The bottom line is that the federal budget is better off by $11.5 billion

While inflation – which hit 7.8 per cent in December – has caused Australian households pain in the cost of living and squeezed businesses, it has also helped the budget outcome.

The government has also collected nearly $800 million in additional GST over the past six months. GST is levied at a rate of 10 per cent on a variety of goods and services which have faced rising inflation in recent months.

But the report shows the government is also behind on spending.

While the government spent about half of the entire fiscal year on key programs like Social Security and welfare, spending on programs like mining, agriculture, transportation and communications, fuel and housing lagged behind. Many programs required contracts with the state governments.

Independent economist Chris Richardson said the increase in the government’s balance sheet was a godsend, not a solution.

“Outcomes over budget are now the norm around the world. And it’s NOT because governments are making tough decisions. That’s because inflation is taking the brunt,” he said.

“Inflation increases tax revenues more than government spending.”

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Richardson said Australia’s budget gets additional help from the fact that the country is a big exporter of food and especially commodities like coal and iron ore.

“The price of that went up after Putin’s invasion of Ukraine, which gave an additional boost to tax revenues,” he said.