Statement 4: Assessing the Sustainability
of the Budget
Conclusion
The global recession presents a significant challenge for fiscal policy in all countries, including Australia. In the short term, the challenge is to allow the automatic stabilisers to operate freely and implement discretionary fiscal policy measures that provide substantial stimulus to aggregate demand. Providing support to economic growth through fiscal and monetary policy is important to reduce the costs of the recession, particularly those associated with unemployment.
The Government has a clear, achievable strategy to return to surplus in the medium term. When the economy recovers, tax receipts will be allowed to recover naturally and real growth in spending will be restrained. Given the current global and domestic economic outlooks and the Government's fiscal strategy, it is projected that Australia's budget will return to surplus in 2015‑16. While global developments may impact on the timing of the return to surplus, the Government's firm commitment to the return to surplus will ensure that fiscal sustainability is maintained.
Other measures of Australia's fiscal sustainability are also strong, despite the move to a budget deficit. This is important because fiscal sustainability remains one of the key ingredients for sustainable economic growth. Australia's fiscal position is currently, and will continue to be, one of the strongest in the advanced world.
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