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Budget overview

The Government’s economic plan to ensure Australia continues to successfully transition from the mining investment boom to a stronger, more diversified, new economy.

Australia’s transition is supporting jobs growth

The successful transition to broader-based economic and jobs growth is due to the flexibility of the Australian economy

The Australian economy is transitioning from the largest mining investment boom in its history to broader-based growth.

The resources sector will continue to play an important role in our economy — the economic transition is about broadening growth to other sectors of the economy.

Growth is shifting to the more employment-intensive service sectors. The largest employment growth over the past year has been in the household and business services sectors, such as health and retail trade.

The unemployment rate has fallen and more Australians have entered the workforce.

The flexibility of the economy and new export trade agreements mean that we can also take advantage of transitions happening in many other economies.

A rising Asian middle class and ageing populations within our region offer opportunities to export more services.

The number of tourists visiting Australia from China exceeded one million for the first time in 2015. Future visitor growth is likely to come from India, as well as other emerging countries in Asia. International student enrolments are also growing strongly, while Australia’s reputation as a leading provider of services continues to grow.

Almost 300,000 jobs were created in 2015

This chart shows growth in employment by industry for the 2015 calendar year. Employment increased in the household services, business services and goods related categories. Employment fell in construction, agriculture, mining and manufacturing.

Through the year to the December quarter of 2015

A national plan for jobs and growth

The Government is sticking to its national economic plan for jobs and growth

The Government is helping to create more jobs as the mining boom ends and new sources of growth emerge. There were almost 300,000 jobs created in the economy last year, the largest number of jobs created in a single year since 2007.

Having more secure and better paying jobs in a strengthening economy provides financial security and opportunities for Australian families.

Our policies will drive economic growth, particularly through innovation, boosting investor confidence, opening up new markets through Australia’s successful and ambitious trade agenda, and continuing on a sustainable path to balancing the budget.

The Government’s economic plan builds on the achievements of the past 2½ years of the Coalition Government and sets out fresh policy directions that seek to ensure the economy is working for every Australian.

Our plan for jobs and growth

Building an economy that works for every Australian

This graphic summarises the Government’s national economic plan for jobs and growth. This plan builds on the Government’s achievements over the past 2-and-a-half years and sets out fresh policy directions that seek to ensure the economy is working for every Australian. The Government’s plan is focused on: A path to budget balance, A better tax system, More exports, Youth employment, Competition and Choice, High-tech defence jobs,Innovation and science, Infrastructure  

  

  

Budget at a glance

Careful and responsible economic management and fiscal restraint will support the successful transitioning of our economy

This Government, in a challenging budget environment, is making responsible choices in its national economic plan to support jobs and growth and boost the economy by directing spending where it is needed and most effective.

The Government’s Ten Year Enterprise Tax Plan will support growth, higher wages and jobs by lowering the tax rate for companies over time to an internationally competitive level.

The Government will better target superannuation concessions while ensuring that incentives for individuals to save for retirement continue.

The $1.1 billion National Innovation and Science Agenda and new measures to support innovation will put Australia on the right track to becoming a leading innovator.

The Government has committed a record $50 billion in infrastructure investment between 2013-14 and 2019-20 for roads, rail, airports and dams.

The twenty year defence industry plan is underpinned by the Government’s commitment  to grow Defence funding to 2 per cent of GDP by 2020-21, transforming the defence manufacturing industry.

The $840 million Youth Employment Package will provide an innovative approach to help up to 120,000 vulnerable young people secure jobs.

The Government is committed to restraining growth in spending and to sustainable revenue policies that will support economic growth while returning the budget to balance.

Maintaining spending control will create opportunities to deliver future tax relief as the budget position allows, while charting a sustainable path back to budget balance and reducing the fiscal burden on future generations.

Budget aggregates and major economic parameters
Budget aggregates Actual Estimates Projections
2014-15 2015-16 2016-17 2017-18 2018-19 2019-20
Underlying cash balance ($b)(a) -37.9 -39.9 -37.1 -26.1 -15.4 -6.0
Per cent of GDP -2.4 -2.4 -2.2 -1.4 -0.8 -0.3
Fiscal balance ($b) -39.9 -39.4 -37.1 -18.7 -9.8 -2.1
Per cent of GDP -2.5 -2.4 -2.2 -1.0 -0.5 -0.1

(a) Excludes net Future Fund earnings.

Major economic parameters(b) Outcomes Forecasts Projections
  2014-15 2015-16 2016-17 2017-18 2018-19 2019-20
Real GDP 2.2 2 1/2 2 1/2 3    3    3   
Employment 1.6 2    1 3/4 1 3/4 1 1/4 1 1/2
Unemployment rate 6.1 5 3/4 5 1/2 5 1/2 5 1/2 5 1/2
Consumer price index 1.5 1 1/4 2    2 1/4 2 1/2 2 1/2
Wage price index 2.3 2 1/4 2 1/2 2 3/4 3 1/4 3 1/2
Nominal GDP 1.6 2 1/2 4 1/4 5    5    5   

(b) Year average growth unless otherwise stated. From 2014-15 to 2017-18, employment and the wage price index are through the year growth to the June quarter. The unemployment rate is the rate for the June quarter. The consumer price index is through the year growth to the June quarter.
Source: ABS cat. no. 5206.0, 6202.0, 6345.0, 6401.0 and Treasury.

Economic outlook

The Australian economy is entering its 26th year of uninterrupted growth despite an uncertain international environment

Australia is growing faster than all major advanced economies and well above the OECD average. The economy is forecast to grow by 2½ per cent in both 2015-16 and 2016-17 and to pick up to 3 per cent in 2017-18.

Near-term economic growth is being supported by household spending, investment in housing and exports.

This strong economic growth is also underpinning strong jobs growth. Almost 300,000 jobs were created in 2015, the most created in a single year since 2007.

Historically low interest rates and a lower exchange rate compared with the peak of the mining boom are supporting households and businesses.

Global growth has weakened with growth in the United States having moderated, continued sluggish European growth and economic difficulties in a number of commodity exporting countries.

However, growth in Australia’s major trading partners is expected to remain higher than global growth, reflecting Australia’s trade links to East Asia where growth remains relatively strong.

There are also opportunities for Australia as our transition towards the service sectors is synchronised with growing wealth in China and demand for our services.

Australia is growing faster than other advanced economies

This chart compares Australia's GDP growth to growth in the major advanced economies and the average growth rate in the OECD from 2005 to 2018. Australia has grown more strongly than the United States, the United Kingdom, the euro area, Canada, Japan and the OECD average since 2005, and this is expected to continue over the forecast period to 2018.