So the ABC – whose job it is to provide factual information – has provided a handy guide to the budget process. Including the term “revenue collapse” that our left-of-centre friends keep talking about.
Over the past few years there has been a significant drop in the amount of tax revenue coming in to the government. There is some contention over the reasons behind the drop, but economists are united in saying that at least part of the problem facing the government in its quest to return to a surplus stems from a lack of revenue, rather than too much government spending.
Really? Tax Revenue has fallen?
Not according to the MYEFO. In the graph below I show tax revenue and, as can be seen, it has been growing in the past few years.
Revenue this financial year is about 23 per cent higher than Peter Costello had to spend in 2007-08. Remember government has other sources of revenue too. Total Receipts are up nearly 24 per cent on what Peter Costello had in 2007-08. Spending is up 50 per cent. That is why the budget is in deficit.
Even as a percentage of GDP Tax Revenue and Total Receipts have been rising over the past few years. There has been no “significant drop in the amount of tax revenue coming in to the government”. What has happened is that forecast revenue has exceeded actual revenue but only university administrators – and now the ABC – would describe that situation as being a drop in revenue.