Statement 3: Fiscal Strategy and Outlook
This statement assesses the fiscal outlook against the Government's fiscal strategy.
The Government's fiscal strategy aims to ensure fiscal sustainability over the medium term.
The Government's medium‑term fiscal strategy involves:
The Government is budgeting for an underlying cash surplus for 2008‑09 of $21.7 billion (1.8 per cent of GDP), compared with the Pre‑Election Economic and Fiscal Outlook 2007 (PEFO) estimate of $14.3 billion (1.2 per cent of GDP). This honours the Government's commitment to deliver an underlying cash surplus in 2008‑09 of at least 1.5 per cent of GDP, while banking upward revisions to tax receipts. All tax receipt revisions ($3.0 billion) since PEFO have been saved and added to the 2008‑09 surplus.
All new spending since PEFO in 2008‑09, including the Government's election commitments, has been offset by spending cuts. Overall, the Government has made total cash savings of $33.3 billion over four years, including $7.3 billion in 2008‑09. These savings more than offset new policy in 2008‑09 by $2.0 billion.
Overall, real government spending is forecast to grow by 1.1 per cent in 2008‑09 — the lowest rate of growth in nine years.
Appendix A outlines budget accounting policy for the 2008‑09 Budget and implications for the financial statements. Appendix B illustrates the sensitivity of the budget estimates to changes in the economic outlook.
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