The stuff the government won't crow about in the budget

Last year's $15 billion-odd surplus was revised down to a $27.6 billion underlying deficit. Woopsie.

But let's dig beneath that, as the underlying budget deficit doesn't tell the whole story. 

The government has turned unprecedented windfalls from previous financial years into a budget deficit this year, and a revised one for last year. 

This is made worse because the windfalls weren't necessarily due to good economic management, rather surging prices for commodities and a rising tax take thanks to bracket creep and high inflation.

The spending, in contrast to these temporary gains, is now structural, meaning the government has made decisions permanent, against a temporary windfall. 

You can't get a mortgage without securing it against a house, so why can the government back spending against forecasts and unexpected windfalls it can't control?

Eventually the emperor will be found to have no clothes. 

Here's a breakdown of some of the uglier home truths in the budget that you won't see Jim Chalmers and co crowing about tonight, in the coming days, or in the lead-up to the election.

Structural deficits

The underlying deficit for this upcoming financial year will be $42.12 billion.

Compared to last year's mid-year budget update, tax receipts will be down more than $14 billion for this financial year and over the next four.

Overall, the next five financial years will deliver in excess of $179 billion in budget deficits.

The forecasts don't see a balanced budget until 2035-36.

According to AMP chief economist Dr Shane Oliver, 96% of the windfall is being spent, which is what's leaving the budget in deficit. It could get worse still should the breeze turn. 

Increased reliance on the taxpayer

Total tax receipts as a share of GDP are expected to increase from 25.3% of GDP in 2028-29 to 26.8% of GDP in 2035-36.

Yes there are income tax cuts for the 16c tax bracket - down to 15c then 14c. Big whoop - it'll mean the average worker is better off by about $5 a week.

That idea is Berlin bunker type stuff.

Let's look at the 'effect of parameter' variations in the budget documents.

This is where it gets really fruity - it essentially boils down to the government relying on windfalls they can't control (iron ore prices, unexpected strength in the labour force).

Tax cuts cost the budget $17.1 billion over the next five years,

The labour force is what is driving tax receipts increasing by $6.7 billion over the mid-year outlook in 2025-26, before slowing over this one and the next four for a total of $9.4 billion. 

This indicates that bracket creep is still creepin' and the cuts don't return it. 

At current inflation and wage growth levels the average worker will tip into the 37c tax bracket in 10 years. This bracket was never designed for them.

Mr Chalmers has fallen upwards once again. 

Huge off-balance-sheet expenditure

That $42.1 billion is the 'underlying' deficit which compares expenses and revenues.

However, there's another number known as the headline deficit, which also includes investments.

At $65.2 billion the headline deficit is significantly higher, making up 2.3% of GDP.

Overall the headline deficit is expected to be more than $283 billion through the next five financial years.

When employing 'mark to market' accounting, you can spend a bunch of money but hold it off the balance sheet because one day they might turn into positive money spinners, or be considered opaque investments. 

This tricky accounting is what undid Enron in the early 2000s thanks to dodgy power plant investments in South America, but anyway...

What's lurking off the balance sheet? 

The HECS-HELP debt relief is costing a bit (around $700m), but is considered an investment; students barely rated a mention a few years ago, before they were about to be sent to the wolves with 7% indexation. 

• 'Student loans' adds nearly $27 billion in spending over the next five years. 
• Clean Energy Finance Corporation (aka propping up lenders to dish out green loans) adds more than $21 billion.
• Further NBN spending adds more than $2.7 billion.
• The home equity scheme (that doesn't exist yet) adds nearly $1.4 billion.
• Housing Australia (aka the home guarantee scheme) adds $12.3 billion. 
• Bailing out Whyalla Steelworks for around $500 million. 

And saving the biggest whopper until last: 'Net other' adds $13 billion to spending. What is this? Well that's for the government to know and you to never find out.

It includes 'commercial in confidence' stuff. Ostensibly the government can whack any remotely sensitive items in there.

I did a freedom of information request last year on what's in there, and got knocked back.

The public has a right to know where their $13 billion is going.

Gross debt and rising servicing costs

By mid-2036, gross debt is expected to be 31.9% of GDP, peaking at 37% in mid-2030. 

Gross debt will top $1 trillion this upcoming financial year, and will balloon to more than $1.2 trillion 

You might think debt doesn't really matter, as long as the government can pay it back.

But it has real-world consequences - more money is spent on merely servicing this debt. 

Total interest on government debt tops $27.9 billion this upcoming financial year, or 1% of GDP, before growing to $38.2 billion and 1.2% in 2028-29.

Interest on government debt (+9.5% over forward estimates) is the fastest-growing area of government expenditure - faster than the much-maligned NDIS (circa +8%)

That's money that can be spent on roads, military, whatever else.