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Category: Budget / Federal Government / Business, Economics and Finance

National deficit projections balloon by $34 billion

Wednesday, 3 Feb 2016 12:29:05 | Dan Conifer

Treasurer Scott Morrison will deliver his first budget in May. (ABC: Nick Haggarty)

Commonwealth, state and territory government budget projections plummeted by more than $30 billion over the second half of last year.

The Parliamentary Budget Office (PBO) has calculated the combined national deficit over the next four years has ballooned by a projected $34.1 billion to $122.1 billion.

"The national fiscal outlook has deteriorated significantly since the Commonwealth, state and territory governments delivered their 2015-16 budgets," the PBO's National fiscal outlook said.

The PBO said about 80 per cent of the deterioration comes from the Commonwealth, with its forward projections slipping by $27.3 billion since May last year, largely due to revenue write downs of $42.4 billion, which will be partly offset by spending reductions of $17.7 billion.

Asked whether Australia had a revenue problem, Federal Treasurer Scott Morrison's office referred to comments from Question Time.

"The Government has credible measures in place to reduce government spending as a share of the economy in this country from 25.9 per cent this year to 25.3 per cent at the end of the forward estimates," Mr Morrison said.

"We are reducing the share of government as a share of the economy so we can let the private sector expand and continue the strong jobs growth."

Greens treasury spokesman Adam Bandt said the Federal Government was set to raise less revenue than it needed for vital services.

"The independent Parliamentary Budget Office has confirmed that we've got a revenue crisis in this country," Mr Bandt said.

"The Treasurer says we don't have a revenue problem but this report shows he's got his head in the sand.

"Our economy and tax system is far too reliant on iron ore and coal and when the price of those change it hits the revenue."

National net debt is projected to hit $397.6 billion in 2018-19, an increase of about $18 billion.

The PBO is an independent office established under the former Labor government.

The figures are based on mid-year updates from the Commonwealth and all states and territories, except Tasmania.

States and territories are facing additional revenue write downs of $4 billion, while expenses and capital investment are $2.8 billion more than forecast earlier in 2015.

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