Statement 1 (continued)
The Australian economy is entering its 25th year of economic expansion and is forecast to strengthen over the next few years. Real GDP is forecast to grow by 2¾ per cent in 2015‑16, before increasing to around trend growth of 3¼ per cent in 2016‑17.
The transition from mining-led growth to broader-based growth is underway. While weaker commodity prices are having a significant impact on the nation's income and tax collections, historically low interest rates, lower oil and electricity prices and a lower exchange rate are providing support to households and businesses. The unemployment rate is forecast to peak in 2015‑16 at around 6½ per cent and then decline.
The underlying cash deficit is expected to be $35.1 billion in 2015‑16 (2.1 per cent of GDP), reducing to $6.9 billion (0.4 per cent of GDP) in 2018-19 (Table 1). Forecast tax receipts have been downgraded by $52 billion over the four years to 2017‑18 since the 2014‑15 Budget. This has been driven by a near halving of the iron ore price and persistently low wage growth. The fall in commodity prices has contributed to the largest fall in the terms of trade in over 50 years.
|Underlying cash balance ($b)(b)||-48.5||-41.1||-35.1||-25.8||-14.4||-6.9||-82.3|
|Per cent of GDP||-3.1||-2.6||-2.1||-1.5||-0.8||-0.4|
|Fiscal balance ($b)||-43.7||-39.4||-33.0||-23.4||-9.2||-3.2||-68.9|
|Per cent of GDP||-2.8||-2.5||-2.0||-1.3||-0.5||-0.2|
(a) Total is equal to the sum of amounts from 2015‑16 to 2018‑19.
(b) Excludes net Future Fund earnings.
This year's Budget focuses on building a stronger economy to create jobs, growth and opportunity, while making progress in restoring Australia's fiscal position.
At the core of the Budget are a $5.5 billion Jobs and Small Business Package and a $4.4 billion Families Package, designed to boost business investment, help more Australians participate in the workforce, and drive innovation and productivity. Other priorities include improving tax and benefit system integrity, harnessing future growth through infrastructure investment, unlocking new trade opportunities, strengthening the foreign investment framework, as well as delivering on new national security commitments.
A return to an underlying cash surplus is projected to occur in 2019-20, the same year as projected in the 2014‑15 MYEFO, with surpluses over the medium-term projection period. Net debt is projected to peak at 18.0 per cent of GDP in 2016‑17, and fall to 7.1 per cent of GDP by 2025‑26. Gross debt is projected to reach $573 billion by 2025‑26.