While Scott Morrison and Josh Frydenberg have likely secured their place in Australian fiscal history as our biggest-spending government since World War II, they’ve quietly notched up another record for big government as well.
In the June quarter this year, the Commonwealth raised a new record of taxation revenue, according to the Australian Bureau of Statistics (ABS), with tax revenue hitting $140 billion in the quarter. That compares to just $118 billion in the June quarter last year, which obviously was dramatically affected by the pandemic. But in the June quarter of 2019, a much more normal fiscal year, tax revenue was just $127 billion.
These aren’t inflation-adjusted numbers of course, but let’s look at how Morrison and Frydenberg stack up as tax collectors in relation to the overall size of the economy using like-for-like numbers across the years. This is June quarter tax collections versus June quarter GDP numbers:
As the data shows, the Coalition inherited a level of taxation: GDP in the low twenty percent range, but steadily lifted the level of taxation burden on the economy through the mid-twenties and now, close to 28% of GDP. Moreover, they did it during a time of profound wage stagnation, which takes real effort.
Clearly, the super-profits of the big iron ore miners enjoying record commodity prices, and the JobKeeper and monetary policy-generated profits of the big banks, account for a substantial proportion of the rise. The slide in iron ore and copper prices will take some of the gloss off the rise in the terms of trade since June 30 (though higher LNG, oil and gas, and especially coal prices, which have more than trebled in the past 18 months, will help keep nominal GDP high this quarter). But according to the ABS data, income tax collections also rose in the three months to June, along with GST collections.
Much of the rise in tax revenues can also be looked at (on the consumption side) as billions in government support packages, along with loans and quantitative easing from the Reserve Bank, is recycled back into government coffers (and into state government coffers as well — they also had a big quarter).
The lack of coverage of the new record suggests most in the media are still in the grip of the traditional mindset that Labor is the party of big government when it has been the Coalition that has racked up both the highest taxation levels and the highest spending levels even before the pandemic. It’s amazing what you can get away with if journalists, editors, and producers think that you’re not the kind of party that does that sort of thing.