E How Does The Australian Financial System Look?

The financial system is a set of financial institutions, each of which promotes the formation and use of appropriate funds, and public bodies and institutions that carry out financial activities within their competence. The existence of different institutions within the financial system is due to the fact that finances cover the entire economy and the social sphere.

Australia's financial system has three links: the finances of the federal, state, and local governments. In turn, the financial system of each link consists of the budget and finances of state-owned enterprises owned or controlled by the administration.

In Australia, 97 percent of the funds raised and redistributed by the state go through the federal, state, and local government budgets.

The finances of the Australian federal government account for about 80 percent of the revenue generated and cover more than 50 percent of all expenditures.

Photo by Liam Pozz on Unsplash

Federal government spending

The most important item of expenditure of the federal government is spending on defense and maintenance of the administrative apparatus.

The second important group of federal expenditures is the cost of social security and insurance. The main items in this group are old-age or disability pensions, unemployment and disease benefits, child benefits, etc.

The economy also remains an important item of expenditure in the federal budget, although the share of this article is steadily declining. Most of the allocations go to two industries - agriculture and industrial infrastructure. The state plays an active role in stimulating exports, especially manufactured goods.

The role of federal finance in the development of industrial infrastructure is great. In the context of the Australian continent, the creation of a network of roads of national importance, the construction of irrigation facilities, electricity facilities require huge capital investments, which are often not available to private capital, have a long payback period, also not stimulating private investment.

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William K. 1 month ago Member's comment

Interesting and certainly very educational. So it seems that Australia runs on taxes.It is not clear to me what total portion of one's income would go towards taxes, though.

That proportion would have a fair effect on the desirability of living in a given country, at least for me it would have a large effect.

The hope would always be, then, for governmental leaders to be very wise and totally honest, and not the slightest bit greedy.

I am aware that in some countries the overall tax rate seems to be about 89% of one's income, though.