Returning the Budget to surplus

Deficit exit strategy

The most challenging global economic conditions since the Great Depression have wiped billions of dollars off the Australian economy and placed considerable short‑term pressure on the budget.

The Government has a clear strategy that is currently expected to see the budget return to a surplus position in 2015‑16.

The net measures in the Budget raise the level of GDP by ¾ of a per cent in 2009‑10 when the economy is at its weakest, continuing important programs and cushioning the impact of the global recession on jobs.

To preserve fiscal sustainability, all new spending is offset in 2012‑13. The deficit is expected to more than halve by the final year of the forward estimates.

As the economy improves, and companies restore profitability and jobs growth accelerates, tax receipts will always improve.

The Government will allow the recovery in tax revenue to flow through to the budget. This will ensure that the dividends from the recovery flow directly to a stronger budget position.

As the economy recovers and returns to above trend growth the Government will take the hard decisions to contain real spending growth at 2 per cent per annum.

The government has already begun to deliver on its deficit exit strategy by holding real spending growth below 2 per cent in the years when the economy is projected to grow above trend (in 2011‑12 and 2012‑13).

Surplus by 2015‑16

Spending restraint in accordance with the fiscal strategy and improved revenue is projected to return the budget to surplus by 2015‑16.