Statement 1: Budget Overview
The 2009‑10 Budget has been framed against the backdrop of the deepest global recession since the Great Depression. Early and decisive policy action is helping to support the Australian economy.
The world economy is expected to contract by 1½ per cent in 2009, with virtually every advanced economy now in recession. The deepening global recession is having a significant impact on the Australian economy, with GDP forecast to contract by ½ of a per cent in 2009‑10. Without early and decisive policy action, the contraction would have been significantly deeper. Government action is expected to support up to 210,000 jobs.
An underlying cash deficit of $57.6 billion (4.9 per cent of GDP) is expected in 2009‑10. The Budget deficit is an inevitable consequence of the global recession, which has resulted in downward revisions to revenue of around $210 billion since the 2008‑09 Budget. The Government's fiscal strategy is currently expected to halve the budget deficit by 2012‑13 and return the budget to surplus by 2015‑16. As part of this strategy the Government has fully offset spending proposals in the final year of the forward estimates period. The Government has found savings worth a total of $22.6 billion over four years.
This Budget supports jobs now while investing in the infrastructure Australia needs for the future. The measures in this Budget will increase the level of GDP by ¾ of a per cent in 2009‑10. This will deliver a boost to the economy and jobs in the period in which the economy is expected to be weakest.
Investment in nation building infrastructure is the centrepiece of the 2009‑10 Budget. Representing the most significant infrastructure package in Australia's history and spanning the nation, the Government is investing $22 billion to improve the quality, adequacy and efficiency of transport, communications, energy, education and health infrastructure across Australia — the building blocks of the future economy. The Government is also implementing significant reforms to higher education and investing in innovation.
The Government has found room under difficult circumstances to deliver on its commitment to reform the pension system, with substantial increases in pension payments, reform of the payments structure for pensioners, and provision of more assistance for carers. To ensure pension reform remains sustainable over the long‑term, particularly given the challenges of an ageing population, the Government has announced reforms across a range of areas where sustainability of existing arrangements will come under pressure in years to come. This will also ensure that spending is focused where it is most needed.
To boost participation in the long run, and as part of its rebalancing of the family payment system, the Government is implementing a Paid Parental Leave scheme. The Government is taking a decisive and historic move as part of reforms to position Australia for the recovery.
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