New federal government figures show the budget is back on track to return a $7.05 billion surplus in this financial year, even though the Australian Taxation Office is doling out tax refunds at a greater pace than had been expected.
The government’s monthly financial statement for September released on Friday showed the underlying budget balance was in a $13.85 billion deficit, $119 million smaller than had been predicted for the first three months of the 2019/20 year.
This is in contrast to the August result, where the deficit had been $664 million larger than forecast after two months of the financial year.
However, the Department of Finance is quick to point out monthly results are generally volatile due to timing differences between revenue and receipts, and expenses and payments.
The improvement in the monthly statement came despite income tax refunds running at just over $20 billion and $1 billion more than the government’s accounts thought it would be after three months.
“The tax refunds are flowing,” Commonwealth Securities chief economist Craig James said.
“Now the question is what people do with them … the experience from retailers so far is mixed.”
The Morrison government introduced personal income tax cuts on July 1, but taxpayers can only feel their benefit after they have put in their tax return.
The April 2 budget forecast a surplus of $7.05 billion for 2019/20, which if correct, will be the first time the budget has been in the black in just over a decade.
Since then there has been a vast improvement in the starting point for this financial year with the deficit for 2018/19 having shrunk to just $700 million compared to the $4.2 billion forecast at the time of the budget.