Between 1980-2023;

• 28 Years of Budget Deficit
• 13 Years of Budget Surplus

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labels: ["2006", "2007", "2008", "2009", "2010", "2011", "2012", "2013", "2014", "2015", "2016", "2017", "2018", "2019", "2020", "2021", "2022", "2023", "2024 (Forecast)", "2025 (Forecast)", "2026 (Forecast)"]
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  - title: Gov. Net Debt as a % of GDP
    data: [0, -2.2, -3.4, -0.9, 3.7, 6.4, 10.2, 10.4, 13.1, 15.1, 18.3, 18.3, 18.6, 19.2, 24.8, 28.6, 22.5, 23.0, 25.8, 27.4, 28.5]
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General Trend

• As Economic Growth 📉 slows;
  • Budget Outcome quickly turns to Deficit.
• As Economic Growth 📈 recovers;
  • Budget Outcome gradually moves towards a surplus.

Why does this occur? (source) §

This occurs due to Automatic Stabilisers as well as the Discretionary adjustments that follow them in either the positive or negative direction.

Gradual movement towards a surplus is primarily a result of Automatic Stabilisers (🠱tax revenue/⬇Welfare). generally, we are still in a Expansionary Stance during the Recovery phase even though we get closer to a surplus because the stance is determined by the structural balance.

#econs-example source)

Post-GFC Structural Measures were being put in place, even all the way up to 2017 yet we kept approaching a surplus due to Automatic Stabilisers. (

2008 - 2009 §

After the GFC everyone attempted to limit their exposure to Mortgages / Morgage Backed Securities to avoid risk.

• Decreases in Credit Availability
• Plunge in Business Confidence

[!Fiscal-Policy] Expansionary Fiscal Stimulus Package (source)

Size: $10.4b, or 1% of GDP)

Cash payments to low-income families; Support for Housing Construction; New “Training Places”

[!Fiscal-Policy] Second Expansionary Fiscal Stimulus (source)

Size: $42b, 4% of GDP

Targets Consumption Support & Infrastructure Spending. Examples of Included programs; Schools building program Home Insulation Program

[!Monetary-Policy] Expansionary Monetary Policy (source) The RBA adopted Expansionary Monetary Policy Stance. With the Cash Rate decreasing 4.25% in just 9 months 7.25% on Aug. 2008; 3% in April 2009

Outcome of these Policy Adjustments (source) §

Within 2008-2009 Australia managed to avoid recession, in 2008-2009;

• Economic Growth was just 1.8%
• Unemployment was nearly 6%.
  • Fears of it rising above 10%

And This was despite Australia having a;

• Favourable Terms of Trade
• Strong demand for Minerals Thanks to those, we were able to survive the GFC better than any other western country.

Post-GFC §

• Australia averaged only 2.5% growth per annum from 2010-19
  • Largest growth between 2010-19 was 2011-12 with 3.9%
• Average Rate of “High Income” countries was only 2% from 2010-19.
• Government Debt hit 10% in 2013 (source)

2011-12 §

[!Fiscal-Policy] Unknown Package (source) Small Businesses were allowed to claim a 100% depreciation allowance in equipment. Package duration extended multiple times

2014-15 §

[!Fiscal-Policy] ⬇Contractionary Fiscal ‘Budget Repair’ (source)

• $80b Cuts to Education & Health Spending
• Review of Eligibility of people under 35 receiving disability pension
• Extra fees for doctor visits
• Reduced Unemployment entitlements for people under 25
• “Temporary budget repair” Tax on high Income Earners.

All Measures abandoned by Early 2015 due to their ability to be elctorally damaging.

Econ. Growth and Wage increases did not help to improve household budgets.

It became apparent to the government that they could not use the budget to prematurely exit a deficit.

2020-21 §

• Entered Recession for the first time since 1991

[!Fiscal-Policy] Expans. COVID-19 Stimulus Lasted from: Feb. 2020 --- Augest 2020

Business Support §

Job Keeper §

• All Employees of Eligible Businesses get $1,500 per fortnight

Misc. §

Small businesses can claim a 100% Depreciation allowance on equipment Investment (in palce since 2011, but extended again) Cash Payments to businesses based on wage, and salary tax. Wage Subsidies for Apprentices.

Household Support §

• Two $750 Payments to pensioners / Welfare recipients
• Early access to superannuiation (requires application)
• A Temporary $550 coronavirus supplement to JobSeeker Recipients.
• Child Care relief package
• $25,000 grant to home owners for new building or substantial renovations (HomeBuilder)

Total Cost: >250 Billion §

And an additional $13b through measures like payroll tax relief, and support for sectors such as tourism §

Fiscal Policy Outlook 2023-25 §

• Australian Budget is forecast to stay in deficit for the next decade.
  • Usually budgets return to surplus after 5-6 Years. It has been 14.

What has prevented the “balancing” of the budget §

• COVID led to much larger stimulus than what was applied during the GFC in 2008.
• Russian Invasion of Ukraine causing Disruption in Feb. 2022
  • Impacted Energy & Food Supply world-wide
• Severe Flood events in the eastern states.

Those listed above are supply-side problems.

Policy Responses however have focused on the demand side instead, likely due to;

• Lack of Real Wage increases
• Household budgets eing stretched by rising Electricity, gas, and food costs.
• Rising Rent and mortgage prices
  • e.g. a 25 Year, 650