Australian Local Government Association

Federal Budget priorities

The Australian Government has budgeted for expenses amounting to $220 billion in 2006-07. This represents 21.8% of Gross Domestic Product.

This will increase to $252.6 billion in 2009-10.

The Commonwealth estimates total Revenue to be $231.7 billion in 2006-07 (23% of GDP) increasing to an estimated $252.6 billion in 2009-10.

Consequently, the underlying cash budget surplus for 2006-07 is $10.8 billion and will increase to $12.0 billion in 2009-10¹.

Tables 56.1 outlines the Commonwealth General Government Budget Aggregates (04-05 to 09-10)

In 2006-07 major measures include:

• Personal income tax cuts worth $36 billion over four years. This is in addition to the $21.7 billion in tax cuts announced in the 2005-06 budget
• Superannuation tax concessions with the abolition of tax on superannuation benefits paid from taxed funds to people aged over 60 from 1 July 2007
• $993 million over four years to expand eligibility for the maximum rate of family tax benefit
• $497 million over four years to extend the Family Tax Benefit Large Family Supplement to families with three children
• $2.3 billion to road and rail projects, increasing Auslink to a $15 billion program from 2004-05 to 2008-09.This includes funding for the Hume ($800 million), Bruce ($220 million) and Pacific Highways ($160 million) and $270 million to improve the North-South rail corridor
• $500 million to the Murray-Darling Commission to undertake a range of new capital works and other initiatives to enhance environmental flows
• $792 million in 2006-07 ($1.7 billion over four years) to acquire a new heavy lift capability for the Australian Defence Force
• $1.1 billion over four years for a range of national security measures
• $1.9 billion over four years for mental health reform measures
• $971 million over four years to introduce the health and social services access card

Chart 20 outlines Commonwealth expenditure by function as a percentage for 2005-06. Table 57 provides an overview of the funding attached to each function for the period 2004-05 to 2009-10.

Chart 20

The major source of revenue in 2006-07 will be from individual income tax accounting for 50% of total Commonwealth revenue. This includes the significant income tax cuts ($ 36 billion over four years).

Table 58.1 - 58.6 provides details on estimated Commonwealth revenue for the five-year period 2004-05 to 2009-10.

For information about ALGA's analysis of the Federal Budget please contact:

• John Pritchard
• Executive Director, Policy and Research
  Australian Local Government Association
• Phone: 02 6122 9414   
• john.pritchard@alga.asn.au