Managing our debt

Since the onset of the global financial crisis, government revenues have fallen by around an estimated $210 billion over the forward estimates to 2012‑13.

The Government has kept ahead of the curve, providing fiscal stimulus to support the economy and jobs.

In these difficult times a temporary deficit, along with temporary borrowing, is the only responsible course of action. The alternative would be significant spending cuts or tax increases, which would only lead to a deeper and more protracted recession and more Australians out of work.

Across the forward estimates, the Government's net debt position is forecast to increase from ‑0.4 per cent

of GDP in 2008‑09 to 13.6 per cent of GDP in 2012‑13.

Net debt is projected to stabilise shortly thereafter at 13.8 per cent of GDP in 2013‑14, before returning to 3.7 per cent at the end of the medium‑term projections in 2019‑20.

The global recession has affected governments' budgets everywhere. The Australian Government's net debt position is small compared with current debt levels in most advanced countries.

The IMF has estimated that, in 2014, Japan and Italy's net debt will be more than 125 per cent of GDP. At the same time, the UK, US, Germany and France will all have net debt levels of at least 80 per cent of GDP.

Government expenditure now on nation‑building infrastructure and world class universities and hospitals will position Australia to take full advantage of the global recovery.

As the economy recovers and grows above trend, the Government will move the Budget back to surplus and repay the debt taken on to support the economy.

Hard choices to return to surplus are at the core of this Budget. The Government will stimulate the economy now, invest in the future and stick to the deficit exit strategy.