Insights into Government Finance Statistics, June 2022

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Released
6/09/2022
Source
Government Finance Statistics, Australia, June 2022

Economic overview

Government fiscal support in June quarter 2022 targeted the rising cost of living and inflationary pressures faced by households and businesses. Funding for healthcare and assistance for those affected by floods in Queensland and New South Wales also continued.

Annual Consumer Price Inflation (CPI) increased to 6.1 per cent in the June quarter, due to higher dwelling construction costs and automotive fuel prices (a). The average wholesale electricity price for all regions reached a record-high (b), and weather impacts and transport costs drove food prices higher. In response, the Commonwealth government halved the fuel excise from 44.2 cents to 22.1 cents per litre and implemented a $250 Cost of Living Payment to eligible income support recipients.

  1. Consumer Price Index, Australia, Key statistics, June 2022
  2. Australian Energy Regulator, Quarterly spot prices, Q2 2022

The record-high wholesale electricity prices increased revenues for Public Non-Financial Corporation (PNFC) electricity generators, however higher input costs for coal and gas increased PNFC expenses.

The Reserve Bank of Australia raised the cash rate target by a total of 75 basis points in the quarter to 0.85%. Interest revenues and expenses of all levels of government increased. Cost of living pressures and higher interest rates impacted the property market. Stamp duty on conveyances revenue fell in most jurisdictions, as the estimated number of sale settlements and capital city dwellings values declined (c).

  1. CoreLogic Monthly Housing Chart Pack, July 2022

Healthcare spending for hospitalisations, testing, vaccinations, and distribution of rapid antigen tests (RATs) continued, albeit at a lower level than March quarter 2022. Other COVID-19 response spending such as business support programs decreased. 

While severe flooding events in Queensland and New South Wales continued in the June quarter, flooding was not as widespread as the March quarter. Consequently, government disaster recovery payments and other support from the Commonwealth decreased.

Taxation revenue rose in most jurisdictions due to strong company profits in the resources sector, low unemployment, and reduced impacts from COVID-19 restrictions and weather events. The main contributors to the rise were:

  • company income tax, personal income tax and goods and services tax for the Commonwealth
  • payroll tax, motor vehicle taxes, and gambling taxes for states and territories

Government fiscal position

Net operating balance

Net operating balance rose for all levels of general government. This is the third consecutive quarterly increase.  
In June quarter 2022 total net operating balance:

  • increased $15.5 billion to $13.2 billion
  • was $11.1 billion higher than June quarter 2021

Total expenses

  • Total expenses remain elevated compared to pre-pandemic levels
  • Total expenses paid by general government rose 6.6% from March quarter 2022 to $220.0 billion and increased 7.4% from June quarter 2021

The main contributors were:

  • increased activity from resumption of international travel to Australia
  • the Australian Federal Election in May 2022
  • the $250 Cost Of Living Payment
  • the introduction of additional childcare assistance for multiple children from 7 March 2022

Total revenue

  • Total revenue received by general government increased 14.2% from March quarter 2022 to $233.3 billion due to a rise in taxation revenue, and a rise in royalty income from higher commodity prices

  • Total revenue rose 12.6% from June quarter 2021 as improved economic conditions increased company income tax, personal income tax, and royalty income. Higher interest revenue was due to higher interest rates since April 2022

State and local net operating balance

State and local general government net operating balance rose $2.6 billion from March quarter 2022 to $1.6 billion. 

  • Queensland (up $2.7 billion) saw the largest increase

  • All jurisdictions rose except Victoria (down $2.1 billion)

  • All states recorded a positive net operating balance except Victoria (-$4.1 billion) and New South Wales (-$0.3 billion)

Through the year, net operating balance decreased $3.6 billion from June quarter 2021:

  • The largest decreases were Victoria (down $1.8 billion) and New South Wales (down $1.6 billion)
  • Queensland was the only state to increase (up $1.9 billion)

Public non-financial corporations’ fiscal position

Net operating balance

Net operating balance rose for all levels of public non-financial corporations (PNFCs). This is the first time since March quarter 2015 that this series has recorded a positive balance. The main contributors were:

  • Capital transfers received from general government to support social housing projects (up $0.7 billion)

  • 9.3% increase in sales of goods and services revenue from record-high wholesale electricity prices (up $2.0 billion)

  • 12.1% increase in subsidy revenue (up $0.4 billion) from general government

The 15.0% increase in other operating expenses (up $2.2 billion) was driven by higher electricity production input costs for coal and gas.  

In June quarter 2022 total net operating balance:

  • increased $0.5 billion to $0.3 billion
  • was $1.7 billion higher than June quarter 2021

Taxation revenue

Total taxation revenue

Total taxation revenue increased 14.5% (up $24.4 billion) from March quarter 2022.

Commonwealth taxation revenue

Commonwealth taxation revenue increased 17.2% (up $23.3 billion) to $158.7 billion. The rise in taxation revenue in June quarter 2022 followed a fall in March quarter 2022, which was the usual seasonal pattern. The main contributors were:

  • 44.2% rise in company income tax (up $12.5 billion)
  • 11.4% rise in personal income tax (up $7.8 billion)
  • 16.9% rise in goods and services tax (GST) (up $3.0 billion)

The 41.8% fall in excise on petroleum products (down $2.1 billion) reflected the Commonwealth government’s reduction of the fuel excise from 44.2 cents to 22.1 cents per litre from 30 March 2022. The reduction in fuel excise is expected to continue until 28 September 2022.

State and local government taxation revenue

State and local taxation revenue increased 3.3% (up $1.1 billion) to $34.2 billion, following a slight decrease in March quarter 2022. The main contributors were a 9.1% rise in payroll tax (up $0.6 billion) due to an increase in people employed, a 14.2% rise in motor vehicle taxes (up $0.4 billion), and a 5.3% rise in taxes on gambling (up $0.1 billion).

The main contributors to the rise in motor vehicle taxes were:

  • 9.1% rise in other vehicle registration fees and taxes (up $0.2 billion)
  • 11.8% rise in stamp duty on vehicle registration (up $0.1 billion)

The main contributors to taxes on gambling were:

  • 17.5% rise in gambling devices (up $0.2 billion) (d)
  • 24.3% fall in private lotteries (down $0.1 billion)
  1. Taxes on gambling devices include taxes and licences imposed on clubs for the operation of poker machines and other gambling devices

Stamp duty on conveyances decreased 2.7% (down $0.2 billion) across most jurisdictions. Victoria, Queensland, and New South Wales recorded the largest declines.

Public investment

Public investment in new assets

Total public investment in new assets (e) rose 14.6% through the year (up $4.6 billion) to $36.4 billion. Investment across most levels of government increased.

  • Commonwealth general government had the strongest growth, up 26.8% (up $1.6 billion) driven by investment in Defence and building projects
  • State and local general government rose 11.4% (up $2.1 billion), led by New South Wales, Victoria, and Queensland
  • PNFCs rose 14.8% (up $0.9 billion), driven by the investment from Commonwealth corporations including Snowy Hydro 2.0, NBN Co and Western Sydney Airport
  • Universities fell 13.9% (down $0.1 billion), as investment declined across most universities
  • Public investment in dwellings has increased above pre-pandemic levels driven by social housing programs in Victoria and Western Australia
  1. Includes acquisitions of new non-financial fixed produced assets. Second-hand asset acquisitions and sales between sectors are excluded from this measure.

Classifying new government policies in macroeconomic statistics

The ABS continues to undertake extensive consultation with stakeholders and subject matter experts to determine the appropriate classification for new government policies. These classifications are based on well-established conceptual frameworks (f), which ensure consistent recording of these policies across macroeconomic statistics, particularly in relation to Government Finance Statistics (GFS) and the National Accounts (NA).

These policies are grouped into five broad categories (g):

  • Frontline services
  • Provision of assistance to households
  • Provision of assistance to corporations, unincorporated enterprises, and non-profit institutions
  • Changes in tax and non-tax revenue
  • Capital injections, establishment of new, or extended, lending facilities and provision of guarantees

The following presents a summary of the ABS classification of major new government policies that began during June quarter 2022 (h).

Classification of selected new June quarter 2022 policies across Commonwealth and State and Territory levels of government
Types of policiesExamples of policiesClassification in Government Finance Statistics (GFS) and National Accounts (NA) (i)
Frontline services
Co-funding arrangements

Commonwealth and state: (j) Co-funding for the new Private Hospital staff support agreement

GFS: Current grants, Use of goods and services

NA: Income accounts - Current transfers, GDP (E) - Government final consumption expenditure

Vaccine supply

Commonwealth: National Immunisation Program for all children 6 months to less than 5 years, adults 65 years and older and other at-risk groups

State: Free Influenza A vaccine jabs at general practitioners and pharmacies for residents aged 5 to 64 years of age

GFS: Social benefits to households in goods and services

NA: GDP (E) - Government final consumption expenditure

Donated assets for foreign aid purposes

Commonwealth: Foreign aid in the form of Bushmaster and M113AS4 armoured vehicles to Ukraine

GFS:  Assets donated (defence equipment systems)

NA: Capital account - Capital transfers

Provision of assistance to households

Cash payments to households

Commonwealth:  Australian Government Disaster Recovery Payment and the Disaster Recovery Allowance

State: Other state-based payments to households e.g. WA Workers Travel and Accommodation Support Scheme

GFS: Current monetary transfers to households

NA: Income accounts - Social assistance benefits
Capital transfers to householdsState:  Essential services safety and reconnection grant (QLD)

GFS: Capital transfer expenses nec

NA: Capital account - Capital transfers, GPD (E) - Private gross fixed capital formation (Dwellings)
Current transfers to households

Commonwealth and state: Disaster Recovery Flooding Assistance – payments for reconnecting utilities, replacing essential household contents and temporary accommodation

State:  New toll relief for NSW drivers

GFS: Current grants, Current transfer expenses nec

NA: Income accounts - Other current transfers

Provision of assistance to corporations, unincorporated enterprises, and non-profit institutions

Co-funding business cash support

Commonwealth and state: NSW Northern Rivers Support Package

GFS: Current grants, Other subsidies on production

NA: Income accounts - Current transfers, GDP (I) – Other subsidies on production
Cash support payments to eligible producersState: NSW Small business Northern Flood Grant and Rental Relief Package

GFS: Other subsidies on production

NA: GDP (I) - Other subsidies on production
Targeted industry support for market producersState:  Funding to support international visitor arrivals (QLD)

GFS: Subsidies on products

NA: GPD (P) - Subsidies on products
Changes in tax and non-tax revenue
Changes in payroll taxState:  Mental health and well-being surcharge (VIC)

GFS: Other taxes on production

NA: GDP (I) - Total taxes on production

Capital injections, establishment of new, or extended, lending facilities and provision of guarantees

Loan guaranteesCommonwealth: Reinsurance pool for Northern Australia

GFS: Contingent liabilities

NA: Not recognised

 

  1. These frameworks are supported by international standards such as the International Monetary Fund (IMF) Government Finance Statistics Manual 2014 (GFSM 2014) and the System of National Accounts 2008 (2008 SNA)

  2. The categories are broadly based on the recommendations in “COVID-19: How to Record Government Policy Interventions in Fiscal Statistics” (IMF, 2020)

  3. This table summarises key policies with an impact on the macroeconomic accounts and does not cover every specific government policy in Australia

  4. NA includes the gross domestic product (GDP) accounts, which are measured using the expenditure approach (GDP (E)), the income approach (GDP (I)) or the production approach (GDP (P)).  NA also includes income accounts, capital accounts, financial accounts, and balance sheets

  5. ‘States’ refers to the state sector in macroeconomic statistics which covers all eight state and territory jurisdictions in Australia

Insights archive

Quarterly insights:

Insights into Government Finance Statistics (March 2022)

Insights into Government Finance Statistics (December 2021)

Insights into Government Finance Statistics (September 2021)

Government Finance Statistics, Australia - Analysis (June 2021)

Government Finance Statistics, Australia - Analysis (March 2021)

Government Finance Statistics, Australia - Analysis (December 2020)

Government Finance Statistics, Australia - Analysis (September 2020)

Annual insights:

Insights into Government Finance Statistics (2020-21)

Public sector debt analysis (2019-20)