Sunday, May 11, 2008

Australian and U.S. Federal Budgets

There were some great charts on the growth of tax revenues and spending in the last few decades in Australia in Saturday's Australian Financial Review. Unfortunately, their website has high subscription fees and I couldn't find similar charts elsewhere on the web. The bottom line was that despite the Australian government's constant attempts to cut tax more and more tax revenue per person has kept piling in since the mid-1990s. Anyway, in response the government has spent more and more, while maintaining a small surplus. In honor of Tuesday's upcoming Australian Commonwealth (Federal) budget I present the following comparison of the breakdown of the US and Australian federal budgets:

Australia


United States


Two big differences are in: interest payments - Australia effectively pays none as it has little government debt any more and defence where the US spends 19% and Australia 8%. Interestingly, the US spends more of its budget on health - 23.1% in total than Australia does, 18% despite there being free public health care available for all without private coverage in Australia (around 35% or so have private health care). Australia though spends more on all social security and welfare, 41%, though Australia only spends about 13% on the "age pension" while the US spends 20% on social security (almost as much goes to "families with children" as to the old in Australia) . Education is much higher in the Australian budget, not surprisingly given the almost complete absence of private universities and more centralized education system.

4 comments:

Anonymous said...

well, size is a bit of an issue. The state of California has almost 15 million more people than the Country of Australia. And I don't think that figure includes illegal immigrants - regardless of where you stand on the illegal immigrant issue, the number of illegals in California does affect California's bottom line. And that is just California. Now factor in the other 49 states and additional territories and you see the US Federal Government has a lot to mention. This is why I subscribe to the true republican ideal of shifting more power to the state level and decentralizing the US Federal Government where the Federal Government basically manages US Foreign Policy, states who need help, and issues between states. Now, I would argue that the current Republican Political Party does not really subscribe to this true republican philosophy.

Anonymous said...

mention? I meant to say manage. The US Federal Government has a lot to manage.

movingeast said...

The interesting thing to me is that interest payment and the difference in healthcare costs.

The Aussie govt had a lot of debt, but paid it off over the last 15 years.. That makes such a difference.

Along with the better outcomes for less spending, I guess you give the Aussie Govt an "A-" and the US Govt sits fairly in the middle of the remedial class.

While size is relevant, how come a lot of the US states are in financial straits despite being smaller than Australia?

It would be interesting if you had similar info for other countries like Canada and the UK...

mOOm said...

A comparison with Canada would be very interesting. Australia is more like Canada than any other country. Especially if you cut out Quebec, then they have similar area, population (and population distribution), culture, ethnic composition, constitution etc. etc. They both have strong resource industries. Main difference is Australia is hot and Canada cold. And Australia's neighbor with a 200 million plus population is Indonesia :) The Australian government's success is paying off the national debt, cutting taxes, and now accumulating sovereign wealth funds is a mixture of responsible government - for example the compulsory superannuation system here vs. the horror in the US of any mention of privatizing social security - and luck - in having the resources to supply to the growing Asian economies.