A collapse in receipts has ripped a $16 billion hole in government finances over this year and next. Treasurer Wayne Swan has revealed a budget deficit for 2011-12 of $22.6 billion, up $10.3 billion from November. This year’s deficit has increased $8 billion to $49.4 billion.

But the government still expects a return to a $3 billion-plus surplus in 2012-13 — in fact it has made a small upgrade back to $3.5 billion, fueled by an upward revision to revenues and a suite of savings measures.

The deficit has increased in spite of an upward revision in growth to 2011-12 from 3.75% to 4% from November’s MYEFO forecasts, reflecting the displacement of economic activity from the summer’s natural disasters, which will cut 1% from growth this financial year. Unemployment will fall to 4.5%, as anticipated by Swan before the budget, but more slowly than expected in MYEFO.

The collapse in revenue — primarily driven by a $9 billion-plus fall in company tax receipts — has prompted a range of savings measures, but once again the government’s dire pre-budget warnings of a bloodbath have gone unfulfilled, unless you’re a public servant or middle-income earner near the Family Tax Benefit thresholds.

The government has found $22 billion worth of savings this year and over the forward estimates, with the biggest cuts coming from middle class welfare, cuts in taxation expenditures and a raid on the Defence portfolio.

The new spends in the budget include a major $750 million skills package that, combined with a welfare reform package, offer the big selling points of the budget. It’s all designed to address the implications of full employment and ensure all idle workforce capacity is available as the mining boom takes off again. There’s also a $900 million-plus mental health package to address persistent criticism of the government over mental health.

The two-speed economy is very much in evidence in the detailed forecasts, with growth in non-dwelling construction and machinery equipment set to surge into the high teens next year — both significant upgrades from MYEFO — on the back of the mining boom. But dwelling construction has yet again been revised downwards — as it has been at every new forecast in the last two years — to a miserable 1.5% growth in 2011-12, suggesting Treasury expects the construction industry’s woes to deepen before they improve in 2012-13.

Household consumption remains unrevised at 3.5%, but our terms of trade are expected to fall more moderately than previously forecast, with a resulting decline in the current account deficit.

And plainly Treasury doesn’t share the general expectation with the business commentariat that nearing full employment will drive higher costs: the wage price index remains unrevised for 2011-12 at 4%.

There is a fiscal philosophical issue illustrated in this year’s budget that will receive little attention but should be of increasing concern to governments and Treasury. As Crikey has previously shown, the Commonwealth budget is becoming more dependent than ever on company tax revenue.

In 2009-10, GST was 15.9% of Commonwealth revenue, versus just over 18% for company tax. By 2014-15, company tax will be just a tad under 20% of revenue, while the GST will have fallen to 14%. Every increase in the reliance of the budget on company tax means we’re more exposed fiscally in the event of an economic slowdown, because the dominant sources of corporate tax revenue are our financial services industries and mining companies.

This won’t be the last time governments complain that a drop in the corporate tax take has smashed their budget forecasts. We’re making it ever more likely.