What is the federal budget?
The federal budget is the Australian government’s annual economic statement containing details of what it expects to collect in revenue and allocate in expenditure.
The budget outcome gives an indication of the overall impact of fiscal policy on the state of the economy. The federal budget outcome is a deficit and is expected to be $29.4 billion, meaning there is more injections than leakages. In 2017-18 and improve over the forward estimates to a projected surplus of $7.4 billion in 2020-21.
Fiscal Policy Stance
The change in the budget outcome from one year to the next can indicate a change in government fiscal policy stance. The 2017-18 federal budget undergoes a contractionary fiscal policy stance. With the chosen fiscal stance, the government of Australia might increase taxation revenue or decrease government expenditure. This type of fiscal stance aims to increase the level of economic activity by reducing aggregate demand. This should lead to a fall in inflation, but it risks increasing employment if demand is reduced too much.
Revenue and Expenditure
According to figure 1.0, the total revenue for the federal budget is forecasted at $449.5 billion in 2017-18, which is 7.8% higher than the $412.1 billion in 2016-17. The total expenditure for the federal budget is forecasted at $464.8 billion in 2017-18, which is 3% higher than the $450.8 billion in 2016-17.
Individual and other withholding taxes (204.6b)
Fringe benefits tax (4.3b)
Company Tax (77.8b)
Superannuation fund taxes (8.5b)
General Public Services (20.7b)
Petroleum resource rent tax (1bil)
All other functions (47.6b)
Sales taxes (64.1b)
Social Security and welfare (164.1b)
Other purposes (92.8b)
Excise and customs duty (36.88b)
Other Indirect Taxation (7.12b)
Main Goals of the Federal Budget
The government have chosen to focus on growing the economy, in particular by investing in infrastructure, to secure more and better paying jobs, and create an environment where people and businesses are enabled and permitted. By encouraging businesses to develop, and investing in key infrastructure will increase job creation and help deliver much needed pay rises for Australians. The government are to prioritise the vital services that Australians depend on, especially their most susceptible, by funding their share of important services in health care, housing, disability support, education and employment. These are services that give Australians the security and confidence they need to grab a hold of opportunities when they arise. During the times of low wage growth, Australians are more focussed on the delivery of vital services such as Medicare. Australians are assured, the government will not only continue to deliver these services, but will...