Statement 3 (continued)
Overview
The 2015‑16 Budget focuses on building jobs, growth and opportunity. It carefully balances the need for investment to enhance Australia's prosperity, with the need to repair the budget in a responsible and fair way.
This Budget redirects spending towards investments that boost productivity and workforce participation. The 2015‑16 Budget priorities, including the Jobs and Small Business Package, support for Australian families, promoting infrastructure investment, and unlocking the region's potential through free trade agreements, all contribute to building a stronger economy. The Budget also contains a number of measures that improve the fairness of the tax and benefits systems.
Downgrades in forecast tax receipts since the 2014‑15 Budget are estimated to have totalled $52 billion over the four years to 2017‑18 and over $90 billion across the forward years since the 2013 Pre‑Election Economic and Fiscal Outlook. These write‑downs have been driven by a rapid fall in some commodity prices, particularly iron ore, and lower‑than‑expected wages growth.
Despite these headwinds, the 2015‑16 Budget maintains a steady and credible trajectory towards surplus. The underlying cash balance is expected to improve each and every year over the forward estimates. The deficit is expected to fall from $35.1 billion (2.1 per cent of GDP) in 2015‑16 to $6.9 billion (0.4 per cent of GDP) in 2018‑19, as shown in Table 1.
| Actual | Estimates | Projections | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2013‑14 | 2014‑15 | 2015‑16 | 2016‑17 | 2017‑18 | 2018‑19 | Total(a) | ||||||
| Underlying cash balance ($b)(b) | -48.5 | -41.1 | -35.1 | -25.8 | -14.4 | -6.9 | -82.3 | |||||
| Per cent of GDP | -3.1 | -2.6 | -2.1 | -1.5 | -0.8 | -0.4 | ||||||
| Fiscal balance ($b) | -43.7 | -39.4 | -33.0 | -23.4 | -9.2 | -3.2 | -68.9 | |||||
| Per cent of GDP | -2.8 | -2.5 | -2.0 | -1.3 | -0.5 | -0.2 | ||||||
(a) Total is equal to the sum of amounts from 2015‑16 to 2018‑19.
(b) Excludes net Future Fund earnings.
The average annual pace of fiscal consolidation across the forward estimates 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 underlying cash balance is expected to continue to improve into the medium‑term. Current projections indicate a surplus being reached by 2019‑20, the same year as projected at the 2014‑15 MYEFO. By the end of the medium‑term, the underlying cash balance is projected to have been in a modest surplus for 6 years, even after assuming additional tax relief is provided to taxpayers from 2020‑21.