Treasury has revealed the state of the Government’s finances, and it's been revealed that spending has dropped.
The country's still in an operating deficit of $9.3 billion, but tax take has gone up and growth in total expenses has slowed.
Infometrics principal economist Brad Olsen unpacks what's behind this recent data.
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Speaker 1 (00:09):
You're listening to a podcast from News Talks'd be follow
this and our wide range of podcasts now on iHeartRadio.
Speaker 2 (00:16):
Now, the government's financial statements are out and it's not
looking that great. Debt is now at forty one point
eight percent of GDP. It's gone up in the last year. Obviously.
The operating deficit obergal X is sitting on nine point
three billion dollars. That's higher than last years which was
eight point eight billion dollars. Revenue is up, expenses is up.
Of course, Finance Minister Nicolaullis managed to spin it in
(00:36):
a good light.
Speaker 3 (00:37):
Health and education, but as a proportion of the overall economy,
Crown spending is reducing.
Speaker 2 (00:42):
Brad Olson is Info Metrics principal economist and with us
Hi Brad good evening. Obviously not great, But how much
of this should we give them slack fall because of
the state of the economy.
Speaker 3 (00:53):
Well, I think more than just the state of the economy.
The challenges is that a lot of these numbers were
baked in by previous decisions and unless you were going
to see some really really fundamental changes, and that would
probably have to affect the likes of you know, different
welfare and social spending, health and education. You probably couldn't
do too much of a turnaround job too quickly. So
the fact that some of these indicators have either stabilized
(01:16):
or started to move slightly in the right direction. Yes,
it's not enough yet, but some of them. I mean,
you look at the likes of spending now a smaller
percentage of GDP. You mentioned the debt figure up six
point seven billion dollars from last year, but three point
five billion lower than was forecast in the budget. And
the fact that it stabilized at forty one point eight percent.
(01:37):
The first change, and it will first part of a
turnaround is at least leveling things out and stopping them
going higher. So I guess on that front there is
a bit of a change, But clearly there's still a long,
hard slog for the government books to get back into
a more reasonable position. That's probably going to take quite
a few years, until probably the twenty thirties.
Speaker 2 (01:55):
But why is the operating deficit still widening?
Speaker 3 (01:59):
Well, I mean the government is still spending more in
general than it's earning. If you look at the sort
of spending figures, total revenue, so money earned by government
was up to point five billion from last year, spending
up three point four billion, But again a lot of
that coming down to the likes of social security and welfare.
That's both job seeker support. Because the economy is weak here,
(02:20):
you've got more people out of jobs, so that's sort
of cyclical. But of course you've also got those higher
superannuation payments. Like when you look through the numbers, those
are the areas that you see the biggest changes. What
the government has done, particularly around Kaying Aura has seen
a little bit less going through in the expense line,
so that's an important change. But at the same time
(02:40):
there are then concerns in the community around social housing.
So all of this is a very delicate and very
difficult balancing act.
Speaker 2 (02:47):
I think, what is it We're supposed to hit surplus
in about four years and twenty twenty nine.
Speaker 1 (02:50):
Is that credible?
Speaker 3 (02:52):
Well, I mean it also depends on exactly what you
include or exclude from the various measures. I mean, it's
sort of I think it's around twenty thirty is sort
of where my mind is sitting when you look at
the various indicators and realizing that's still a long way
away in terms of other economics. That could come through,
and a whole lot of other changes. So look, I
think we are seeing that first shift towards stabilizing things,
(03:15):
to bringing down expenses as a proportion of GDP, But
it's still going to take a while for those numbers
to get back into what we might feel as a
sort of comfortable and sustainable zone. Let's remember the reason
we need to get the government accounts back into a
more sort of sensible order is that the next time
something comes out of the blue and hits the economy,
we need to have buffer room to respond. And at
(03:37):
the moment, we're still trying to pay off the credit
card bill from the last couple of times we've wrapped
it up.
Speaker 2 (03:42):
Hey, listen, what do you make of the OCR announcement
yesterday with the double cut. Do you think that that
is enough to get our spending again?
Speaker 3 (03:50):
Well, in a sense, I mean the proof will be
in the pudding, but not for another twelve months. I mean,
those decisions that were made yesterday still won't flow through
to the economy fully. Brad, it was still for a while.
Speaker 2 (03:59):
No, But Brad, it was supposed to be a head change,
a game changer in our heads. Right, We're supposed to
stop being scared, stop saving, and start spending effective. Now
is that going to work?
Speaker 3 (04:08):
Well, that's the talk. But that's why I'm a little
bit sort of, I guess, curious and a little bit
there's a part in the bottom of my stomach here
that still worries that if we've got you know, three
hundred or so basis points of cuts and that hasn't
done anything, but we're waiting for just that extra little
cut to get us over the line. I worry that
when inflation is nearly at three percent and similar, by goodness,
(04:28):
we could look back at this decision any year's time ago,
we might have overdone it. I get the call for
stimulus and support, but that inflation worry, It really does
sort of stick in the back of my throat and
it worries me that will be there in a year's
time and still concerned.
Speaker 2 (04:42):
Yeah, Hey, thanks very much. Brad always appreciated this. Brad
Awesome infametrics principle Economist.
Speaker 1 (04:47):
For more from News Talks b listen live on air
or online, and keep our shows with you wherever you
go with our podcasts on iHeartRadio
You're listening to a podcast from News Talks'd be follow
this and our wide range of podcasts now on iHeartRadio.
Speaker 2 (00:16):
Now, the government's financial statements are out and it's not
looking that great. Debt is now at forty one point
eight percent of GDP. It's gone up in the last year. Obviously.
The operating deficit obergal X is sitting on nine point
three billion dollars. That's higher than last years which was
eight point eight billion dollars. Revenue is up, expenses is up.
Of course, Finance Minister Nicolaullis managed to spin it in
(00:36):
a good light.
Speaker 3 (00:37):
Health and education, but as a proportion of the overall economy,
Crown spending is reducing.
Speaker 2 (00:42):
Brad Olson is Info Metrics principal economist and with us
Hi Brad good evening. Obviously not great, But how much
of this should we give them slack fall because of
the state of the economy.
Speaker 3 (00:53):
Well, I think more than just the state of the economy.
The challenges is that a lot of these numbers were
baked in by previous decisions and unless you were going
to see some really really fundamental changes, and that would
probably have to affect the likes of you know, different
welfare and social spending, health and education. You probably couldn't
do too much of a turnaround job too quickly. So
the fact that some of these indicators have either stabilized
(01:16):
or started to move slightly in the right direction. Yes,
it's not enough yet, but some of them. I mean,
you look at the likes of spending now a smaller
percentage of GDP. You mentioned the debt figure up six
point seven billion dollars from last year, but three point
five billion lower than was forecast in the budget. And
the fact that it stabilized at forty one point eight percent.
(01:37):
The first change, and it will first part of a
turnaround is at least leveling things out and stopping them
going higher. So I guess on that front there is
a bit of a change, But clearly there's still a long,
hard slog for the government books to get back into
a more reasonable position. That's probably going to take quite
a few years, until probably the twenty thirties.
Speaker 2 (01:55):
But why is the operating deficit still widening?
Speaker 3 (01:59):
Well, I mean the government is still spending more in
general than it's earning. If you look at the sort
of spending figures, total revenue, so money earned by government
was up to point five billion from last year, spending
up three point four billion, But again a lot of
that coming down to the likes of social security and welfare.
That's both job seeker support. Because the economy is weak here,
(02:20):
you've got more people out of jobs, so that's sort
of cyclical. But of course you've also got those higher
superannuation payments. Like when you look through the numbers, those
are the areas that you see the biggest changes. What
the government has done, particularly around Kaying Aura has seen
a little bit less going through in the expense line,
so that's an important change. But at the same time
(02:40):
there are then concerns in the community around social housing.
So all of this is a very delicate and very
difficult balancing act.
Speaker 2 (02:47):
I think, what is it We're supposed to hit surplus
in about four years and twenty twenty nine.
Speaker 1 (02:50):
Is that credible?
Speaker 3 (02:52):
Well, I mean it also depends on exactly what you
include or exclude from the various measures. I mean, it's
sort of I think it's around twenty thirty is sort
of where my mind is sitting when you look at
the various indicators and realizing that's still a long way
away in terms of other economics. That could come through,
and a whole lot of other changes. So look, I
think we are seeing that first shift towards stabilizing things,
(03:15):
to bringing down expenses as a proportion of GDP, But
it's still going to take a while for those numbers
to get back into what we might feel as a
sort of comfortable and sustainable zone. Let's remember the reason
we need to get the government accounts back into a
more sort of sensible order is that the next time
something comes out of the blue and hits the economy,
we need to have buffer room to respond. And at
(03:37):
the moment, we're still trying to pay off the credit
card bill from the last couple of times we've wrapped
it up.
Speaker 2 (03:42):
Hey, listen, what do you make of the OCR announcement
yesterday with the double cut. Do you think that that
is enough to get our spending again?
Speaker 3 (03:50):
Well, in a sense, I mean the proof will be
in the pudding, but not for another twelve months. I mean,
those decisions that were made yesterday still won't flow through
to the economy fully. Brad, it was still for a while.
Speaker 2 (03:59):
No, But Brad, it was supposed to be a head change,
a game changer in our heads. Right, We're supposed to
stop being scared, stop saving, and start spending effective. Now
is that going to work?
Speaker 3 (04:08):
Well, that's the talk. But that's why I'm a little
bit sort of, I guess, curious and a little bit
there's a part in the bottom of my stomach here
that still worries that if we've got you know, three
hundred or so basis points of cuts and that hasn't
done anything, but we're waiting for just that extra little
cut to get us over the line. I worry that
when inflation is nearly at three percent and similar, by goodness,
(04:28):
we could look back at this decision any year's time ago,
we might have overdone it. I get the call for
stimulus and support, but that inflation worry, It really does
sort of stick in the back of my throat and
it worries me that will be there in a year's
time and still concerned.
Speaker 2 (04:42):
Yeah, Hey, thanks very much. Brad always appreciated this. Brad
Awesome infametrics principle Economist.
Speaker 1 (04:47):
For more from News Talks b listen live on air
or online, and keep our shows with you wherever you
go with our podcasts on iHeartRadio
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