The 2010-11 Final Budget Outcome shows that despite the major impact on budget revenues from the global financial crisis, recent natural disasters and a strong Australian dollar, Australia's public finances remain amongst the strongest in the developed world.
While Australia avoided recession, the global financial crisis still cut around $130 billion from government revenues as the economy slowed markedly and businesses accumulated substantial income and capital losses that continue to be offset against tax liabilities.
From the onset of the global financial crisis it had been anticipated that these losses would hit tax receipts hardest in 2010-11. In total, 2010-11 tax receipts came in around $40 billion below the level that was forecast before the crisis.
Despite this, Australia's budget position remains one of the strongest in the world, in large part due to the decisive actions taken to avoid recession and the strict fiscal discipline delivered by the Government.
As a result Australia is expected to return to surplus well ahead of its peers and has a net debt level less than a tenth of the level across major advanced economies.
The Australian Government general government sector recorded an underlying cash deficit of 3.4 per cent of GDP ($47.7 billion) for 2010-11. This compares to deficits of over 10 per cent of GDP in the United Stated and United Kingdom.
The strength of Australia's budget position has been emphasised by key global economic authorities such as the IMF and the OECD and is a key reason why Australia has retained its AAA credit rating at a time of global turbulence.
The outcome for the underlying cash balance in 2010-11 shows a small improvement of $1.6 billion from the estimate at the May budget. This was the result of lower cash payments of $3.6 billion, offset partially by lower cash receipts (excluding Future Fund earnings) of $2.0 billion.
Total taxation receipts for 2010-11 were $1.7 billion lower than estimated in the 2011-12 Budget, largely reflecting softer than expected company taxes and taxes on wages, with this softness expected to have flow-on implications for revenues in future years, including in 2011-12.
Total cash payments for 2010-11 were $3.6 billion lower than estimated in the 2011-12 Budget. The reduction in payments reflected lower than expected payments across a range of demand driven programs and the finalisation of some agreements with the States and Territories.
Australian Government net debt was $84.6 billion (6.1 per cent of GDP) in 2010-11. This is dramatically lower than the level across major advanced economies, which averaged a net debt of 75.3 per cent of GDP in 2010.
The Government remains determined to return the budget to surplus in 2012-13, despite softer than expected revenues and increased global instability that will inevitably make that task more difficult.
An electronic version of the Final Budget Outcome 2010-11 can be found on the Budget website.