Budget bottom line $8bn better than expected despite Delta lockdowns

Australia’s budget has been improved by almost $8 billion more than expected despite Covid-19 sending 13 million people into lockdown.

Lower welfare costs and extra tax income due to more people working has improved Australia’s budget bottom line by almost $8 billion, despite the Delta outbreak sending 13 million people into lockdown.

Finance Minister Simon Birmingham will today release figures showing that for the financial year to October 31, the federal government’s bottom line will be $43.9 billion in the red — a significant improvement on the $51.8 billion deficit originally projected for the 2021-22 budget.

It comes as an extra 350,000 jobs have come back across Australia since the start of September as NSW, Victoria and the ACT began to reopen after months-long lockdowns.

Less people claiming welfare than expected has boosted the federal government’s budget bottom line. Picture: NCA NewsWire / Adam Yip

Consumer and business confidence has soared, with a 4.9 per cent rise in retail sales in October alone.

Welfare payments have also dropped, with Jobseeker costing $1.2 billion less than anticipated, though the government did spend $12.9 billion on Covid disaster payments for the approximate 2.4 million Australians who lost work during the Delta wave.

Overall the improved budget position has been driven by higher tax receipts, through which the government raked in $15.6 billion more than expected to the end of October.

Mr Birmingham said while Australia continued to grapple with Covid “curveballs” like the Omicron variant, the boost to the budget bottom line was a demonstration the country’s economy “remains resilient”.

“As we head towards Christmas, more Australians in jobs and more confidence across the economy will be key to further improving our budget position,” he said.

Under stage two cuts brought forward during Covid, the 32.5 per cent income tax threshold was increased from $37,000 to $45,000, and the 37 per cent bracket upped from $90,000 to $120,000.