Returning to surplus three years early

Delivering on our strategy

When the Government responded to the global financial crisis, it also laid out a clear plan for returning the budget to surplus.

This Budget is delivering on that deficit exit strategy:

• All new spending in this Budget has been fully offset
• Real spending growth has been kept to less than 2 per cent a year
• Higher tax receipts have been allowed to flow through to the budget bottom line
• Tax as a share of GDP has been kept below the 2007‑08 level.

Sticking to this plan contributes to a much stronger fiscal outlook.

The Budget is now expected to return to surplus by 2012‑13 — three years ahead of schedule, and well before any of the major advanced economies.

Strongest fiscal consolidation

This is forecast to be the fastest positive turnaround in the budget position in modern times, delivering a tightening fiscal policy stance of around 1½ per cent of GDP a year over the next three years.

The improvement in budget balance is faster than the recoveries in the 1980s and 1990s.

This is paying dividends. Net debt is now projected to peak at only 6.1 per cent in 2011‑12, two years earlier than previously thought.

Maintaining discipline

The Government is delivering on its responsible fiscal strategy, and will continue to do so.

All the investments in this Budget — measures to boost savings, build skills and infrastructure, improve our health and hospitals, invest in renewables and simplify tax time for working families — are fully funded within the strict confines of our responsible strategy.

The Government remains committed to maintaining strong fiscal discipline into the future.