Statement 1: Budget Overview

Recent natural disasters have had a significant impact on the Australian economy and the Government's fiscal position, but medium‑term prospects are for strong economic growth, low and falling unemployment and rising incomes.

While the high Australian dollar and legacy effects from the global financial crisis are weighing particularly heavily on some sectors, the overall economy is expected to grow at an above‑trend rate over the next two years.

Sustained high prices for our resources underpin record investment intentions in the mining sector and strong forecast growth in commodity exports.

With the unemployment rate already low, the unprecedented mining investment boom will stretch the economy's capacity over the coming years.

It is important that the Government does not compound these pressures, which is why it will return the budget to surplus in 2012‑13 and beyond.

The Government is delivering this return to surplus by making difficult decisions to pay for its new spending, including the cost of the recent natural disasters, by making $22 billion in savings, around two thirds of which are from reductions in spending. The Government has made important structural savings that contribute to the sustainability of public finances and support Australia's capacity to respond to unanticipated shocks.

The return to surplus will be achieved before any major advanced economy through the implementation of the fastest fiscal consolidation in at least forty years. This is despite the impact of natural disasters and softer than expected revenues due to legacy effects of the global financial crisis.

This Budget delivers on the Government's fiscal strategy while also continuing to invest in the economy's productive capacity. It responds to Australia's workforce needs through better and more targeted skills and training, and new measures to boost participation. It also improves private sector opportunities to invest in infrastructure.

This Budget also delivers on key reforms to mental health services and makes important investments in education and families. It delivers on these priorities while rebuilding communities affected by natural disasters, and providing the opportunity for all Australians and regions to prosper from the resources boom.