Latest news with #surplus
News.com.au
4 hours ago
- Business
- News.com.au
‘Worst policy change': State cashes in on GST carve out
The 'worst policy change in the 21st' century is set to blow out the national budget by $60bn and keep one state in the black for years to come. The goods and services tax (GST) carve up was back in focus this week as state treasurers came out with their budgets. Queensland, NSW, Western Australia, and the ACT all delivered budgets, with one state standing above them all. Mining-rich WA is in the black, with costs tipped to come in at $2.5bn less than predicted spending. The rest, budget deficits. WA Treasurer Rita Saffioti used her speech to focus on the relative strength of the economy compared with other states while warning of an uncertain global outlook. 'This budget is about fortifying WA amid global shocks,' she said. Independent economist Saul Eslake argues that WA has achieved a surplus for the last seven years on the back of soaring GST revenue. 'Between 2016 and 2025, Western Australia essentially had the country by the shorts and they squeezed as hard as they could,' Mr Eslake told NewsWire. 'I call it the worst public policy decision of the 21st century.' So what changed for the WA government to achieve seven years of surplus. WHY IS WA THE LUCKY STATE? Much of WA's success comes back to two changes. The first was a change to the GST in 2018, with Mr Eslake arguing that the then Liberal federal government wanted to appease WA where it held an overwhelming majority of federal seats. Then treasurer Scott Morrison announced a review of Australia's horizontal fiscal equalisation (HFE) system, which determines the distribution of goods and services tax (GST) revenue among states and territories. After a Productivity Commission inquiry, the system changed so that all states and territories received 70c for every dollar of GST raised in 2022-23. That figure increased to 75c a dollar in 2024-25. Before the new agreement, WA's GST share was 30 cents in the dollar. High iron ore prices at the time could have meant WA got just 15.6 cents of every dollar of GST raised. 'So what Morrison did was commission the Productivity Commission to do an inquiry into horizontal fiscal equalisation,' Mr Eslake said. 'The terms of reference for that were written in Mathias Cormann's office. It was a classic example of (fictional TV character) Sir Humphrey Appleby's advice that you never call an inquiry unless you know what it's going to say.' HFE's aim is to ensure that every state and territory should have an equal opportunity to provide public services. The key word is should, as states and territories are free to raise additional revenues how they please as well as fund their own state-based services. 'That principle is they are equalising the fiscal capacity of the states and territories,' Mr Eslake continued. 'And the point of that, it matters far less where you live when it comes to the quality of schooling your kids get, the quality of healthcare that you and your family get, the quality of policy or environment you get.' Mr Eslake used the example of the US, which does not have HFE, meaning different states have varying life outcomes. 'If we didn't have it, then Victorians and NSW people would have much better public services and pay lower taxes, all else being equal, than Tasmanians or South Australians,' Mr Eslake said. 'And I would argue, and traditionally most Australians have accepted, that's something that makes Australia a better and fairer place than America in particular.' The second major change for WA was the rise of China, or as Paul Keating famously said, the state got 'kissed on the a*se by a big Chinese rainbow'. This kissing, Mr Eslake argues, turned WA from being propped up into a donor state. '(In the early 2000s) WA got a bigger share of whatever federal grants were going around than they would have got if it was distributed equal per capita,' he said. 'Because the (Commonwealth) Grants Commission recognised that when gold was fixed at $35 an ounce, and iron ore was only trading at $20 a tonne and they weren't selling much of it, they couldn't raise much money for mineral oil fees, but they had a relatively high cost of providing services.' BUDGET BOTTOM LINE To get other states to support these changes, a no one is worse off provision was added, with the federal government topping up any shortfalls in GST revenues. This policy was also extended until 2029-2030 under the Albanese government. This NOWO provision turns a $9bn budget blow into a $60bn black hole. 'This is the biggest blowout in the cost of any single policy decision ever with the possible exception of the NDIS, which as (economist) Chris Richardson says is at least set up for a noble purpose,' Mr Eslake said. 'It's what is allowing Western Australia to run a budget surplus while everyone else, including the feds, are running a deficit. 'In the longer run, what it will mean is residents of Australia's richest state, WA, will have better public services and lower taxes than people who live in the eastern states, which I say is un-Australian.'
CTV News
10 hours ago
- Business
- CTV News
Final budget numbers land: Alberta posts $8.3-billion surplus in 2024-25 fiscal year
The final numbers are in on last years' Alberta budget, and the bottom-line figure is an $8.3-billion surplus. That's $2.5 billion more than officials had expected to get. Finance Minister Nate Horner says the jump is because of more tax revenue from a growing population coupled with oil royalties that were higher than expected. Horner says just over $5 billion of the surplus is cash the province can spend, and the government will split it between its rainy-day Heritage Fund, paying down debt and savings. However, the good times are not expected to last. Horner's current budget for the fiscal year that began in April is expected to end next spring with a $5.2-billion deficit, with more multibillion-dollar deficits in the years after that. The province says the red ink is expected because of volatile oil prices, tax cuts and global events like the trade tariffs imposed by the United States. This report by The Canadian Press was first published June 27, 2025.
Globe and Mail
11 hours ago
- Business
- Globe and Mail
Alberta records unexpected $8.3-billion surplus off higher resource royalties
Massive oil and gas revenues driven by strong global crude prices and record production helped Alberta end the 2024-25 fiscal year with an unexpected $8.3-billion surplus. The surplus, announced Friday in Alberta Finance Minister Nate Horner's year-end fiscal update, was roughly $8-billion higher than the province predicted in its February budget, and $4-billion more than the previous fiscal year. Non-renewable resource revenues alone were $4.7-billion higher than the province had forecast. Along with strong oil prices, the province's fossil fuel sector benefited from the opening of the expanded Trans Mountain pipeline system, which significantly increased the price of Alberta's heavy oil. A lower exchange rate also propelled higher returns for the sector, as did oil production climbing to a record high of almost four million barrels a day. The financial results came off the back of a nine-year high in sector spending to develop oil, gas, hydrogen, geothermal, helium and lithium resources in 2024, as well as a significant increase in oil and gas reserves estimates. Alberta Premier Smith says plan for new West Coast oil pipeline 'pretty close' The unexpected natural resource payout looks to support Prime Minister Mark Carney's push for Canada to become an energy superpower – a message and a goal that the energy sector and provincial government say they can get behind. At the heart of the windfall are solid oil prices and increased demand for the heavier crude supplied by Alberta's oil sands. The price of West Texas Intermediate oil, a North American benchmark, averaged $74.34 per barrel over the year, slightly higher than the $74 per barrel forecast in last year's budget. And while that price was lower than in 2023-24, it was offset by Trans Mountain's influence, which narrowed the difference between Canadian and U.S. pricing. But the province's coffers remain highly dependent on revenue streams that are subject to significant volatility, particularly non-renewable resource royalties, noted the government's annual report. Oil prices in particular are impacted by global supply and demand, and have been volatile in recent years due to geopolitical tensions and economic pressures around the world. One example of how Alberta's reliance on oil prices can cause a significant swing in numbers is the deficit. In last year's budget, the province projected a surplus of around $400-million. Instead, Alberta ended the fiscal year with a $8.3-billion surplus. Time will tell how much the resource revenue roller coaster affects the deficit next year, which the government pencilled in at $5.3-billion in last year's budget. Gary Mason: B.C. and Alberta are about to renew old hostilities. It could get ugly In the 2024-25 fiscal year, Alberta's total revenues hit $82.5-billion, $8.9-billion more than the budget and $7.7-billion more than 2023-24. Strong corporate profits in the oil and gas sector contributed to the windfall, thanks in part to the U.S.-Canadian dollar exchange rate. It averaged 72 US cents in 2024-25, four cents lower than estimated in the budget and two cents lower than the 2023-24 average. Since oil is priced in U.S. dollars, the lower exchange rate boosted the Canadian dollar revenue. Bitumen and conventional oil production volumes rose by 37 per cent and 10 per cent from the budget, respectively. That brought bitumen royalties to $17.2-billion – $4.6-billion more than the budget and $2.6-billion higher than in 2023-24. Conventional crude oil royalties were $3-billion in 2024-25, $300-million higher than the budget and very close to 2023-24. Natural gas and byproduct royalties were $1.2-billion, up $200-million from 2023-24 and down $200-million from budget, due to fluctuations in oil and gas prices. Real GDP rose an estimated 2.7 per cent last year. The energy sector led Alberta's growth in business activity and output with activity ramping up in the second half of the year.
Bloomberg
11 hours ago
- Business
- Bloomberg
Alberta Posts Larger-Than-Projected Surplus, Braces for Deficit
Alberta posted a larger-than-projected surplus in its most recent fiscal year, providing the oil-rich province with some cushion against an expected trade war-driven shortfall in the current period. Revenue exceeded expenses by about C$8.3 billion ($6.1 billion) in the fiscal year that ended in March, about C$8 billion more than originally projected, the provincial government said Friday. The gain was largely attributable to higher-than-expected resource revenue and corporate income taxes.
Times of Oman
12 hours ago
- Business
- Times of Oman
India records $13.5 billion current account surplus in Q4-FY25
Mumbai: India's current account recorded a surplus of $13.5 billion (or 1.3 per cent of GDP) in the January-March quarter of 2024-25 as compared with $4.6 billion (or 0.5 per cent of GDP) in the same quarter of 2023-24, RBI data showed Friday. Reportedly, the country's current account posted a surplus for the first time in four quarters. In the October-December quarter of 2024-25, the current account was in a deficit of USD 11.3 billion (1.1 per cent of GDP). Merchandise trade deficit, at USD 59.5 billion in Q4 2024-25, was higher than USD 52.0 billion in Q4 2023-24. However, it moderated from USD 79.3 billion in Q3 2024-25. Net services receipts increased to USD 53.3 billion in Q4 2024-25 from USD 42.7 billion a year ago. Services exports have risen on a year-on-year basis in major categories such as business services and computer services. Net outgo on the primary income account, primarily reflecting payments of investment income, moderated to USD 11.9 billion in Q4 2024-25 from USD 14.8 billion in Q4 2023-24. Personal transfer receipts, mainly representing remittances by Indians employed overseas, rose to USD 33.9 billion in Q4 2024-25 from USD 31.3 billion in Q4 2023-24. In the financial account, foreign direct investment (FDI) recorded a net inflow of USD 0.4 billion in Q4 2024-25 as compared to an inflow of USD 2.3 billion in the corresponding period of 2023-24. Foreign portfolio investment (FPI) recorded a net outflow of USD 5.9 billion in Q4 2024-25 as against a net inflow of USD 11.4 billion in Q4 2023-24. In the entire year 2024-25, India's current account deficit, at USD 23.3 billion (0.6 per cent of GDP) was lower than USD 26.0 billion (0.7 per cent of GDP) during 2023- 24, primarily due to "higher net invisibles receipts." Net invisibles receipts were higher during 2024-25 than a year ago on account of services and personal transfers, RBI said. Aditi Nayar, Chief Economist and Head - Research and Outreach, ICRA Limited, said, "While the current account balance expectedly reported a seasonal surplus in Q4 FY2025, the size of the same overshot our expectations, amid a surprise dip in primary income outflows in the quarter. This led to the unexpected narrowing in the CAD to 0.6 per cent of GDP in FY2025 from 0.7 per cent in FY2024." "Amid expectations of a widening in the merchandise trade deficit as well as a moderation in the services trade surplus in Q1 FY2026 vis-a-vis Q4 FY2025, we expect the current account to revert to a deficit in the ongoing quarter, printing at 1.3 per cent of GDP. We foresee India's current account deficit to average 1 per cent of GDP in FY2026, assuming an average crude oil price of USD 70/barrel for the fiscal, which is eminently manageable in spite of the prevailing global uncertainties," added Nayar. In another news, the Reserve Bank of India, in consultation with the State Governments/Union Territories (UTs), announced today that the quantum of total market borrowings by the State Governments/UTs for the quarter July - September 2025, is pegged to be Rs 2.86 lakh crore.
