Of the many Budgets I have looked at, I have always wondered why the media perception frequently looks so different to the numbers. I have seen social security Budgets presented as defence Budgets. I have seen defence Budgets presented as health Budgets. And last night, after Peter Costello presented his twelfth Budget, and all the world agrees that it was an education budget.

However, when I look at the numbers, it looks to me like the major beneficiary is defence first, health second and education only third.

In Table 1, we show the composition of the outlays of this Budget. The Government should manage to spend some $235.6 billion in the year ahead. The biggest sections of this spending remain Social Security and Health. Some $96.45 billion should be spent in social security and welfare or some 40.9% of the Budget. Health spending should consume some $42.9 billion or 18.2% of the Budget. Defence should consume $19.9 billion or 8.4% of the Budget and Education should consume $17.8 billion or 7.5% of the Budget.

Table 1: Estimates of Australian general government expenses by function

Function

2007-08 AUD

$m % of Total Expenses

Social Security and Welfare*

96,450

40.94%

Health*

42,964

18.24%

Defence

19,880

8.44%

Education

17,752

7.54%

General Public Services

15,768

6.69%

Other Purposes

12,794

5.43%

Other Economic Affairs

5,617

2.38%

Fuel and Energy

5,360

2.28%

Transport and Communication

4,516

1.92%

Public Order and Safety

3,670

1.56%

Housing and Community Amenities

3,011

1.28%

Recreation and Culture

2,979

1.26%

Agriculture, Forestry and Fishing

2,799

1.19%

Mining, Manufacturing and Construction

2,029

0.86%

Total Expenses

235,590

100%

* There has been a reclassification of some expenditure administered by the Department of Families, Community Services and Indigenous Affairs that was previously reported under the health assistance to the aged sub-function (health) to the assistance to the aged sub-function (social security and welfare). Source: Budget Paper No.1 2007/2008

In my opening remarks, I suggested that defence was a greater beneficiary in this Budget than education. We can see why I said that by looking at Table 2. In Table 2 we show the budgeted numbers for 2007-2008 compared to the budgeted numbers for the same Government functions in 2006-2008. In Table 2 we can see that defence spending increases by $2 billion from $17.8 billion in 2006-7 to $19.8 billion in 2007-8. This is an increase of 11.2% in nominal terms and an increase of 8.7% in real terms. This compares to increased education spending between the two budgets of $1.1 billion. This represents a nominal increase of 6.7% and a real increase of 4.2%.

 

Table 2: Estimates of Australian general government expenses by function

Function

2006-07 AUD $m

2007-08 AUD $m

Dollar Increase

%
Increase

% Real Increase

Social Security and Welfare*

91,756

96,450

4,694

5.12%

2.62%

Health*

39,838

42,964

3,126

7.85%

5.35%

Defence

17,871

19,880

2,009

11.24%

8.74%

Education

16,633

17,752

1,119

6.73%

4.23%

General Public Services

13,809

15,768

1,959

14.19%

11.69%

Other Purposes

12,761

12,794

33

0.26%

-2.24%

Other Economic Affairs

5,618

5,617

-1

-0.02%

-2.52%

Fuel and Energy

4,804

5,360

556

11.57%

9.07%

Transport and Communication

3,552

4,516

964

27.14%

24.64%

Public Order and Safety

3,286

3,670

384

11.69%

9.19%

Housing and Community Amenities

2,790

3,011

221

7.92%

5.42%

Recreation and Culture

2,627

2,979

352

13.40%

10.90%

Agriculture, Forestry and Fishing

2,300

2,799

499

21.70%

19.20%

Mining, Manufacturing and Construction

2,085

2,029

-56

-2.69%

-5.19%

Total Expenses

219,730

235,590

15,860

7.22%

4.72%

* There has been a reclassification of some expenditure administered by the Department of Families, Community Services and Indigenous Affairs that was previously reported under the health assistance to the aged sub-function (health) to the assistance to the aged sub-function (social security and welfare). Source: Budget Paper No.1 2007/2008

As can be seen above, in percentage and absolute terms, there are bigger increases in defence spending and in health spending than there is in education. Still, the education achieves a substantial growth.

So, will this wizardry allow the Treasurer to resist the approaches of the Boy Wizard of the North? For the answer to that, we will have to wait until the last chapter is published at the end of the year.