Cash surplus
General government sector
The Australian Government general government sector has been in surplus since 1997-98, with the exception of a small cash deficit of 0.1 per cent of GDP in 2001-02.
Panels A and C of Chart 2 show the large contribution of past Australian Government general government sector cash deficits to the consolidated NFPS cash deficit. Panel A of Chart 2 also illustrates the improvement in the Australian Government general government sector balance, culminating in the strong surplus outcomes of recent years.
Panel A of Chart 2 also shows the sustained improvement in State/local general government sector balances through the mid-1990s. The State/local sector maintained a cash surplus each year from 1994-95 to 2005-06, with the exception of 1998-99. This improvement was initially due to payments restraint, helped by lower debt servicing charges and, more recently, to the strong growth in revenues related to the property market and GST. In 2006-07, the sector is expected to record a deficit of 0.9 per cent of GDP. The size of the estimated State/local cash deficit in 2006-07 is affected by a one-off $7.2 billion contribution from New South Wales' General Government Liability Management Fund towards defined benefit superannuation schemes. In 2007-08 the State/local sector is forecast to record a deficit of around 0.4 per cent of GDP.
Public non-financial corporations sector
As shown in Chart 3, the consolidated PNFC sector maintained a cash surplus position through much of the 1990s, but has recorded deficits in recent years. A deficit of 1.2 per cent of GDP is estimated for the consolidated PNFC sector in 2006-07 and a deficit of 1.1 per cent of GDP is estimated for 2007-08, mainly reflecting the impact of large capital expenditure programmes by State/local PNFCs.
Chart 2: Cash surplus by sector and level of government
A: General government sector |
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B: Public non-financial corporations |
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C: Non-financial public sector |
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Non-financial public sector
It is estimated that the consolidated NFPS will record cash deficits of 0.6 per cent and 0.4 per cent of GDP in 2006-07 and 2007-08 respectively, with forecast deficits at the State/local level higher than the surpluses at the Australian Government level.
Chart 3 illustrates that the consolidated NFPS was generally in deficit during the 1990s, primarily reflecting Australian Government general government sector cash deficits in the early to mid-1990s. The consolidated NFPS deficit peaked at 4.2 per cent of GDP in 1992-93 before moving into a surplus position in 1997-98. The deficit in 1998-99 was the result of one-off increases in State funding of superannuation liabilities.
Chart 3: Consolidated non-financial public sector cash surplus
by sector(a)
Receipts and payments
Chart 4 shows trends in general government sector cash receipts and payments at the Australian Government, State/local and consolidated levels, which underpin the developments in cash balances discussed previously. The general government sector is an appropriate focus for an assessment of public sector receipts and payments as it is the sector that collects taxes and provides non-market public services. The general government sector also accounts for the majority of NFPS receipts and payments.
Estimates of Australian Government receipts and payments in Panel A of Chart 4 are net of GST receipts and show a decline in 2000-01 with the introduction of The New Tax System. In addition, consolidated general government receipts fell from 1999-2000 due to the Australian Government's tax reforms, which included significant personal income tax cuts and the abolition of a range of taxes at the State level, including financial institutions duty, stamp duty on quoted marketable securities and bank account debits tax.
The increases in receipts and payments in 1998-99 for the State/local sector and in 1999-2000 for the Australian Government, shown in Panels B and A of Chart 4 respectively, were predominantly due to the move to an accrual accounting framework and the subsequent 'grossing' up of cash receipts and payments, whereas prior to this, some cash receipts were netted off payments.
The PNFC sector is an important provider of economic infrastructure and contributes significant revenue to the general government sector, mainly in the form of dividends. State/local governments account for the majority of total PNFC sector payments, reflecting State responsibility for infrastructure and service provision in areas such as electricity, gas, water and public transport.
Chart 4: General government sector receipts and payments by level of government
A: Australian Government |
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B: State/local |
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C: Consolidated |
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