2020/21 Budget snapshot from the PBO


The Parliamentary Budget Office (PBO) has released its independent analysis of the Department of Treasury and Finance’s 2020/21 Budget, published on the PBO website at pbo.vic.gov.au.

The PBO found that the 2020/21 Budget shows:

  • the economic impact of the COVID-19 pandemic in 2020-21, and the beginnings of an economic recovery from 2021-22
  • an increase in net debt to GSP over the next 4 years, to reach 28.9 per cent of GSP at 30 June 2024
  • a move from net operating surpluses to net operating deficits in all years from 2019-20 to 2023-24
  • a large increase in net borrowing—the operating balance after taking account of asset investment, and an important gauge of the government’s need to raise debt to fund its policies—to 48.3 per cent of revenue in 2020-21 before improving to 20.0 per cent of revenue in 2023-24.


The PBO also found that when compared to the Budget Update 2019/20, the government forecasts in the 2020/21 Budget show:

  • $19.6 billion lower revenue forecasts down from 2020-21 to 2022-23, reflecting lower goods and services tax (GST) distribution from the Australian Government and lower state taxation
  • $33.5 billion higher operating expense forecasts from 2020-21 to 2022-23, particularly in health, economic affairs and social protection, reflecting the response to the COVID-19 pandemic
  • $12.4 billion higher government net asset investment forecasts, mainly in transport, over the period 2020-21 to 2022-23—but the government has not published the State Capital Program. The PBO was therefore unable to determine the extent that the upward revision to net asset investment reflects rephasing of spending profiles or higher than expected costs on existing projects.


When compared to the last budget, the PBO also found that in this budget, the government revised its fiscal targets and objectives:

  • removing fiscal sustainability objectives for expenditure growth and net debt, leaving one now aimed at operating deficits
  • changing some financial measures and targets from ‘maintaining sustainable levels’ to ‘stabilising in the medium term’
  • adding stabilising its interest expense to revenue ratio as one of its financial targets
  • no longer including maintaining a triple A credit rating in its long-term financial objectives.


The government states that it will consider introducing further sustainability objectives in the 2021/22 budget expected in May 2021.

To keep up to date on the PBO’s work visit the PBO website at pbo.vic.gov.au or follow the PBO on Twitter at @pbovic.


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