The government’s mid-year economic and fiscal outlook confirms that the budget will return to a surplus by 2020.
According to the government’s numbers the budget is expected to reach a surplus of $4.1 billion in 2019–20 which will be the first surplus since the Howard era in 2007–08.
The underlying cash balance is forecast to improve from a $14.5 billion deficit at budget to just $5.2 billion in 2018-19.
The budget update released by Treasurer Josh Frydenberg also revealed $8.9 billion in revenue that had been set aside but not yet announced.
Included in the $8.9 billion is $2.5 billion in tax reductions for next year and another $3.8 billion in 2020–21.
This leaves the government with $1.4 billion in spending measures which it currently has not announced but it is assumed they will make the announcement in the lead up to next year’s election.
Mr Frydenberg said in a joint statement with the Minister for Finance Mathias Cormann that a record number of people working had helped to increase revenue in Australia.
“The combination of a growing economy with a record number of people in work is helping to increase revenues while decreasing expenditure. This means 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,” he said.
Despite unemployment set to average 5 per cent this year, wages growth forecasts have been slashed with wages only expected to lift by 2.5 per cent this year and then 3 per cent in 2019–20.
Inflation has also been downgraded to the bottom half of the Reserve Bank’s target band and economic growth has also suffered a downgrade to 2.75 per cent this financial year.
Mr Frydenberg said that the mid-year position was a positive one with net debt expected to decline each year, falling from 18.2 per cent in 2018–19 to just 1.5 per cent in 2028-29.
“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,” he said.
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