The Shadow Budget: The Parts of Australia’s Economy That Don’t Appear in Anyone’s Forecasts

Every budget night, Australia is presented with a clean story: GDP rising at a steady pace, inflation easing on schedule, employment strengthening, revenue ticking along. But anyone who looks closely at the structure of the economy knows the forecasts rest on an incomplete picture. Vast parts of Australia’s real economic activity live outside Treasury’s field of vision. Some sit in the shadows because they’re unmeasured; others because they defy the categories used in traditional forecasting models.

Treasury models the economy Australia claims to have — one built around formal wages, taxable profits and transparent transactions. The problem is that a large share of the nation’s economic life occurs in places that don’t show up in the national accounts at all. For policymakers, that missing data isn’t just inconvenient; it skews our understanding of growth, productivity and long-term fiscal sustainability.

The $700 Billion Workforce That Officially Doesn’t Exist

Unpaid care work is one of the clearest examples. ABS time-use surveys and Treasury estimates consistently value unpaid labour — raising children, caring for elderly parents, supporting people with disability, running households — at between $650 billion and $720 billion per year. That figure is roughly one-third of Australia’s GDP, and yet none of it counts as “production” in the national accounts.

Because unpaid care is invisible, the official data makes families appear more resilient than they are. Productivity looks weaker, labour-force participation looks smaller, and the true cost of raising a family appears far lower than reality. Budget forecasts are built on the assumption that unpaid care will continue absorbing the gaps left by the formal care sector, especially in aged care and early childhood. As Australia’s population ages, the volume of this hidden labour will only grow — and the gap between the measured and actual economy will widen.

The Informal Labour Market: Small in Size, Large in Distortion

The budget also assumes most work is formal, taxed and properly recorded. But Australia’s informal labour market — cash jobs, under-reported shifts, off-books contracting, gig-style platform work — is a growing structural feature. The ATO estimates the shadow labour market costs between $12 billion and $20 billion in lost tax revenue and super contributions each year.

This isn’t fringe activity. It appears in construction, hospitality, rideshare, delivery work, personal services and small retail — the kinds of industries that form the everyday backbone of local economic life. What this does is distort wage signals, undermine productivity estimates, and mask the real pressures on low-income workers. Treasury sees a labour market with rising participation and stable wages, but a portion of the workforce is operating under a separate set of rules entirely.

Corporate Profits That Are Real — But Not Fully Taxed

The headline corporate tax rate is 30 per cent, but the effective tax rate across large companies is substantially lower. ATO transparency reports routinely show that a meaningful share of major companies pay no corporate tax in a given year, despite generating billions in revenue.

This is achieved through familiar structures: transfer pricing between Australian subsidiaries and offshore hubs; debt loading that shifts profits overseas via interest payments; the routing of intellectual-property fees through low-tax jurisdictions; and the use of carried-forward losses or accelerated depreciation to reduce taxable income. The ATO estimates profit shifting costs the budget between $2 billion and $3 billion annually, though independent modelling suggests the true number may be double that.

Budgets treat these behaviours as edge cases. In reality, they shape how large parts of the private economy actually operate.

Rent Extraction: The Invisible Drag on Household Income

A growing share of Australia’s economy revolves around extracting value rather than producing it — something GDP counts as growth, but households experience as pressure. Residential rents now exceed $60 billion a year. Toll-road operators generate billions in guaranteed, inflation-indexed revenue. Financial services fees run into the tens of billions annually. Landlords, utilities, insurers and intermediaries all represent parts of the economy where income is captured rather than created.

This has two effects the budget doesn’t fully register. First, it inflates GDP even when nothing new is produced. Second, it suppresses household discretionary income, weakening consumption — the very variable Treasury relies on to forecast growth. Rent extraction isn’t an anomaly in Australia’s economy; it’s one of its core operating principles, and yet it’s largely absent from forward estimates.

Private Equity: A Large Economic Engine Hidden Behind Closed Books

In sector after sector — aged care, childcare, healthcare, retail, logistics, software — ownership has shifted from public companies to private equity funds. Once assets move into private equity structures, their financial positions become far harder to see. Debt levels, profit flows, fee arrangements and transfer pricing operate behind private reporting standards rather than public markets.

Private equity often involves high leverage and aggressive cost extraction, reshaping the pricing and labour practices in industries that everyday Australians rely on. Yet because none of this activity is visible in aggregated public data, the budget treats these industries as stable inputs rather than the financialised, debt-driven ecosystems they have become.

Asset Recycling: A Short-Term Gain, Long-Term Blind Spot

State governments have increasingly sold long-term public assets for upfront cash injections — ports, electricity networks, land registries, toll roads. These transactions can involve billions in immediate revenue. But the loss of future income streams rarely features in forward estimates with equal clarity.

A port leased for $5 billion might deliver 50 years of foregone revenue. Toll-road concessions handed to private operators can lock households into decades of rising charges. Asset recycling flatters the budget position in the present while quietly eroding fiscal capacity in the future. Treasury acknowledges the proceeds but not the full economic cost.

Tech Platforms Take Their Slice — and the Budget Barely Notices

Much of Australia’s consumption flows through global digital intermediaries. Platform fees, payment processing charges, app-store commissions and marketplace cuts carve out small percentages from millions of daily transactions. RBA payments data suggests Australians spend hundreds of billions per year through digital platforms, and even a modest slice of those transactions amounts to tens of billions in value flowing offshore.

Treasury books this as consumption. It does not account for the fact that a significant portion leaves the domestic tax base entirely.

The Economy We Measure vs. the Economy We Live In

The official budget rests on the assumption that the formal economy tells us everything we need to know. But the real story — unpaid labour, informal work, tax-minimised profits, rent extraction, private equity ownership and digital skimming — accounts for a substantial share of economic value. None of it is captured cleanly in the forward estimates.

That gap affects everything: fiscal sustainability, social policy, labour markets, wages, productivity, and the lived experience of households. Australia does not suffer from a lack of economic activity. It suffers from a lack of visibility.

Until the shadow budget becomes part of the real budget conversation, we’ll continue forecasting based on a map that describes only half the terrain.

If you need advice grounded in the real economy — not the official fiction — we can help.

Trident Accounting works with households and businesses across Southern Sydney to navigate the parts of the economy that don’t show up in the budget papers.

Written by Aidan Walmsley