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Friday, 27 August 2010

Australian Budget - where does all the money go? (and come from)

The annual budget announcement often highlights the details of specific changes being made, so much so that the overall budget picture often isn't clear. So I had a look at the top-level figures for the 2009-10 budget and divided the amounts by the current Australian population (around 22.5 million) to get a better feel for the amounts involved:

Budget Revenue (2009-10):

Income tax:..................$122,710 million
Other revenue:...............$167,901
TOTAL revenue:...............$290,611
which works out to be $5,454 income tax per person. This level of government impost doesn't seem too onerous, until you how many Australians aren't wage earners (eg. children, elderly, unemployed/not working). And the total government revenue per person ($12,916) is even higher.

So where does this money go each year?
Budget spending (2009-10):

Social security and welfare..$110,994..=..$4,933 pp..=..33% of budget
Community services , culture..$12,188.......$542 pp
Health........................$51,223.....$2,276 pp.....15%
Infrstructure, transport......$13,886.......$617 pp......4%
Defence.......................$20,952.......$931 pp......6%
Education.....................$35,222.....$1,565 pp.....10%
Industry , workforce..........$13,271.......$590 pp
General government services...$80,478.....$3,577 pp
TOTAL........................$338,214....$15,032 pp

Deficit.......................$47,603.....$2,116 pp

What stands out is that most (about half) of government spending goes on caring for the sick (health costs) and elderly / unemployed (social security). And, given increasing health costs and the aging population this will only increase.

It also highlights the massive expense of the planned NBN ($43,000 million) - even though that cost is to be spread out over 5+ years, it is still massive compared to the amount being spent on national infrastructure each year. Although it would be nice to have optical fibre to every suburban house in Australia, I can't see that everyone needs it. NBN seems to be more of a national 'want' than a 'need', especially compared to spending the money on more conventional infrastructure such as roads, rail and port facilities. Many suburban areas already have 'fibre to the node', so running fibre to individual houses should be done privately and at the households expense (user pays). Where there isn't already 'fibre to the node' the government could pay via 'NBN-lite' - for example to rural towns and new suburban land releases.

Defence doesn't seem to be such a huge expense on a per capita basis - although I can't see the value of some big ticket defence items like strike fighters, given the actual tasks our military is involved in (usually ground troops and naval and air transport). The old F-111s, for example, were never used in anger, so a smaller 'deterrent' may have sufficed. In any major conflict I expect we would have to rely on support from our allies - whether we had just a handful of flighters, or a dozen. That will still be true for their planned replacement, the vastly expensive Joint Strike Fighters. So there is probably some room for reallocating funds from defence to infrastructure or education. And, as for the cost-benefit value of our fleet of non-nuclear submarines...

The 2009-10 deficit isn't huge either (as a one-off), but that $2,116 per person translates to about an extra $200 a year revenue required just to service the interest on the debt. No wonder neither party was promising tax cuts in the recent election campaign.

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2 comments:

Anonymous said...

Ahh, but you forget to discuss the second largest category - general government services, which is basically wage costs for public servants. Middle class welfare in my opinion, and I live in Canberra...

Rob said...

Do you know how the tranfer of revenue (eg GST money etc) to the states comes into play?