Annex 2 - Fiscal projections and assumptions
The fiscal projections are based on trend or long-run averages for growth rates or levels of key economic, fiscal and demographic variables, and generally assume no policy changes beyond those built into their forecast base. The key assumptions are:
- Operating allowances - Other than for the areas of welfare-related expenses and interest costs, spending growth is largely determined by operating allowances, which are assumed to be $2.4 billion in Budget 2028, growing at 2 per cent per year for subsequent Budgets.
- Capital allowances - $7.0 billion in the first projected year of 2028/29, growing at 2 per cent per year for subsequent years. This is the same assumption for new capital expenditure made at the Pre-election Update.
- Tax revenue - As a proportion of GDP, tax revenue converges towards its long run average over the projection period. However, tax brackets are adjusted more slowly at the start of the projection period than in previous projections, reflecting the tax changes announced at Budget 2024.
Other assumptions are unchanged from the Pre-election Update. Full details of the projection assumptions are available on the Treasury website.
Table 6 — Summary of key fiscal indicators from the projections
| Year ending 30 June | 2023 Actual | 2024 Forecast | 2028 Forecast | 2029 Projection | 2030 Projection | 2038 Projection |
|---|---|---|---|---|---|---|
| % of GDP | ||||||
| Core Crown revenue | 31.2 | 32.0 | 32.2 | 32.1 | 32.1 | 31.2 |
| Total Crown revenue | 38.7 | 40.0 | 39.1 | 39.1 | 39.1 | 38.2 |
| Core Crown expenses | 32.3 | 33.5 | 31.1 | 31.0 | 30.7 | 29.0 |
| Total Crown expenses | 40.9 | 42.5 | 38.7 | 38.6 | 38.4 | 36.2 |
| Total Crown OBEGAL | -2.4 | -2.7 | 0.3 | 0.3 | 0.6 | 1.9 |
| Total Crown operating balance | 1.3 | -0.7 | 1.8 | 1.8 | 2.1 | 3.6 |
| Net core Crown debt | 39.3 | 43.1 | 41.8 | 40.6 | 39.3 | 25.9 |
| Gross debt | 34.3 | 42.3 | 48.4 | 46.9 | 45.2 | 29.6 |
| Total Crown net worth | 48.4 | 45.8 | 38.5 | 38.8 | 39.4 | 51.7 |
| Net worth attributable to the Crown | 46.4 | 43.8 | 36.8 | 36.9 | 37.5 | 49.8 |
Source: The Treasury