The Australian economy continues to outperform most of the developed world despite difficult global conditions, household caution and the sustained high dollar, which are all weighing heavily on prices and profits across the board and reducing budget revenues.
The economy is expected to undergo two significant transitions over the forecast period to 2016-2017:
- the resources sector will transition away from the labour intensive investment phase towards growth in production and exports; and
- more broadly, the Australian economy is expected to transition to non-resource drivers of growth.
As this process unfolds, economic growth is forecast to be 2.75% in 2013-14 and 3% in 2014-15.
The unemployment rate is expected to rise slightly to 5.75% by the June quarter 2014. In 2014-15, the unemployment rate is expected to stabilise at this level, as employment growth picks up to 1.5% through the year to the June quarter 2015 in line with an expected strengthening economy.
Tax receipts have been revised down by around $60 billion over the four years to 2015-16 since the Mid Year Economic and Fiscal Outlook (MYEFO).
The Government reports that tax receipts have been significantly
affected by weaker than expected nominal GDP growth. Weaker
commodity prices and the high Australian dollar affected company
profits across most of the economy, including the resources sector.
This has had a significant impact on the level of company tax
receipts expected in 2012-13 and
over the forward estimates. This fall in company tax receipts has been compounded by lower than expected capital gains tax and resource rent taxes.
Budget bottom line
An underlying cash deficit of $19.4 billion (1.3% of GDP) is expected in 2012-13, with a deficit of $18 billion (1.1% of GDP) expected in 2013-14.
|Underlying cash balance ($b)(a)||-43.4||-19.4||-18.0||-10.9||0.8||6.6|
|Percent of GDP||-2.9||-1.3||-1.1||-0.6||0.0||0.4|
|Fiscal balance ($b)||-44.5||-20.3||-13.5||-6.3||6.0||10.8|
|Percent of GDP||-3.0||-1.3||-0.8||-0.4||0.3||0.6|
- Excludes net Future Fund earnings
|Real GDP||3||2 ¾||3||3||3|
|Employment||1 ¼||1 ¼||1 ½||1 ½||1 ½|
|Unemployment rate||5 ½||5 ¾||5 ¾||5||5|
|Consumer Price Index||2 ½||2 ¼||2 ¼||2 ½||2 ½|
|Nominal GDP||3 ¼||5||5||5 ¼||5 ¼|
Real and nominal GDP are year-average growth. Employment and CPI are through the year growth to the June quarter. The unemployment rate is the rate for the June quarter.
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