State general government sector net operating balance
The aggregate state net operating balance for the general government sector is estimated to be 0.2 per cent of gross domestic product (GDP) in 2005-06, slightly lower than in 2004-05 (Chart 4). The 2004-05 and 2005-06 surpluses are lower than in previous years, partly reflecting the impact of a softer housing market on revenue collections from property-related taxes.1
The net operating balance measures, in accrual terms, the gap between a government’s expenses and revenue for a given period, and provides a good indication of the sustainability of the existing level of government services. An operating surplus indicates that a government can finance the services it provides in a period using revenues derived in that period. An operating deficit indicates that a government must borrow or sell assets in order to finance services provided in a period.
Aside from the Australian Capital Territory, every state is expected to record an operating surplus in 2005‑06 and each of the forward years. The Australian Capital Territory is expecting to remain in deficit in 2005‑06 and the forward years.
Chart 4: Individual state general government sector net operating balance(a)(b)
- The ABS is currently reviewing accrual time series data, in consultation with all Treasuries, as accrual reporting is now established in all jurisdictions. Improvements in the quality of the time series data have resulted in some changes to these series. Further revisions are expected over the next year.
- States’ net operating balances are expressed as a percentage of GSP (left hand axis) and the states’ aggregate net operating balance is expressed as a percentage of GDP (right hand axis).
Sources: ABS Cat. No. 5512.0, state 2004-05 mid-year reports, Victoria, Australian Capital Territory and Northern Territory 2005-06 Budgets and Treasury estimates.
1 See, for example, NSW’s 2004-05 Half-Yearly Budget Review, pp. 10, 17 and Victoria’s Budget Paper No. 2, 2005-06 Strategy and Outlook, pp. 33, 43.