Part 1: Overview (continued)

Updated fiscal outlook

The underlying cash deficit is expected to narrow from $37.4 billion (2.3 per cent of GDP) in 2015‑16 to $14.2 billion (0.7 per cent of GDP) in 2018‑19. The average annual pace of fiscal consolidation is 0.4 per cent of GDP over the forward estimates period, only slightly less than the 2015‑16 Budget despite economic parameter variations detracting significantly from the fiscal outlook.

Table 1.1: Budget aggregates

	Estimates
	2015‑16			2016‑17
	Budget	MYEFO		Budget	MYEFO
Underlying cash balance($b)(a)	-35.1	-37.4		-25.8	-33.7
Per cent of GDP	-2.1	-2.3		-1.5	-2.0
Fiscal balance($b)	-33.0	-35.8		-23.4	-32.8
Per cent of GDP	-2.0	-2.2		-1.3	-1.9
	Projections
	2017‑18			2018‑19
	Budget	MYEFO		Budget	MYEFO
Underlying cash balance($b)(a)	-14.4	-23.0		-6.9	-14.2
Per cent of GDP	-0.8	-1.3		-0.4	-0.7
Fiscal balance($b)	-9.2	-17.4		-3.2	-10.2
Per cent of GDP	-0.5	-1.0		-0.2	-0.5

(a) Excludes expected net Future Fund earnings.

Net debt is projected to peak at 18.5 per cent of GDP in 2017‑18 and then decline over the medium term.

Government payments as a share of GDP are expected to decline from 25.9 per cent of GDP in 2015‑16 to 25.3 per cent of GDP in 2018‑19. Based on the 2014‑15 Budget outcome, real growth in payments over the forward estimates has fallen since the 2015‑16 Budget from 2.0 per cent to 1.8 per cent due to a lower spending profile.

Consistent with the Government's fiscal strategy, spending decisions taken since the 2015‑16 Budget, including those arising from Senate negotiations, have been more than offset by reductions in spending elsewhere in the budget. After taking into account the provision previously made for the China‑Australia Free Trade Agreement, new policy decisions taken since the 2015‑16 Budget have had a positive net impact on the underlying cash balance over the forward estimates (see Table 3.6).

Excluding policy changes, total receipts are expected to be $33.8 billion lower over the forward estimates than expected at the 2015‑16 Budget. This largely reflects revisions to forecast nominal GDP, with declining commodity prices resulting in lower company tax receipts and a weaker outlook for wages and population growth, leading to lower expected income tax from individuals. Furthermore, weaker equity markets since the 2015‑16 Budget have also resulted in downward revisions to receipts from capital gains tax.

Partly offsetting the impact of lower forecast tax receipts, stronger employment and slower population growth have driven a decrease in expected personal benefit payments.