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Australian Government Coat of Arms

Budget | 2014-15

Budget 2014-15
Australian Government Coat of Arms, Budget 2014-15
  1. budget.gov.au
  2. 2014‑15
  3. Budget Paper No. 1
  4. Statement 1
  5. Fiscal strategy and outlook

Statement 1 (continued)

Fiscal strategy and outlook

The medium‑term fiscal strategy of achieving budget surpluses, on average, over the course of the economic cycle is underpinned by the Government's objectives to:

  • invest in a stronger economy by redirecting Government spending to quality investment to boost productivity and workforce participation;
  • reduce the Government's share of the economy over time in order to free up resources for private investment, with payments to GDP falling and paying down debt; and
  • strengthen the Government's balance sheet by improving net financial worth over time.

The 2014‑15 Budget repair strategy is designed to deliver budget surpluses building to at least 1 per cent of GDP by 2023‑24 with the Government more than offsetting all new spending measures with decisions to reduce spending elsewhere in the budget. Any variations in the budget from higher revenue or lower expenses will be banked to the bottom line rather than spent. The Government's clear path back to surplus is underpinned by decisions, rather than an assumption about future policy.

The underlying cash deficit is expected to be $29.8 billion in 2014‑15 (1.8 per cent of GDP), compared to a deficit of $33.9 billion projected in MYEFO. The deficit is expected to fall to $2.8 billion (0.2 per cent of GDP) in 2017‑18. The underlying cash balance is expected to reach surplus around the end of the decade, and by 2023‑24 the surplus will reach more than 1 per cent of GDP.

Excluding GST, tax receipts are expected to be lower by $2.6 billion in 2013‑14 and $2.4 billion over the four years to 2016‑17. Policy decisions since the 2013‑14 MYEFO are expected to increase total receipts by $0.7 billion in 2014‑15 and $5.4 billion over the four years to 2016‑17. Abstracting from policy decisions, there has been a small overall downward revision to total tax receipts (excluding GST) of $2.6 billion in 2013‑14 and $7.4 billion over the four years to 2016‑17.

Since the 2013‑14 MYEFO, estimated cash payments for 2014‑15 have decreased by $1.2 billion, reflecting decreased payments due to new policy decisions of $1.0 billion and decreased payments due to parameter and other variations of $0.2 billion.

In 2014‑15, net debt for the Australian Government general government sector is estimated to be $226 billion (13.9 per cent of GDP), compared with the 2013‑14 MYEFO estimate of $231 billion (14.2 per cent of GDP). By the end of the forward estimates, net debt as a percentage of GDP is expected to reach 14.0 per cent.

Commonwealth Government Securities on issue in 2023‑24 are expected to reduce to $389 billion, even when future tax relief is assumed, compared to the projection of $667 billion in MYEFO before the Government's actions to repair the budget.