The federal government's final cash deficit for 2016/17 was $33.2 billion -- $4.4 billion less than the $37.6 billion forecast in May.
The reduction was driven by higher taxes from company profits and capital gains from the property market, combined with reduced spending on welfare.
The improvement in the budget bottom line was helped by beats on some key economic forecasts set in the budget, as Australia benefited somewhat from the synchronised upturn in global growth this year. The national economy accelerated sharply between April and June after a shocker in the first three months of the year.
Treasurer Scott Morrison said the result was due to the government's efforts to "de-risk" the budget and keep spending under control, with spending on social services more than $5 billion lower that last year's budget.
The savings for the 2017 financial year savings were partly driven by lower than expected payments on the National Disability Insurance Scheme, which Treasury says reflects "a more gradual transition of participants into the NDIS than estimated and under-utilisation of capital expenditure". This means not as many people as expected have moved onto the NDIS, and capital outlays have been less than forecast.
The Treasurer said the improvement the bottom line was driven by $4.1 billion in higher total receipts than expected when this year's budget was handed down in May, as well as an improvement of $1.2 billion from payments being lower than expected.
The underlying cash deficit fell below 2% of GDP for the first time in four years, coming in at 1.9% of GDP.
Last month Business Insider reported the budget was running several billion dollars ahead of target.
Among the strong results:
- Growth is slightly firmer: real GDP grew by 1.9% in 2016-17, slightly stronger than the 1.75% forecast in the budget, while nominal GDP grew by 6.0%, in line with the forecast. This would have been helped by inflation being touch lower than expected.
- A big beat on job creation: almost 250,000 jobs were created over 2016-17 resulting in employment growing by 1.9% through the year to the June quarter. The budget forecast just 1%.
- Net debt is down: General government sector net debt was $322.3 billion, $2.8 billion better than estimated at the time of the 2017-18 Budget.
This table shows the improved performance over what was forecast back in May as the final outcome.
Here's a breakdown of the better-than-expected tax receipts:
Company tax receipts were $590 million (0.9%) above the 2017-18 Budget estimate. This reflects stronger-than-expected outcomes from assessments, mainly from smaller companies due in May.
- Receipts from the GST were $569 million (1.0%) above the 2017-18 Budget estimate, reflecting strength in collections in the last part of the financial year. Higher-than-expected GST receipts will be reflected in higher payments to the States.
- Receipts from superannuation fund taxes were $488 million (6.3%) above the 2017-18 Budget estimate, partly reflecting lower-than-expected refunds to self-managed superannuation funds.
- Total excise and customs duty receipts were $197 million (0.6%) above the 2017-18 Budget estimate, largely reflecting higher-than-expected fuel and other customs duty collections, partly offset by lower-than-expected tobacco collections.
- Fringe benefits tax receipts were $314 million (7.2%) below the 2017-18 Budget estimate, primarily reflecting lower-than-expected on-assessment collections.