After ten years of sound economic management the Australian Government has eliminated debt in net terms. The consequent reduction in debt servicing costs is producing on-going savings which can be applied to increased investment in physical and intellectual infrastructure.

The Future Fund is provisioning for the anticipated cost of the ageing of the population.

The Government will implement a further stage of tax reform that includes substantial cuts in personal taxes for low and middle-income earners, improvements to the international competitiveness of our top tax rates and enhancements to depreciation tax arrangements to improve business efficiency and competitiveness. In addition, a plan for substantial simplification and enhancement of Australia's superannuation system is being released.

The Government will continue its commitment to families through increasing the income test threshold for the maximum rate of Family Tax Benefit Part A to $40,000 a year and extending eligibility for the Large Family Supplement to families with three children.

The Government is increasing its commitment to health and medical research by providing additional funding to the National Health and Medical Research Council, along with a number of medical research facilities, and establishing an Australian health and medical research fellowship scheme.

The Government will also provide significant additional funding for road and rail infrastructure of $2.3 billion, including $800 million to accelerate duplication of the Hume Highway in southern New South Wales.

The Australian economy is forecast to continue to grow solidly, with GDP growth forecast to strengthen from 2½ per cent in 2005-06 to 3¼ per cent in 2006-07. Moderate inflation, low unemployment and strong business investment will provide a sound basis for sustained economic growth.

An underlying cash surplus of $10.8 billion is expected in 2006-07, with further surpluses projected for the three years following.