According to figures released as part of the Mid-Year Economic and Financial Outlook (MYEFO), the Commonwealth government’s underlying cash balance is forecast to improve from a $14.5 billion budget deficit in 2017-18 to a $5.2 billion deficit in 2018-19, before reaching a surplus of $4.1 billion in 2019-20 – the first surplus since the final budget of the Howard government in 2007-08.
Further, according to the MYEFO figures, the cumulative estimated surplus will be nearly double the estimate in this year’s budget, with underlying cash surpluses increasing to $12.5 billion in 2020-21 and $19.0 billion in 2021-22.
Treasurer Josh Frydenberg has said that as a result of the “growing economy”, the expected total receipts have been revised up by $8.3 billion in 2018-19 and $12.4 billion over the four years to 2021-22.
Mr Frydenberg also stated that new spending has been offset by reduced spending elsewhere, with the payments-to-GDP ratio falling to 24.6 per cent by 2020-21.
According to the Treasurer, the rate of real spending growth under the Coalition government is averaging 1.9 per cent, which he said was “the lowest level of any government in 50 years”.
The MYEFO data also revealed that as a result of the improved budget position, net debt is expected to decline in each year of the forward estimates and medium term, falling from 18.2 per cent of GDP in 2018-19 to 1.5 per cent in 2028-29.
“These are the welcome dividends of sound budget management and the government’s plan for a strong economy,” Mr Frydenberg added.
Other figures reported in the MYEFO data include:
- Over 300,000 jobs created in the past year with the unemployment rate falling to its lowest level since 2012
- Real GDP is expected to grow by 2 per cent in 2018-19 and 3 per cent in 2019-20
- Nominal GDP is forecast to grow by 4¾ per cent in 2018-19, stronger than expected at budget
“The government is delivering on its plan to keep the Australian economy strong by backing small business, ensuring women have access to greater economic opportunities, investing in infrastructure, providing drought relief and delivering a fairer GST system for all states and territories,” Mr Frydenberg said.
The Morrison government recently announced that the next federal budget is set to be released in April 2019, with the federal election expected to be held soon after.
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