Statement 3: Fiscal Strategy and Outlook
This Budget is focused on building jobs, growth and opportunity, while making progress in restoring Australia to a sustainable fiscal position.
The Government is committed to its medium‑term fiscal strategy of returning the budget to surplus, maintaining strong fiscal discipline, strengthening the Government's balance sheet and redirecting government spending to boost productivity and workforce participation.
Significant progress on the task of budget repair has already been made. The 2015 Intergenerational Report (IGR) shows that structural savings measures already implemented are projected to make a significant contribution towards achieving fiscal sustainability over the longer term.
Despite the iron ore price nearly halving and $52 billion in tax receipts write‑downs to 2017‑18 since the last Budget, the Government continues to progress budget repair in a way that is responsible, measured and fair.
The underlying cash balance is expected to improve in each and every year of the forward estimates, with a deficit of $35.1 billion (2.1 per cent of GDP) in 2015‑16 improving to $6.9 billion (0.4 per cent of GDP) in 2018‑19.
The average annual pace of fiscal consolidation until 2018‑19 is a responsible 0.5 per cent of GDP. This is broadly consistent with the average pace of consolidation in the 2014‑15 Budget.
The payments‑to‑GDP ratio is expected to fall from 25.9 per cent in 2015‑16 to 25.3 per cent in 2018‑19. Net debt as a share of GDP is expected to peak in 2016‑17 and then decline over the remainder of the forward estimates.
The budget is projected to return to surplus in 2019‑20 — the same year as projected in the 2014‑15 MYEFO.
Analysis of the medium‑term shows that while modest surpluses are anticipated over much of the projection period, there is more work to do in order to achieve the Government's target surplus of 1 per cent of GDP.