Strong income tax revenue growth has fuelled a surge in government spending aimed at securing re-election in tonight’s 2018-19 budget.

The return to surplus has been brought forward a year, with a $2.2 billion surplus forecast for next year and a more substantial $11 billion in 2020-21, while this year’s deficit has been significantly pared back to just $14.5 billion.

There’ll be a immediate tax cut of around $500 a year, or $10 a week (a bacon and egg roll tax cut?) for average wage earners; we’ll have to wait until 2022-23 for more substantial tax cuts driven by increases in tax thresholds and the eventual abolition of the 37% tax level. But that’s all two elections away.

There’ll also be a lift in urban and regional infrastructure investment, as already flagged ahead of the budget, with a number of new road projects and a new $1 billion urban congestion fund designed to address metropolitan bottlenecks.

There’s a package of measures aimed at baby boomers to encourage ageing at home, and lift workforce participation, as well as a variety of additional expenditure across existing program areas — including a continuation of the notorious quarter-billion-dollar school chaplain program.

As a result, government spending is set to surge from around 25% of GDP this year to 25.4% of GDP in 2018-19, before falling again to 25% in 2019-20 — which is conveniently timed with the coming election cycle.

Where’s the money coming from to pay for this largesse and return the budget to surplus more quickly? There’s a set of initiatives aimed at the black economy that the government hopes to reap $6 billion from over the forward estimates.

But mainly the government is enjoying a windfall of revenue this year and next — an extra $7 billion discovered since December’s MYEFO statement for this year, and an extra $8 billion for 2018-19, plus an extra $11 billion in the two years beyond that.

Higher personal income tax revenue — an extra $3 billion, the government thinks, since it did the books for MYEFO — and extra company tax of over $2 billion are part of the extra $8 billion for the coming financial year.

This “raining revenue” result means a big rise in the level of taxation: as a proportion of GDP, tax receipts have grown to 22.7% in the current year — the highest level since Peter Costello’s last budget.

In 2018-19, receipts will rise above 23% of GDP — a big rise even since MYEFO forecast 22.9%.

The extra spending is forecast to occur in a steady-as-she-goes economy, with little change in the government’s MYEFO forecasts. In particular, the government expects no significant downward shift in unemployment, with the unemployment rate remaining at 5.25% into the 2020s.

The government has stuck with its MYEFO wage price index forecasts (which were revised down from last year’s budget) — it still expects wages to rise 2.75% next financial year and then start growing by 3% and above following that.

“Optimistic” was a word many economists used about this forecast even after the government lowered it in December. That term might still be applicable.

What do you think about the 2018 federal budget? Let us know on boss@crikey.com.au.