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Statement 8: Trends in Public Sector Finances

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Fiscal balance

This section looks at fiscal balance data for the Commonwealth and State/local non-financial public sectors, including medium term projections for the Commonwealth general government sector.

Concept

Fiscal balance, or GFS net lending, represents the gap between government savings and investment. It measures a government's net call on other sectors of the economy, and approximates a government's contribution to the current account deficit.

Fiscal balance includes net capital expenditure, but not the use of capital (depreciation). The fiscal balance is a good measure of the impact of a government's budget on the economy because it includes the full amount of investment by a government in a given period.

Data

As not all States and Territories have made the transition to accrual accounting, fiscal balance data for the consolidated public non-financial corporations and non-financial public sector are currently available for 1998-99 through 2000-01, while consolidated general government data is available through 2001-02. Tables 1, 2 and 3 show general government, public non-financial corporations and non-financial public fiscal balance data respectively by level of government.

Trends

The Commonwealth general government fiscal balance is expected to move from a surplus of 0.8 per cent of gross domestic product (GDP) in 2000-01 to a deficit of 0.1 per cent of GDP in 2001-02, and to return to surplus in 2003-04. This is largely the result of transitional issues associated with the move to the Pay As You Go (PAYG) system which recognises some revenue as accruing in 2000-01 even though payments by companies can be spread over 2½ to 5 years.

The State/local general government sector is expected to have a small fiscal deficit in 2000-01 and 2001-02 (although the latter estimate should be treated with some caution as the majority of States and Territories have yet to bring down their 2001-02 budgets).

The consolidated PNFC sector is expected to be in a fiscal surplus position in 1999-2000 and 2000-01. The decrease in consolidated PNFC revenue and expenses as a share of GDP in recent years is partly attributable to the privatisation of PNFCs by both the Commonwealth and State/local governments.

Table 1: General government fiscal balance by level of government (per cent of GDP)(a)

Table 1: General government fiscal balance by level of government (percent of GDP)(a)

(a) Data are sourced from the ABS 2000-01 Government Financial Estimates and Treasury estimates.

(b) Consolidated government includes Commonwealth and State/local governments and universities.

(c) The fiscal balance is equal to revenue less expenses less net capital investment which is not shown in this table.

(e) Estimates.

(p) Projections.

na Data not available.

Table 2: Public non-financial corporations fiscal balance by level of government (per cent of GDP)(a)

Table 2:  Public non-financial corporations fiscal balance by level of government (percent of GDP)(a)

(a) Data are sourced from the ABS 2000-01 Government Financial Estimates and Treasury estimates.

(b) Consolidated government includes Commonwealth and State/local governments and universities.

(c) The fiscal balance is equal to revenue less expenses less net capital investment which is not shown in this table.

(e) Estimates.

na Data not available.

Table 3: Non-financial public sector fiscal balance by level of government (per cent of GDP)(a)

Table 3: Non-financial public sector fiscal balance by level of government (percent of GDP)(a)

(a) Data are sourced from the ABS 2000-01 Government Financial Estimates and Treasury estimates.

(b) Consolidated government includes Commonwealth and State/local governments and universities.

(c) The fiscal balance is equal to revenue less expenses less net capital investment which is not shown in this table.

(e) Estimates.

na Data not available.

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