Australia faces the future from a position of economic and fiscal strength.
The Government's timely fiscal stimulus protected the economy from the worst of the global financial crisis. As a result, the Australian economy continued to grow while other advanced economies fell into recession.
Keeping the economy growing means that the loss of business capital and workforce skills that typically accompanies an economic slowdown has been less dramatic for Australia than for other countries.
The economic recovery is now strengthening, with GDP forecast to grow by 3¼ per cent in 2010‑11 and 4 per cent in 2011‑12, leading to further reductions in the unemployment rate.
The Government's fiscal strategy and the success of monetary and fiscal stimulus will help the budget return to surplus three years ahead of schedule in 2012‑13, ahead of any major advanced economy.
Forecast deficits are now lower across the forward estimates. An underlying cash deficit of $40.8 billion (2.9 per cent of GDP) is expected in 2010‑11, $5.9 billion lower than forecast in the Mid‑Year Economic and Fiscal Outlook 2009‑10.
The peak in net debt is also now expected to be lower and earlier at 6.1 per cent of GDP in 2011‑12, considerably below the previous forecast of 9.6 per cent of GDP. Net debt in the major advanced economies is expected to peak at more than ten times this level.
The improvement in the fiscal position is one of the dividends of keeping the economy growing through the global financial crisis. It allows Australia to face future challenges from a position of budget strength.
This Budget implements the Government's tax reform agenda, making the tax system stronger, fairer and simpler. It contains measures to boost the economy's capacity and support economic growth. It makes investments in the National Health and Hospitals Network. It contains measures that support saving for the future and ease cost of living pressures today.
All of these new measures have been delivered within the fiscal strategy and are fully offset over the forward estimates by a reprioritisation of other policies. Consistent with the fiscal strategy, this has been achieved without raising taxes as a share of GDP above 2007‑08 levels.
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