57,661
8.7
7,514
1.1
2000-01
46,802
6.6
6,195
0.9
2001-02
42,263
5.6
5,352
0.7
2002-03
33,403
4.2
3,758
0.5
2003-04
26,995
3.1
3,040
0.4
2004-05
15,604
1.7
2,502
0.3
2005-06
331
0.0
2,303
0.2
2006-07
-24,288
-2.2
228
0.0
2007-08
-39,958
-3.4
-1,015
-0.1
2008-09
-11,285
-0.9
-1,196
-0.1
2009-10
47,874
3.7
2,386
0.2
Budget Paper No. 1 |
Statement 11: Historical Australian Government Data | Page 421
Table 11.4: Australian Government general government sector net debt and net
interest payments
(a)
(continued)
Net debt(b)
Net interest payments(c)
$m
Per cent of GDP
$m
Per cent of GDP
2010-11
90,660
6.4
4,608
0.3
2011-12
153,443
10.2
6,609
0.4
2012-13
159,594
10.4
8,285
0.5
2013-14
209,559
13.1
10,843
0.7
2014-15
245,817
15.1
10,868
0.7
2015-16
303,467
18.3
12,041
0.7
2016-17
322,320
18.3
12,365
0.7
2017-18
341,961
18.5
13,135
0.7
2018-19
373,566
19.2
15,149
0.8
2019-20
491,217
24.8
13,280
0.7
2020-21
592,221
28.4
14,290
0.7
2021-22
515,650
22.1
14,977
0.6
2022-23
491,013
19.2
11,852
0.5
2023-24 (e)
499,886
18.6
12,281
0.5
2024-25 (e)
552,532
20.0
14,549
0.5
2025-26 (e)
615,478
21.5
18,797
0.7
2026-27 (e)
660,048
21.8
20,782
0.7
2027-28 (e)
697,505
21.9
25,994
0.8
a) Data have been revised in the 2024–25 Budget to improve accuracy and comparability through time.
b) Net debt is the sum of interest-bearing liabilities less the sum of selected financial assets (cash and
deposits, advances paid and investments, loans and placements).
c) Net interest payments are equal to the difference between interest paid and interest receipts.
e) Estimates.
| Budget Paper No. 1
Page 422 | Statement 11: Historical Australian Government Data
Table 11.5: Australian Government general government sector face value of
Australian Government Securities (AGS) on issue and interest paid
(a)
Face value of AGS on issue(b)
Total AGS on issue(c)
Subject to Treasurer’s Direction(d)
Interest paid(f)
End of year
Per cent
End of year
Per cent
Per cent
$m
of GDP
$m
of GDP
$m
of GDP
1970-71
10,887
27.0
-
-
580
1.4
1971-72
11,490
25.8
-
-
614
1.4
1972-73
12,217
24.5
-
-
675
1.4
1973-74
12,809
21.2
-
-
712
1.2
1974-75
14,785
20.7
-
-
893
1.3
1975-76
17,940
21.5
-
-
1,001
1.2
1976-77
20,845
21.7
-
-
1,485
1.5
1977-78
23,957
22.8
-
-
1,740
1.7
1978-79
28,120
23.7
-
-
2,080
1.8
1979-80
29,321
21.8
-
-
2,356
1.8
1980-81
30,189
19.8
-
-
2,723
1.8
1981-82
31,060
17.7
-
-
3,058
1.7
1982-83
37,071
19.6
-
-
3,580
1.9
1983-84
45,437
21.3
-
-
4,558
2.1
1984-85
54,420
23.1
-
-
5,952
2.5
1985-86
63,089
24.2
-
-
7,394
2.8
1986-87
67,172
23.5
-
-
8,339
2.9
1987-88
62,794
19.3
-
-
8,139
2.5
1988-89
56,854
15.4
-
-
8,222
2.2
1989-90
48,399
12.0
-
-
8,064
2.0
1990-91
48,723
11.7
-
-
6,994
1.7
1991-92
58,826
13.9
-
-
6,819
1.6
1992-93
76,509
17.2
-
-
6,487
1.5
1993-94
90,889
19.5
-
-
7,709
1.7
1994-95
105,466
21.3
-
-
9,144
1.8
1995-96
110,166
20.8
-
-
10,325
2.0
1996-97
111,067
20.0
-
-
10,653
1.9
1997-98
93,664
15.9
-
-
9,453
1.6
1998-99
85,331
13.7
-
-
9,299
1.5
1999-00
75,536
11.4
-
-
8,509
1.3
2000-01
66,403
9.4
-
-
7,335
1.0
2001-02
63,004
8.3
-
-
6,270
0.8
2002-03
57,435
7.2
-
-
4,740
0.6
2003-04
54,750
6.3
-
-
4,096
0.5
2004-05
55,151
6.0
-
-
3,902
0.4
2005-06
54,070
5.4
-
-
4,628
0.5
2006-07
53,264
4.9
-
-
3,959
0.4
2007-08
55,442
4.7
-
-
3,754
0.3
2008-09
101,147
8.0
95,103
7.5
3,970
0.3
2009-10
147,133
11.3
141,806
10.9
6,411
0.5
Budget Paper No. 1 |
Statement 11: Historical Australian Government Data | Page 423
Table 11.5: Australian Government general government sector face value of
Australian Government Securities (AGS) on issue and interest paid
(a)
(continued)
Face value of AGS on issue(b)
Total AGS on issue(c)
Subject to Treasurer’s Direction(d)
Interest paid(f)
End of year
Per cent
End of year
Per cent
Per cent
$m
of GDP
$m
of GDP
$m
of GDP
2010-11
191,292
13.5
186,704
13.2
9,551
0.7
2011-12
233,976
15.6
229,389
15.3
10,875
0.7
2012-13
257,378
16.7
252,791
16.4
11,846
0.8
2013-14
319,487
20.0
316,952
19.8
13,972
0.9
2014-15
368,738
22.7
366,202
22.5
13,924
0.9
2015-16
420,420
25.3
417,936
25.2
14,977
0.9
2016-17
500,979
28.5
498,510
28.3
15,290
0.9
2017-18
531,937
28.8
529,467
28.7
16,568
0.9
2018-19
541,992
27.8
541,986
27.8
18,951
1.0
2019-20
684,298
34.5
684,292
34.5
16,524
0.8
2020-21
816,991
39.1
816,985
39.1
17,102
0.8
2021-22
895,253
38.4
895,247
38.4
17,423
0.7
2022-23
889,790
34.7
889,785
34.7
18,862
0.7
2023-24 (e)
904,000
33.7
904,000
33.7
22,685
0.8
2024-25 (e)
934,000
33.9
934,000
33.9
23,824
0.9
2025-26 (e)
1,007,000
35.1
1,007,000
35.1
27,502
1.0
2026-27 (e)
1,064,000
35.2
1,064,000
35.2
29,833
1.0
2027-28 (e)
1,112,000
34.9
1,112,000
34.9
35,585
1.1
a) Data have been revised in the 2024–25 Budget to improve accuracy and comparability through time.
b) From 2023–24 onwards, data for AGS on issue are estimates and are rounded to the nearest
$1.0 billion.
c) Total AGS on issue includes AGS held on behalf of the states and the Northern Territory.
d) The face value of AGS subject to the Treasurer’s Direction excludes the stock and securities outlined in
subsection 51JA(2A) of the Commonwealth Inscribed Stock Act 1911. These are the same stock and
securities that were excluded from the previous legislative debt limit. AGS on issue subject to the
Treasurer’s Direction are not available prior to 2008–09 because the limit was first introduced in
July 2008.
e) Estimates.
f) Interest paid consists of all cash interest payments of the general government sector, including those
relating to AGS on issue.
Page 424 | Statement 11: Historical Australian Government Data
| Budget Paper No. 1
Table 11.6: Australian Government general government sector revenue, expenses, net operating balance, net capital
investment and fiscal balance
(a)
Revenue
Expenses
Net operating balance(b)
Net capital investment
Fiscal balance(c)
Per cent
Per cent
Per cent
Per cent
Per cent
$m
of GDP
$m
of GDP
$m
of GDP
$m
of GDP
$m
of GDP
1996-97
141,688
25.5
145,940
26.2
-4,252
-0.8
90
0.0
-4,342
-0.8
1997-98
146,820
24.9
148,788
25.3
-1,968
-0.3
147
0.0
-2,115
-0.4
1998-99
152,106
24.5
146,925
23.6
5,181
0.8
1,433
0.2
3,748
0.6
1999-00
167,304
25.2
155,728
23.5
11,576
1.7
-69
0.0
11,645
1.8
2000-01
186,106
26.3
180,277
25.5
5,829
0.8
8
0.0
5,820
0.8
2001-02
190,432
25.2
193,214
25.5
-2,782
-0.4
382
0.1
-3,164
-0.4
2002-03
206,778
25.7
201,402
25.1
5,376
0.7
287
0.0
5,088
0.6
2003-04
222,042
25.7
215,634
25.0
6,409
0.7
660
0.1
5,749
0.7
2004-05
242,354
26.2
229,427
24.8
12,926
1.4
1,034
0.1
11,892
1.3
2005-06
260,569
26.1
241,977
24.2
18,592
1.9
2,498
0.2
16,094
1.6
2006-07
277,895
25.5
259,197
23.8
18,698
1.7
2,333
0.2
16,365
1.5
2007-08
303,402
25.7
280,335
23.8
23,068
2.0
2,593
0.2
20,475
1.7
2008-09
298,508
23.7
324,889
25.8
-26,382
-2.1
4,064
0.3
-30,445
-2.4
2009-10
292,387
22.4
340,354
26.1
-47,967
-3.7
6,433
0.5
-54,400
-4.2
2010-11
309,204
21.8
356,710
25.1
-47,506
-3.3
5,297
0.4
-52,802
-3.7
2011-12
337,324
22.5
377,948
25.2
-40,624
-2.7
4,850
0.3
-45,474
-3.0
2012-13
359,496
23.4
383,351
24.9
-23,855
-1.6
987
0.1
-24,842
-1.6
2013-14
374,151
23.4
415,691
26.0
-41,540
-2.6
3,850
0.2
-45,390
-2.8
2014-15
379,455
23.4
418,956
25.8
-39,501
-2.4
2,706
0.2
-42,206
-2.6
2015-16
395,055
23.8
430,739
26.0
-35,684
-2.2
3,829
0.2
-39,513
-2.4
Budget Paper No. 1 |
Statement 11: Historical Australian Government Data
| Page 425
Table 11.6: Australian Government general government sector revenue, expenses, net operating balance, net capital
investment and fiscal balance
(a)
(continued)
Revenue
Expenses
Net operating balance(b)
Net capital investment
Fiscal balance(c)
Per cent
Per cent
Per cent
Per cent
Per cent
$m
of GDP
$m
of GDP
$m
of GDP
$m
of GDP
$m
of GDP
2016-17
415,723
23.6
449,712
25.6
-33,989
-1.9
2,876
0.2
-36,865
-2.1
2017-18
456,280
24.7
461,490
25.0
-5,209
-0.3
1,284
0.1
-6,493
-0.4
2018-19
493,346
25.3
485,869
24.9
7,476
0.4
6,126
0.3
1,350
0.1
2019-20
486,278
24.5
578,117
29.1
-91,839
-4.6
4,005
0.2
-95,844
-4.8
2020-21
523,012
25.0
651,916
31.2
-128,904
-6.2
7,204
0.3
-136,108
-6.5
2021-22
596,401
25.6
623,050
26.7
-26,649
-1.1
8,412
0.4
-35,061
-1.5
2022-23
668,389
26.1
637,025
24.8
31,363
1.2
9,437
0.4
21,926
0.9
2023-24 (e)
706,877
26.3
691,070
25.7
15,807
0.6
7,754
0.3
8,053
0.3
2024-25 (e)
711,505
25.8
734,518
26.6
-23,014
-0.8
6,303
0.2
-29,316
-1.1
2025-26 (e)
732,740
25.5
767,290
26.7
-34,550
-1.2
8,055
0.3
-42,604
-1.5
2026-27 (e)
776,239
25.7
793,765
26.3
-17,526
-0.6
8,988
0.3
-26,514
-0.9
2027-28 (e)
819,628
25.8
829,755
26.1
-10,127
-0.3
11,899
0.4
-22,026
-0.7
a) Data have been revised in the 2024–25 Budget to improve accuracy and comparability through time.
b) Net operating balance is equal to revenue less expenses.
c) Fiscal balance is equal to revenue less expenses less net capital investment.
e) Estimates.
| Budget Paper No. 1
Page 426 | Statement 11: Historical Australian Government Data
Table 11.7: Australian Government general government sector net worth and net
financial worth
(a)
Net worth(b)
Net financial worth(c)
Per cent
Per cent
$m
of GDP
$m
of GDP
1999-00
-10,424
-1.6
-70,414
-10.6
2000-01
-10,287
-1.5
-75,544
-10.7
2001-02
-15,330
-2.0
-81,707
-10.8
2002-03
-18,856
-2.3
-86,456
-10.8
2003-04
-4,740
-0.5
-75,976
-8.8
2004-05
11,066
1.2
-62,372
-6.7
2005-06
14,293
1.4
-63,442
-6.3
2006-07
42,677
3.9
-39,370
-3.6
2007-08
67,122
5.7
-18,428
-1.6
2008-09
15,452
1.2
-75,465
-6.0
2009-10
-50,383
-3.9
-148,930
-11.4
2010-11
-100,504
-7.1
-203,904
-14.4
2011-12
-252,046
-16.8
-360,672
-24.0
2012-13
-207,769
-13.5
-317,843
-20.7
2013-14
-261,596
-16.4
-375,882
-23.5
2014-15
-308,390
-19.0
-427,169
-26.3
2015-16
-423,674
-25.5
-548,028
-33.0
2016-17
-390,897
-22.2
-529,225
-30.1
2017-18
-418,135
-22.7
-562,183
-30.5
2018-19
-543,459
-27.9
-694,448
-35.6
2019-20
-664,892
-33.5
-840,557
-42.4
2020-21
-725,230
-34.7
-905,924
-43.4
2021-22
-581,758
-24.9
-775,727
-33.2
2022-23
-538,371
-21.0
-743,294
-29.0
2023-24 (e)
-508,621
-18.9
-720,309
-26.8
2024-25 (e)
-545,133
-19.8
-764,495
-27.7
2025-26 (e)
-593,107
-20.7
-819,613
-28.6
2026-27 (e)
-622,142
-20.6
-856,698
-28.3
2027-28 (e)
-642,958
-20.2
-888,684
-27.9
a) Data have been revised in the 2024–25 Budget to improve accuracy and comparability through time.
b) Net worth is equal to total assets less total liabilities.
c) Net financial worth is equal to financial assets less total liabilities.
e) Estimates.
Budget Paper No. 1 |
Statement 11: Historical Australian Government Data | Page 427
Table 11.8: Australian Government general government sector accrual taxation
revenue, non-taxation revenue and total revenue
(a)
Taxation revenue
Non-taxation revenue
Total revenue
Per cent
Per cent
Per cent
$m
of GDP
$m
of GDP
$m
of GDP
1999-00
153,409
23.1
13,895
2.1
167,304
25.2
2000-01
175,876
24.9
10,229
1.4
186,106
26.3
2001-02
178,410
23.6
12,022
1.6
190,432
25.2
2002-03
195,319
24.3
11,458
1.4
206,778
25.7
2003-04
210,541
24.4
11,501
1.3
222,042
25.7
2004-05
230,490
24.9
11,863
1.3
242,354
26.2
2005-06
245,846
24.6
14,723
1.5
260,569
26.1
2006-07
262,876
24.1
15,019
1.4
277,895
25.5
2007-08
286,869
24.3
16,534
1.4
303,402
25.7
2008-09
279,303
22.1
19,206
1.5
298,508
23.7
2009-10
268,841
20.6
23,546
1.8
292,387
22.4
2010-11
289,566
20.4
19,639
1.4
309,204
21.8
2011-12
317,413
21.1
19,911
1.3
337,324
22.5
2012-13
338,106
22.0
21,390
1.4
359,496
23.4
2013-14
353,239
22.1
20,912
1.3
374,151
23.4
2014-15
356,365
21.9
23,090
1.4
379,455
23.4
2015-16
369,468
22.3
25,587
1.5
395,055
23.8
2016-17
388,706
22.1
27,017
1.5
415,723
23.6
2017-18
427,249
23.2
29,031
1.6
456,280
24.7
2018-19
456,147
23.4
37,198
1.9
493,346
25.3
2019-20
447,605
22.6
38,673
1.9
486,278
24.5
2020-21
480,312
23.0
42,700
2.0
523,012
25.0
2021-22
550,412
23.6
45,989
2.0
596,401
25.6
2022-23
618,288
24.1
50,101
2.0
668,389
26.1
2023-24 (e)
656,039
24.4
50,838
1.9
706,877
26.3
2024-25 (e)
658,962
23.9
52,542
1.9
711,505
25.8
2025-26 (e)
679,469
23.7
53,272
1.9
732,740
25.5
2026-27 (e)
721,170
23.9
55,069
1.8
776,239
25.7
2027-28 (e)
762,990
24.0
56,638
1.8
819,628
25.8
a) Data have been revised in the 2024–25 Budget to improve accuracy and comparability through time.
e) Estimates.
Page 428 | Statement 11: Historical A
ustralian Government Data
| Budget Paper No. 1
Table 11.9: Australian Government cash receipts, payments and surplus by institutional sector ($m)
(a)
General government
Public non-financial corporations
Non-financial public sector
Underlying cash
Receipts(b)
Payments(c)
balance(d)
Receipts(b)
Payments(f)
Cash surplus
Receipts(b)
Payments(f)
Cash surplus
1988-89
90,748
85,326
5,421
4,177
6,035
257
93,923
90,312
5,678
1989-90
98,625
92,684
5,942
3,926
11,322
-5,261
101,495
102,883
681
1990-91
100,227
100,665
-438
4,804
9,351
-2,139
103,837
108,808
-2,577
1991-92
95,840
108,472
-12,631
3,899
7,713
101
97,937
114,369
-12,530
1992-93
97,633
115,751
-18,118
4,385
7,819
-196
100,512
122,042
-18,314
1993-94
103,824
122,009
-18,185
5,178
6,476
1,482
106,747
126,214
-16,703
1994-95
113,458
127,619
-14,160
5,262
7,318
1,956
116,751
132,965
-12,204
1995-96
124,429
135,538
-11,109
4,927
8,190
-527
126,593
140,963
-11,636
1996-97
133,592
139,689
-6,099
4,782
7,373
473
135,259
143,948
-5,626
1997-98
140,736
140,587
149
6,238
7,923
1,119
144,517
145,985
1,268
1998-99
152,063
148,175
3,889
na
na
-353
na
na
3,536
1999-00
166,199
153,192
13,007
na
na
-2,594
na
na
10,413
2000-01
182,996
177,123
5,872
na
na
391
na
na
6,323
2001-02
187,588
188,655
-1,067
na
na
1,210
na
na
65
2002-03
204,613
197,243
7,370
27,386
26,105
1,280
na
na
8,651
2003-04
217,775
209,785
7,990
27,718
26,142
1,575
238,236
228,664
9,569
2004-05
235,984
222,407
13,577
29,621
28,071
1,550
257,946
242,805
15,141
2005-06
255,943
240,136
15,757
30,875
31,874
-999
278,254
263,421
14,833
2006-07
272,637
253,321
17,190
16,882
18,641
-1,759
285,336
267,719
17,625
2007-08
294,917
271,843
19,754
7,758
8,231
-472
300,503
277,754
22,800
2008-09
292,600
316,046
-27,013
7,987
8,960
-973
297,421
321,275
-23,786
2009-10
284,662
336,900
-54,494
8,419
9,341
-922
290,681
343,816
-52,879
Budget Paper No. 1 |
Statement 11: Historical Australian Government Data
| Page 429
Table 11.9: Australian Government cash receipts, payments and surplus by institutional sector ($m)
(a)
(continued)
General government
Public non-financial corporations
Non-financial public sector
Underlying cash
Receipts(b)
Payments(c)
balance(d)
Receipts(b)
Payments(f)
Cash surplus
Receipts(b)
Payments(f)
Cash surplus
2010-11
302,024
346,102
-47,463
8,558
9,733
-1,175
308,258
353,452
-44,911
2011-12
329,874
371,032
-43,360
8,845
10,847
-2,002
336,122
379,266
-42,763
2012-13
351,052
367,204
-18,834
9,766
13,061
-3,294
358,088
377,221
-19,133
2013-14
360,322
406,430
-48,456
11,042
14,246
-3,204
368,521
417,248
-48,726
2014-15
378,301
412,079
-37,867
11,256
15,136
-3,880
386,643
424,229
-37,586
2015-16
386,924
423,328
-39,606
11,606
17,753
-6,147
395,842
438,228
-42,386
2016-17
409,868
439,375
-33,151
12,406
19,543
-7,138
419,433
456,020
-36,587
2017-18
446,905
452,742
-10,141
14,195
22,348
-8,153
457,604
471,451
-13,846
2018-19
485,286
478,098
-690
17,909
26,608
-8,699
498,767
500,276
-1,510
2019-20
469,398
549,634
-85,272
18,824
28,244
-9,419
483,362
573,018
-89,656
2020-21
519,913
654,084
-134,171
21,264
26,635
-5,371
535,940
675,484
-139,544
2021-22
584,358
616,320
-31,962
21,791
26,896
-5,105
601,398
638,466
-37,068
2022-23
649,477
627,413
22,064
23,602
29,546
-5,944
668,929
652,810
16,119
2023-24 (e)
692,307
682,961
9,346
23,956
31,662
-7,706
711,406
709,765
1,641
2024-25 (e)
698,446
726,732
-28,286
25,712
34,748
-9,036
718,945
756,268
-37,323
2025-26 (e)
719,353
762,192
-42,838
na
na
na
na
na
na
2026-27 (e)
760,010
786,722
-26,713
na
na
na
na
na
na
2027-28 (e)
801,811
826,157
-24,345
na
na
na
na
na
na
a) Data have been revised in the 2024–25 Budget to improve accuracy and comparability through time.
b) Receipts are equal to receipts from operating activities and sales of non-financial assets.
c) Payments in the general government sector are equal to payments for operating activities, purchases of non-financial assets and net cash flows from financing
activities for leases.
d) Between 2005–06 and 2019–20, the underlying cash balance is equal to receipts less payments, less net Future Fund earnings. In all other years, the
underlying cash balance is equal to receipts less payments.
e) Estimates.
f) Payments in the public non-financial corporations and non-financial public sectors are equal to payments for operating activities, purchases of non-financial
assets, distributions paid and net cash flows from financing activities for leases.
na Data not available.
Page 430 | Statement 11: Historical A
ustralian Government Data
| Budget Paper No. 1
Table 11.10: Australian Government accrual revenue, expenses and fiscal balance by institutional sector ($m)
(a)
General government
Public non-financial corporations
Non-financial public sector
Fiscal
Fiscal
Fiscal
Revenue
Expenses
balance(b)
Revenue
Expenses
balance(b)
Revenue
Expenses
balance(b)
1996-97
141,688
145,940
-4,342
27,431
26,015
-331
na
na
-4,673
1997-98
146,820
148,788
-2,115
29,618
26,999
2,360
na
na
251
1998-99
152,106
146,925
3,748
27,687
26,088
-816
175,891
169,111
2,932
1999-00
167,304
155,728
11,645
25,485
23,542
1,062
188,841
175,322
11,550
2000-01
186,106
180,277
5,820
25,869
24,762
-826
207,367
200,433
4,994
2001-02
190,432
193,214
-3,164
26,638
25,341
793
212,462
213,947
-2,371
2002-03
206,778
201,402
5,088
24,339
22,916
1,975
225,989
219,232
7,023
2003-04
222,042
215,634
5,749
25,449
23,444
2,143
241,746
233,333
7,892
2004-05
242,354
229,427
11,892
26,965
25,191
1,473
263,434
248,733
13,365
2005-06
260,569
241,977
16,094
28,143
29,531
-2,442
281,927
264,722
13,652
2006-07
277,895
259,197
16,365
15,443
16,360
-1,763
289,551
271,771
14,601
2007-08
303,402
280,335
20,475
6,854
6,686
-584
308,888
285,652
19,891
2008-09
298,508
324,889
-30,445
6,998
7,576
-1,495
303,309
330,268
-31,941
2009-10
292,387
340,354
-54,400
7,288
7,297
-1,079
298,033
346,008
-55,480
2010-11
309,204
356,710
-52,802
7,563
7,787
-1,446
315,001
362,732
-54,248
2011-12
337,324
377,948
-45,474
8,046
8,238
-2,158
343,722
384,538
-47,632
2012-13
359,496
383,351
-24,842
8,863
9,415
-4,189
366,642
391,048
-29,031
2013-14
374,151
415,691
-45,390
9,537
11,127
-6,070
381,971
425,102
-51,460
2014-15
379,455
418,956
-42,206
9,987
11,850
-4,856
387,719
429,083
-47,062
2015-16
395,055
430,739
-39,513
10,044
12,809
-7,486
403,868
442,318
-46,999
Budget Paper No. 1 |
Statement 11: Historical Australian Government Data
| Page 431
Table 11.10: Australian Government accrual revenue, expenses and fiscal balance by institutional sector ($m)
(a)
(continued)
General government
Public non-financial corporations
Non-financial public sector
Fiscal
Fiscal
Fiscal
Revenue
Expenses
balance(b)
Revenue
Expenses
balance(b)
Revenue
Expenses
balance(b)
2016-17
415,723
449,712
-36,865
10,894
15,035
-9,918
425,114
463,243
-46,784
2017-18
456,280
461,490
-6,493
12,318
16,934
-10,055
466,661
476,403
-16,463
2018-19
493,346
485,869
1,350
15,836
20,899
-11,121
507,017
504,486
-9,655
2019-20
486,278
578,117
-95,844
17,029
23,174
-10,096
500,961
598,651
-105,637
2020-21
523,012
651,916
-136,108
19,166
22,941
-5,264
538,350
670,849
-141,187
2021-22
596,401
623,050
-35,061
20,767
23,375
-5,285
613,707
642,628
-40,015
2022-23
668,389
637,025
21,926
21,395
23,838
-7,673
687,125
657,873
14,586
2023-24 (e)
706,877
691,070
8,053
21,551
23,461
-8,580
725,953
711,826
-305
2024-25 (e)
711,505
734,518
-29,316
22,831
24,011
-9,072
731,630
755,813
-38,376
2025-26 (e)
732,740
767,290
-42,604
na
na
na
na
na
na
2026-27 (e)
776,239
793,765
-26,514
na
na
na
na
na
na
2027-28 (e)
819,628
829,755
-22,026
na
na
na
na
na
na
a) Data have been revised in the 2024–25 Budget to improve accuracy and comparability through time.
b) Fiscal balance is equal to revenue less expenses less net capital investment. Net capital investment is not shown in this table.
e) Estimates.
na Data not available.
| Budget Paper No. 1
Page 432 | Statement 11: Historical Australian Government Data
Table 11.11: Australian Government general government sector receipts,
payments, underlying cash balance, net debt and net interest payments
presented on a real per capita basis
(a)(b)
Taxation
Non-taxation
Total
Underlying
Net interest
receipts
receipts
receipts
Payments
cash balance
Net debt
payments
1970-71
5,494
838
6,331
5,643
688
263
-144
1971-72
5,524
868
6,391
5,771
620
-347
-171
1972-73
5,484
863
6,348
6,122
227
-515
-164
1973-74
6,138
791
6,930
6,278
652
-1,049
-162
1974-75
6,797
722
7,519
7,433
87
-914
-116
1975-76
7,125
761
7,886
8,516
-631
-144
-139
1976-77
7,212
796
8,008
8,471
-463
329
-23
1977-78
7,073
855
7,928
8,601
-672
956
1
1978-79
7,066
821
7,887
8,534
-647
1,504
77
1979-80
7,430
770
8,200
8,557
-358
1,689
119
1980-81
7,954
817
8,771
8,815
-45
1,549
151
1981-82
8,208
784
8,992
8,916
75
1,283
147
1982-83
7,861
850
8,712
9,353
-642
1,754
172
1983-84
7,956
910
8,866
10,110
-1,243
2,841
288
1984-85
8,889
981
9,870
10,883
-1,013
3,674
472
1985-86
8,978
1,124
10,102
10,883
-782
4,103
603
1986-87
9,131
1,134
10,265
10,600
-334
4,003
654
1987-88
9,453
1,060
10,512
10,329
183
3,443
567
1988-89
9,628
842
10,470
9,844
625
2,536
516
1989-90
9,555
827
10,382
9,756
625
1,697
479
1990-91
9,153
739
9,893
9,936
-43
1,670
359
1991-92
8,368
812
9,180
10,390
-1,210
2,973
365
1992-93
8,341
834
9,175
10,877
-1,703
5,189
375
1993-94
8,532
956
9,488
11,150
-1,662
6,417
514
1994-95
9,191
748
9,938
11,179
-1,240
7,314
639
1995-96
9,608
725
10,333
11,255
-922
7,958
736
1996-97
10,096
732
10,828
11,322
-494
7,804
769
1997-98
10,511
783
11,294
11,282
12
6,655
664
1998-99
10,852
1,070
11,922
11,617
305
5,650
678
1999-00
11,455
1,127
12,582
11,597
985
4,365
569
2000-01
12,010
891
12,901
12,487
414
3,299
437
2001-02
11,882
828
12,710
12,782
-72
2,863
363
2002-03
12,500
794
13,294
12,815
479
2,170
244
2003-04
12,983
693
13,677
13,175
502
1,695
191
2004-05
13,566
727
14,293
13,470
822
945
152
2005-06
14,012
808
14,820
13,904
912
19
133
2006-07
14,269
795
15,064
13,997
950
-1,342
13
2007-08
14,630
817
15,447
14,239
1,035
-2,093
-53
2008-09
13,618
942
14,559
15,726
-1,344
-562
-60
2009-10
12,552
1,077
13,629
16,131
-2,609
2,292
114
Budget Paper No. 1 |
Statement 11: Historical Australian Government Data | Page 433
Table 11.11: Australian Government general government sector receipts,
payments, underlying cash balance, net debt and net interest payments
presented on a real per capita basis
(a)(b)
(continued)
Taxation
Non-taxation
Total
Underlying
Net interest
receipts
receipts
receipts
Payments
cash balance
Net debt
payments
2010-11
12,919
912
13,831
15,849
-2,174
4,152
211
2011-12
13,692
818
14,511
16,321
-1,907
6,750
291
2012-13
13,859
982
14,841
15,524
-796
6,747
350
2013-14
13,798
813
14,611
16,480
-1,965
8,497
440
2014-15
13,908
958
14,866
16,193
-1,488
9,660
427
2015-16
13,831
934
14,765
16,154
-1,511
11,580
459
2016-17
14,000
1,127
15,127
16,216
-1,223
11,896
456
2017-18
14,914
1,027
15,941
16,149
-362
12,198
469
2018-19
15,513
1,267
16,780
16,531
-24
12,917
524
2019-20
14,555
1,265
15,820
18,524
-2,874
16,556
448
2020-21
15,696
1,523
17,219
21,662
-4,444
19,614
473
2021-22
16,799
1,496
18,295
19,296
-1,001
16,144
469
2022-23
17,171
1,376
18,547
17,916
630
14,021
338
2023-24 (e)
17,170
1,440
18,610
18,358
251
13,437
330
2024-25 (e)
16,561
1,441
18,002
18,731
-729
14,241
375
2025-26 (e)
16,310
1,424
17,734
18,790
-1,056
15,173
463
2026-27 (e)
16,687
1,372
18,059
18,694
-635
15,684
494
2027-28 (e)
16,980
1,361
18,341
18,898
-557
15,955
595
a) Data have been revised in the 2024–25 Budget to improve accuracy and comparability through time.
b) The real levels are derived using the Consumer Price Index (CPI). The current reference period for the
CPI is 2011–12, which means the real levels per capita are reported in 2011–12 dollars.
e) Estimates.
Budget Paper No. 1 |
Notes | Page 435
Notes
(a) The following definitions are used in this Budget Paper:
– ‘real’ means adjusted for the effect of inflation
– real growth in expenses and payments is calculated using the Consumer Price
Index (CPI) as the deflator
– the Budget year refers to 2024–25, while the forward years refer to 2025–26,
2026–27 and 2027–28
– one billion is equal to one thousand million.
(b) Figures in tables and generally in the text have been rounded. Discrepancies in
tables between totals and sums of components are due to rounding.
– Estimates under $100,000 are rounded to the nearest thousand.
– Estimates $100,000 and over are generally rounded to the nearest tenth of
a million.
– Estimates midway between rounding points are rounded up.
– The percentage changes in statistical tables are calculated using
unrounded data.
(c) For the budget balance, a negative sign indicates a deficit while no sign indicates
a surplus.
(d) The following notations are used:
-
nil
Na
not applicable (unless otherwise specified)
$m
millions of dollars
$b
billions of dollars
Nfp
not for publication
(e)
estimates (unless otherwise specified)
(p)
projections (unless otherwise specified)
NEC/nec
not elsewhere classified
| Budget Paper No. 1
Page 436 | Notes
(e) The Australian Capital Territory and the Northern Territory are referred to as
‘the territories’. References to the ‘states’ or ‘each state’ include the territories.
The following abbreviations are used for the names of the states, where appropriate:
NSW
New South Wales
VIC
Victoria
QLD
Queensland
WA
Western Australia
SA
South Australia
TAS
Tasmania
ACT
Australian Capital Territory
NT
Northern Territory
(f) In this paper the term ‘Commonwealth’ refers to the Commonwealth of Australia.
The term is used when referring to the legal entity of the Commonwealth of
Australia.
The term ‘Australian Government’ is used when referring to the Government and
the decisions and activities made by the Government on behalf of the
Commonwealth of Australia.
Budget Paper No. 1, Budget Strategy and Outlook 2024–25, is one of a series of Budget Papers
that provides information to supplement the Budget Speech. A full list of the series is
printed on the inside cover of this paper.