Australian Government, 2011‑12 Budget
Budget

Fiscal outlook

The forecast underlying cash deficit for 2011‑12 is $37.1 billion (2.5 per cent of GDP), returning to a small surplus of $1.5 billion (0.1 per cent of GDP) in 2012‑13.

The forecast deficit in 2011‑12 is larger than expected at Budget, with around two‑thirds of the increase reflecting variations to receipts and payments as distinct from policy decisions.

Tax receipts have been revised down by $4.8 billion in 2011‑12 in large part because of the weaker near‑term outlook for the economy. In addition, payments have increased by $2.3 billion under the Natural Disaster Relief and Recovery Arrangements, including an additional advance payment to Queensland to ensure necessary reconstruction and repair work can happen as soon as possible. Decisions to provide significant assistance to households and business as part of the policy reform to reduce carbon pollution and to accelerate funding for key infrastructure projects have also contributed to the change in budget position in 2011‑12.

The Government has made a number of savings decisions in response to the shortfall in tax receipts across the forward estimates. In total, $11.5 billion in savings decisions outside of the Clean Energy Future package have been made, with the combined effect of all policy decisions improving the budget bottom‑line by $6.8 billion. The savings decisions made by Government will help to leave Australia in a substantially stronger fiscal position than any of the major advanced economies.

Australia will return the budget to surplus ahead of the major advanced economies (Chart 1.2). The average net debt position of the major advanced economies (G7) is projected to reach 92.9 per cent of GDP in 2016, more than 10 times higher than the expected peak in Australia's net debt of 8.9 per cent of GDP (Chart 1.3).

Chart 1.2: International comparison of budget balances, 2010‑16

Chart 1.2: International comparison of budget balances, 2010‑16

Note: Australian data are for the Australian Government general government sector and refer to financial years beginning 2010‑11. Data for all other economies are total government and refer to calendar years beginning 2010.

Source: IMF Fiscal Monitor September 2011, IMF World Economic Outlook September 2011 and Treasury.

Chart 1.3: International comparison of net debt, 2010‑16

Chart 1.3: International comparison of net debt, 2010‑16

Note: Australian data are for the Australian Government general government sector and refer to financial years beginning 2010‑11. Data for all other economies are total government and refer to calendar years beginning 2010.

Source: IMF Fiscal Monitor September 2011, IMF World Economic Outlook September 2011 and Treasury.

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