This represents the fastest fiscal consolidation since at least the 1960s, and has been achieved without increasing tax as a share of GDP above the 2007-08 level the Government inherited. The Budget also shows we are meeting our commitment to restrain growth in real spending to 2 per cent until the budget returns to surplus. We offset all new spending over the forward estimates. A small surplus is forecast in 2012-13, and budget deficits in earlier years are lower. The budget deficit of $40.8 billion (2.9 per cent of GDP) for 2010-11 is $5.9 billion less than the forecast in the Mid-Year Economic and Fiscal Outlook (MYEFO), and $16.3 billion less than expected one year ago.

Net debt is now expected to peak lower and earlier than previously expected at 6.1 per cent of GDP in 2011-12, half the level expected a year ago and well below that of every other major advanced economy. Economic stimulus, together with the cooperation and resilience of the Australian people, has also led to remarkable results in Australia’s labour market. Our unemployment rate, already the second lowest compared to the major advanced economies, is set to fall further, to 4¾ per cent in 2011-12. The Australian economy is set to remain a world leader, with strong growth of 3¼ per cent forecast in 2010-11, rising to 4 per cent in 2011-12 as private sector activity continues to recover from the downturn.

A healthy recovery in business investment is expected and exports are recovering, underpinned by high levels of business confidence. Incomes are set to pick-up in line with a strong labour market and recovery in business profits.

www.treasurer.gov.au