Australia’s governments do not have a revenue problem. They have a spending addiction.

New ABS Government Finance Statistics show total government revenue increased by 6.6% in 2025–26, adding $66.5 billion to government coffers. Tax revenue grew even faster, rising 7.0%.

Yet government expenses increased by 8.2%, or $84.4 billion.

The result was a net operating deficit of $37.8 billion — $17.9 billion worse than the previous financial year.

That is an important distinction in the fiscal debate. Government revenue is not stagnant. It is growing comfortably faster than inflation and nominal wages. The difficulty is that expenditure continues to grow even faster.

Disability spending provides a good illustration.

Commonwealth disability benefits increased by another 10.7% in 2025–26, or $4.9 billion, after increasing 10.8% the previous year.

The Government has already introduced reforms intended to improve the financial sustainability of the NDIS. Participant growth has subsequently slowed. But the ABS notes that average payments per participant increased.

This is the broader expenditure challenge in miniature.

Slowing the growth of a government program is not the same thing as reducing expenditure. Even after reform, disability benefits are still expanding at a double-digit annual rate.

There were other large spending increases. Government employee expenses rose 6.1%, social benefits in goods and services rose 5.3%, monetary transfers to households rose 5.4%, while interest expenses jumped 12.0%.

Australia’s governments enjoyed another year of strong revenue growth in 2025–26.

It still was not enough to keep pace with spending.