Accounting body sceptical over ‘better nick’ budget

The Australian government has revealed the largest nominal improvement in the budget in a single parliamentary term, yet CPA Australia has expressed a level of concern.

The accounting body noted it was pleasing to see that the Final Budget Outcome 2024–25 presented on Monday (29 September) highlighted an improvement in Australia’s fiscal position in comparison to earlier forecasts, however wasn’t entirely sold.

Gavan Ord, CPA Australia business and investment lead, said the professional accounting body was concerned over the nation’s over-reliance on a shrinking pool of taxpayers and persistent expected deficits over the next decade.

The outcome reflected that the $10 billion underlying cash deficit was less than half the $29.7 billion deficit forecast in the 2025 pre-election economic and fiscal outlook, with income tax receipts $13 billion higher than projected.

Treasurer Jim Chalmers said from these numbers and in dollar terms, the Albanese government had made more progress on the budget in three years “than any government history”.

“This outcome means the fiscal position is $209 billion better over the three years to 2024–25 than the one we inherited,” Chalmers said.

“Added together, our three Final Budget Outcomes have delivered a cumulative underlying cash balance of +$28 billion, compared with the more than −$181 billion we inherited. The better fiscal position means gross debt in 2024–25 was $188 billion lower than the one left to us, avoiding over $60 billion in interest costs over the 11 years to 2032–33.”

According to Chalmers, the “much better nick” of the budget could be attributed to the government having paid down almost $200 billion of debt, demonstrated spending restraint, as well as overseeing the creation of more than 1.1 million jobs and growth in real wages.

Ord said that while the 2024–25 figures also highlighted government payments to be $4.9 billion lower than what was forecast, the figures still demonstrated that Australia needed a holistic review and reform of the tax system to ensure it could deliver for the future.

“CPA Australia notes the better-than-expected improvement to Australia’s fiscal position. However, these results show the government remains overly reliant on company and personal income taxes,” Ord said.

“The proportion of Australians paying income taxes is declining as the population ages – they will shoulder an increasingly heavy burden unless the tax base changes. Although the final financial results for 2024-25 exceeded projections, Australia continues to face substantial budgetary pressures, with deficits projected to persist over the next decade. Strengthening our fiscal position remains an urgent priority.”

The outcome also highlighted that the government limited real spending growth around 70 per cent of all tax receipt upgrades to the “bottom line”, in comparison to the earlier figure of return at 40 per cent.

Despite the clear budget improvement, Chalmers acknowledged that structural pressures were intensifying rather than easing, and that the government would look to take “decisive action” to address spending pressures.

Additionally, the government would also look to deliver substantial reforms to the NDIS and aged care system, Chalmers said.

“The Final Budget Outcome is a powerful demonstration of the progress Australians have made together on the economy, but there’s more work to do to make the budget more sustainable in the face of global economic uncertainty,” he said.

“We’ll continue to do what we can to clean up the budget mess we inherited from the Coalition and to make our economy more productive and resilient.”

Ord said these motives outlined by Chalmers would be crucial to ensuring and solidifying Australia’s global position.

“We encourage the Albanese government to retain its focus on reducing expenditure, improving productivity and removing unnecessary regulation,” he said.

“Addressing these issues will help improve Australia’s global competitiveness and ensure we are a destination for global capital and investments, while also shielding the economy and government finances from potential geopolitical shockwaves.”