Returning the budget to surplus is appropriate given Australia's strong economic fundamentals and continues to give monetary policy scope to respond to economic developments.
Bringing the budget back to surplus
The Government is returning the budget to surplus in 2012–13, on time and as promised, with surpluses growing over the forward estimates.
During the GFC we took action and stepped in to support demand. We avoided recession and supported jobs. Over 750,000 jobs have been created since late 2007.
Consistent with our fiscal strategy we are now returning the budget to surplus, which is appropriate given the economy is expected to grow around trend.
Australia has strong economic fundamentals, solid growth, low unemployment, record levels of mining investment, and commodity
prices still around historical highs. In these circumstances, returning the budget to surplus in 2012–13 is appropriate
This is being achieved despite tax receipts in the five years to 2012–13 being $150 billion lower than was expected before the GFC. The recovery in tax receipts has also been slow despite the solid growth in the economy following the GFC.
While this is a disciplined Budget, it also focuses on our key priorities and ensures funds are directed to the purposes and people who need them the most.
We have taken $33.6 billion in saves in this Budget, making room for priorities like $5 billion in new payments to low and middle income households.
Providing flexibility to monetary policy
Returning the budget to surplus will allow monetary policy to respond to economic developments as appropriate.
This is important given the near–term challenges facing certain workers and businesses as a result of the patchwork economy and a strong Australian dollar.
In normal circumstances monetary policy should play the primary role in managing demand to keep the economy growing at close to capacity consistent with achieving its medium‑term inflation target.
Returning the budget to surplus (Underlying cash balance)