All states, except the Australian Capital Territory, are expected to record net operating surpluses in 2005‑06. After allowing for capital investment, the majority of states are expecting general government fiscal deficits in 2005‑06. However, most states are forecasting an improvement in their fiscal balances by 2007-08.
Most states are also set to continue the trend of reducing net debt or maintaining low levels of net debt as a percentage of gross state product (GSP). Most states are forecasting that they will be in a net financial asset position in their general government sector by 2005-06. This trend is primarily due to states implementing medium term fiscal strategies and asset sales.
The fiscal indicators presented below indicate that the fiscal outlook of the states is strong. However, the challenge is to sustain this in the longer term in light of emerging pressures associated with continuing increases in demand for services such as health, and the ageing population.