Part 1: Overview
The economic and fiscal outlook for Australia remains strong. The Australian economy is expected to grow solidly in 2005-06, with the forecast for real economic growth unchanged since the 2005-06 Budget, notwithstanding the September quarter National Accounts. Strong fiscal outcomes are forecast and projected across the forward estimates.
An underlying cash surplus of $11.5 billion is forecast for 2005-06, stronger than forecast at Budget, largely reflecting an increase in estimated cash receipts only partially offset by an increase in cash payments.
The increase in estimated cash receipts since the 2005-06 Budget reflects increased dividends principally special dividends from Telstra, prior year corporate profits affecting this year’s company tax receipts, and strong employment growth affecting personal withholding receipts.
The increase in estimated cash payments largely reflects policy measures announced since Budget, including additional drought relief to support drought affected regions, improving access to communications infrastructure in rural and regional Australia, and a structural adjustment package for the Australian fishing industry to help secure fish stocks.
Table 1 presents the fiscal and underlying cash balances for 2005-06 and the forward years.
Table 1: Summary of budget aggregates
- Excludes expected Future Fund earnings.
The underlying cash surpluses projected for the future years emphasise Australia’s sound fiscal outlook at a time when many of the major advanced economies are continuing to experience significant deficits.
Chart 1: International comparison of budget balances 2006 and 2007(a)
- International data are for the total general government sector, sourced from OECD Economic Outlook 78, November 2005. Australian data is for the Australian Government general government sector.
In accrual terms, the fiscal balance is expected to record a $10.4 billion surplus in 2005-06, higher than was forecast at the 2005-06 Budget. The fiscal balance is expected to remain in surplus over the forward estimates.
Further details on the accrual and cash budget estimates are provided in Part 3.