Statement 7: Asset and Liability Management

The Australian Government's balance sheet remains amongst the strongest in the developed world. This is a key reason behind the retention of the Australian Government's AAA credit rating.

The strong balance sheet position continues to provide the Government with the capacity and flexibility to respond to changes in economic circumstances.

Net debt will peak at 7.2 per cent of GDP in 2011‑12, higher than previously anticipated, owing to the immediate economic and fiscal impacts of recent natural disasters and the downward revision to expected tax receipts in 2010‑11 and 2011‑12.

Despite this, the strength of the balance sheet and the projected return to surplus in 2012‑13 means that the Government will begin to reduce net debt as a share of GDP from 2012‑13.

The Australian Government's net debt position remains extremely low by international standards. The expected peak in Australia's net debt is at a level less than one tenth of the average of the major advanced economies in 2011.

In this Budget, the Government is clarifying its objectives with regard to the future of the Commonwealth Government Securities (CGS) market. It is timely to review the CGS market following the global financial crisis, and in light of the changing nature of the CGS investor base, new global bank liquidity rules and the anticipated return to surplus.

A detailed balance sheet for the Australian Government general government sector is provided in Statement 9: Budget Financial Statements.