Budget’s on track to reach surplus

THE federal budget is now on the edge of surplus, with the final result for the 2018-19 financial year revealing a modest $700 million deficit.

It’s a $13.8 billion improvement on the deficit predicted when that budget was originally delivered in May 2018.

The improvement is built on the back of lower-than-expected spending on the National Disability Insurance Scheme, higher personal income tax receipts and strong iron ore exports.

Treasurer Josh Frydenberg said the Government pulled in an extra $11.5 billion in receipts than predicted, and paid out $6.6 billion less.

“The real story today is how more people in jobs and fewer people on welfare has driven higher receipts and lower payments as a result,” he said yesterday.

Finance Minister Mathias Cormann revealed the Coalition had doubled spending on the NDIS, not tripled it as was the forecast.

That saved $4.6 billion in payments, which Senator Cormann said was the result of a slower-than-expected transition of people into the NDIS.

“Ultimately 100 per cent of the demand in the community will be met,” Senator Cormann said. “The Government will cover the cost of the demand that is there to its fullest extent.”

Mr Frydenberg said the extra 100,000 Australians in work had driven the $5.7 billion extra collected in income taxes.

He said the Coalition had overseen a drop in unemployment to 5.2 per cent, but figures released an hour after Mr Frydenberg spoke showed the unemployment rate had ticked back up to 5.3 per cent, with most of the jobs generated being part-time.

Company tax receipts were $4.6 billion higher than predicted, mainly due to mining profits, but Mr Frydenberg could not say how much was due to strong iron ore demand.

The Coalition estimated an iron ore price of $55 a tonne in its budgets, whereas the average iron ore price in 2018-19 was $72 a tonne.

Net Future Fund earnings, which are excluded from the underlying cash balance, were $4.3 billion higher than expected at the time of the 2018-19 budget.

It is the sixth deficit in a row for the Coalition Government, but a surplus is forecast for 2019-20.

Australia has not had a surplus since the $19.7 billion result in the 2007-08 budget.

MORE PEOPLE IN JOBS AND FEWER PEOPLE ON WELFARE HAS DRIVEN HIGHER RECEIPTS AND LOWER PAYMENTS. TREASURER JOSH FRYDENBERG