Budget Overview

COVID-19 and the Australian Government’s response

Australians have experienced a year like no other

The COVID-19 pandemic has had a profound impact on Australia’s health system, community and economy, as it has all around the world.

The Government has acted quickly and decisively to address the consequences of COVID-19. As a result, Australia has achieved some of the best health and economic outcomes in the world. However, the impacts of COVID-19 will continue to be felt in the Australian economy for years to come. The Australian community also continues to feel the effects of COVID-19, through disruption to their lives, education and health. The global economic outlook remains highly uncertain, with many countries experiencing their worst downturns since the Great Depression.

This is a once-in-a-century shock that requires an unprecedented level of support across the economy. The Government’s initial response to the COVID-19 pandemic provided $299 billion in overall support.

The Government’s economic response is designed to support Australian households and businesses through an exceptionally difficult period. It has helped keep businesses in business and Australians in jobs through the JobKeeper Payment and Boosting Cash Flow for Employers, and supported Australians in need with the Coronavirus Supplement and $750 payments to those on certain income support.

The Government’s response is now transitioning to ensure the Australian economy recovers strongly by targeting additional temporary support measures to boost household incomes, bring forward business and infrastructure investment activity, and drive the unemployment rate back down.

The Government is continuing to support those sectors, regions and communities that face significant challenges.

The Government’s response to the 2019-20 bushfire season is also supporting families, farmers, business owners and communities to recover.

The path to recovery

The Government’s Economic Recovery Plan for Australia will rebuild our economy, create jobs and secure Australia’s future.

The 2020-21 Budget commits further response and recovery support, bringing the Government's overall support to $507 billion, including $257 billion in direct economic support.

The Government’s response continues to be temporary and well-targeted, use existing delivery mechanisms where possible, and proportionate to the shock and its impact on the economy.

Our economic recovery plan for Australia is focused on growing the economy so Australia can create jobs, increase economic resilience and create a more competitive and income-generating economy.

Our plan is also reflected through the revised Economic and Fiscal Strategy, firmly setting our focus on driving the economic recovery to strengthen the budget position in the near term, then stabilising and reducing debt as a share of the economy over the medium term.

Australians can be confident that the Government will ensure that Australia emerges from the COVID-19 recession in a strong position.

Economic and fiscal outlook

The once-in-a-century COVID-19 pandemic has fundamentally reshaped Australia’s economic and fiscal outlook

At the 2019-20 MYEFO, the underlying cash balance for 2020-21 was forecast to be a surplus of $6.1 billion (0.3 per cent of GDP).

Since then, the Government has responded decisively to the 2019-20 bushfires and COVID-19 pandemic.

The initial COVID-19 response totalled $299 billion, including health measures, the JobKeeper Payment, Boosting Cash Flow for Employers and the Coronavirus Supplement. The $2 billion National Bushfire Recovery Fund has supported families, farmers, business owners and communities.

The 2020-21 Budget includes $98 billion in response and recovery support, including $25 billion under the COVID-19 Response Package and $74 billion under the JobMaker Plan.

The underlying cash deficit in 2020-21 is expected to be $213.7 billion (11.0 per cent of GDP). This is expected to improve over the forward estimates to $66.9 billion deficit (3.0 per cent of GDP) in 2023-24 and to a $49.5 billion deficit (1.6 per cent of GDP) by the end of the medium term.

Gross debt is expected to be 44.8 per cent of GDP at the end of 2020-21, increasing to 51.6 per cent of GDP by the end of the forward estimates. Gross debt is projected to stabilise at around 55 per cent of GDP in the medium term.

Net debt is expected to be 36.1 per cent of GDP at the end of 2020-21, peaking at 43.8 per cent of GDP at the end of the forward estimates. Net debt is then projected to fall to 39.6 per cent of GDP at the end of the medium term.

Until a vaccine is developed and widely deployed, significant uncertainty remains. Through this phase, the Government will maintain flexibility to respond to the circumstances as they evolve.

Budget aggregates and major economic parameters(a)
  Actual Estimates  
2019-20 2020-21 2021-22 2022-23 2023-24 Total(b)
Underlying cash balance ($b)(c) -85.3 -213.7 -112.0 -87.9 -66.9 -480.5
Per cent of GDP -4.3 -11.0 -5.6 -4.2 -3.0  
Gross debt(d) 684.3 872.0 1,016.0 1,083.0 1,138.0  
Per cent of GDP 34.5 44.8 50.5 51.6 51.6  
Net debt 491.2 703.2 812.1 899.8 966.2  
Per cent of GDP 24.8 36.1 40.4 42.8 43.8  
  Outcomes Forecasts
2019-20 2020-21 2021-22 2022-23 2023-24
Real GDP -0.2 -1 1/2 4 3/4 2 3/4 3
Employment -4.3 2 3/4 1 3/4 1 1 3/4
Unemployment rate 7.0 7 1/4 6 1/2 6 5 1/2
Consumer price index -0.3 1 3/4 1 1/2 1 3/4 2
Wage price index 1.8 1 1/4 1 1/2 2 2 1/4
Nominal GDP 1.7 -1 3/4 3 1/4 4 1/2 5

a) Real GDP and nominal GDP are percentage change on preceding year. The consumer price index, 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.
b) Total is equal to the sum of amounts from 2020-21 to 2023-24.
c) Excludes net Future Fund earnings before 2020-21.
d) Gross debt measures the face value of Australian Government Securities (AGS) on issue.
Source: ABS Australian National Accounts: National Income, Expenditure and Product; Labour Force, Australia; Wage Price Index, Australia; Consumer Price Index, Australia and Treasury.

Revised Fiscal Strategy

The Government’s previous fiscal strategy served Australia well, ensuring we entered the COVID-19 pandemic from a position of strength

The Government returned the budget to balance for the first time in 11 years in 2018-19, with debt‑to‑GDP significantly lower than the average of the G20 advanced economies. The Government’s responsible fiscal management meant it was well placed to provide an unprecedented level of support to households and businesses.

The Government’s revised Economic and Fiscal Strategy recognises that economic growth and job creation will be essential to repair the budget and ensure a sustainable budget position over time.

The Government’s strategy includes two phases – a COVID-19 Economic Recovery Plan that targets job creation; and a medium‑term phase focused on stabilising and then reducing debt as a share of the economy.

During the economic recovery, the Government will continue to use fiscal policy to support demand and confidence to achieve a private sector‑led recovery that drives employment and productivity. As the economic recovery progresses, the budget position will also strengthen.

Once the unemployment rate is comfortably below 6 per cent and on a path toward previous levels, the focus will shift towards stabilising and then reducing debt as a share of GDP, while still allowing for flexibility in response to changing economic conditions.

The strategy maintains the Government’s long‑standing commitments to a low and sustainable tax burden, the guaranteed provision of essential services, and budget and balance sheet discipline.

This chart compares the projected underlying cash balance (UCB) at the 2018-19 MYEFO and 2019-20 Budget. Projections of the underlying cash balance have initially worsened and then improved since the 2019-20 MYEFO. The UCB is projected to reach  a surplus exceeding 1 per cent of GDP by 2026-27.

This chart compares projections of gross debt at the 2019-20 MYEFO and 2020-21 Budget over the forward estimates and medium term up to 2030-31.

Global economic outlook

The worst global economic crisis since the Great Depression

The COVID-19 pandemic has caused a global crisis like no other in living memory. With countries taking action to protect the health of citizens, most economies have recorded historic contractions this year. Global growth is forecast to fall by 4½ per cent in 2020.

Australia stands out among advanced economies for its low infection rates and comparatively strong economic outcomes.

Uncertainty about economic and health outcomes has weighed on consumer and business confidence, and has put pressure on the global economic and financial architecture. Physical distancing and restrictions introduced to control the virus will constrain economic activity for some time, and renewed outbreaks remain a key risk to the outlook.

With countries taking action to protect the health of citizens, most economies have recorded historic contractions this year
Global growth is forecast to fall by 4½ per cent in 2020

The pandemic has hit workers hard. According to the International Labour Organization, hours worked fell by the equivalent of 600 million full‑time jobs in the June quarter 2020, compared to the December quarter 2019.

Governments and central banks have responded to the crisis decisively. Fiscal support aimed at stood down and laid-off workers has limited the impact on household balance sheets, particularly in advanced economies. Near-zero policy interest rates and unconventional monetary policy have helped central banks around the world to maintain liquidity.

Global merchandise trade was 9 per cent lower in the first half of 2020 than in the second half of 2019. International travel restrictions have disproportionately affected services trade, such as tourism and education.

Major trading partner GDP is expected to fall by 3 per cent in 2020, before growing by 5¾ per cent in 2021. China’s economic performance is important for Australia’s Major trading partner growth as it accounts for over one-third of Australia’s trade. With Chinese GDP expected to grow this year, Australia’s external outlook remains in a better position than many other economies.

Cumulative GDP growth since December quarter 2019

This chart compares projections of gross debt at the 2019-20 MYEFO and 2020-21 Budget over the forward estimates and medium term up to 2030-31.

Source: National statistical agencies, Refinitiv.
Note: Data for China not broken down by quarters.

Domestic economic outlook

Economic recovery is underway

The Australian economy is currently in recession as a result of the COVID-19 pandemic, its first recession in almost 30 years.

Real GDP fell by 7.0 per cent in the June quarter 2020 after a modest contraction of 0.3 per cent in the March quarter, as travel restrictions and other pandemic containment measures affected the ability of consumers and businesses to undertake their usual spending and investment activities.

As the virus has come under control and containment measures have been eased, the jobs lost have started to come back. Of the 1.3 million people who lost their job or were stood down on zero hours for economic reasons in April, almost 60 per cent or 760,000 are now back at work.

Economic activity is forecast to pick up strongly from late 2020 and into early 2021, driven by a further easing of containment measures and improving business and consumer confidence. Activity will also be significantly supported by an unprecedented $257 billion in Government economic support.

Real GDP is forecast to fall by 3¾ per cent in 2020 before recovering in 2021 to grow by 4¼ per cent.

The unemployment rate is expected to peak at around 8 per cent in the December quarter of this year, before falling over the next few years as the economy recovers and businesses gain confidence to employ more workers. By the June quarter 2022, the unemployment rate is expected to be 6½ per cent and will continue to decline over the forecast period.

The Government’s economic support measures, including the JobKeeper Payment, are reducing the damage to the economy and the labour market from the COVID-19 pandemic. Without this support, GDP would have fallen further and the unemployment rate would have been much higher.

New initiatives in this Budget as part of the Government’s economic recovery plan are helping households and businesses to get back on their feet.

The challenges for the Australian economy from the virus remain significant. Further outbreaks of the virus are likely until a vaccine is developed and becomes widely available. Any substantial outbreaks that affect the confidence of households to spend and businesses to invest and employ people remain a key risk to the national recovery.

This chart shows that real GDP would have been lower without economic support. It is estimated the Government’s total economic support increased the level of GDP by about 1 per cent in 2019-20 and will increase it by about 5¾ per cent in 2020-21 and 4½ per cent in 2021-22.

This chart shows that the unemployment rate would have been higher without economic support. It is estimated that without the Government’s economic support, the unemployment rate would have risen, and remained, above 12 per cent throughout 2020-21 and 2021-22.

Budget at a glance

Lower taxes for hard-working Australians

In this Budget, the Government is delivering an additional $17.8 billion in personal income tax relief to support the economic recovery, including an additional $12.5 billion over the next 12 months. It builds on the $8.1 billion in tax relief that will be delivered for the 2020‑21 income year under the already legislated Personal Income Tax Plan.

Under the Government's changes, individuals will benefit from bringing forward the tax cuts in Stage 2 of its Plan, as well as a one-off additional benefit from the low- and middle-income tax offset in 2020-21.

Supporting housing construction

As part of our economic recovery plan to create jobs, rebuild our economy and secure Australia’s future, an additional 10,000 first home buyers will be able to purchase a new home sooner under the extension to the First Home Loan Deposit Scheme.

The additional 10,000 places will be provided in 2020-21 to support the purchase of a new home or a newly built home. This will allow first home buyers to secure a loan to build a new home or purchase a newly built dwelling with a deposit of as little as 5 per cent, with the Government guaranteeing up to 15 per cent of a loan.

Infrastructure investment

Since the start of the COVID-19 pandemic the Government has committed to invest an additional $14 billion in new and accelerated infrastructure projects over the next four years. These projects will support a further 40,000 jobs during their construction.

This investment is part of the Government’s record 10-year transport infrastructure investment pipeline, which has been expanded to $110 billion and is already supporting 100,000 jobs on worksites across the country.

Supporting business and investment

To support new investment and increase business cash flow, the Government is providing a temporary tax incentive, which will be available to around 3.5 million businesses (over 99 per cent of businesses) that employ around 11.5 million workers. The incentive will apply to around $200 billion worth of investment, including 80 per cent of investment in depreciable assets by non-mining businesses. From 7:30pm (AEDT) on 6 October 2020 until 30 June 2022, businesses with turnover up to $5 billion will be able to deduct the full cost of eligible depreciable assets of any value in the year they are installed. The cost of improvements to existing eligible depreciable assets made during this period can also be fully deducted.

The Government will also allow companies with turnover up to $5 billion to offset losses against previous profits on which tax has been paid, to generate a refund. Loss carry-back will be available to around 1 million companies that employ up to 8.8 million workers. Losses incurred up to 2021‑22 can be carried back against profits made in or after 2018‑19. Eligible companies may elect to receive a tax refund when they lodge their 2020‑21 and 2021‑22 tax returns.

A digital Australia

The COVID-19 pandemic has accelerated the adoption of digital technologies by Australian businesses and consumers which has enabled many to transform their operations and continue to trade through the crisis.

The Government’s Digital Business Plan will build on this momentum to support an even greater adoption of new technologies across the economy – by both businesses and consumers.

An additional $4.5 billion investment in NBN Co will bring ultra-fast broadband to millions of families and businesses. Funding of $29.2 million will also accelerate the rollout of the 5G network.

Improving the ease of doing business

Cutting red tape is a key element of the Government’s Economic Recovery Plan for Australia. That is why the Government is making it easier for businesses to invest, create jobs, respond quickly to challenges and seize opportunities.

In this Budget, the Government will:

  • Streamline and digitise a wide range of regulatory processes
  • Reduce regulation that imposes unnecessary costs and hinders business activity
  • Support small business through the recovery

JobMaker Hiring Credit

The Government’s new JobMaker Hiring Credit will help to accelerate growth in employment during the recovery by giving businesses incentives to take on additional employees that are young job seekers aged 16 to 35 years old. The JobMaker Hiring Credit is a key part of the Government’s JobMaker Plan to boost Australia’s economic recovery.

The JobMaker Hiring Credit is estimated to support around 450,000 positions for young people and cost $4 billion from 2020-21 to 2022‑23.

Investing in education, skills and apprenticeships

The Government is making skills development a high priority as part of its JobMaker Plan. The Government’s commitment will support getting people into jobs and ensures that Australians have the right skills for the jobs of the future.

  • JobTrainer - growing Australia's workforce
  • New apprenticeships to help the recovery
  • Support for job seekers
  • More job-ready graduates
  • Short courses to reskill and upskill Australians

Delivering economic security for women

The Government is delivering the 2020 Women’s Economic Security Statement to increase women’s workforce participation, improve earning potential and enhance economic independence. The $240.4 million package will deliver employment opportunities, support to parents and support for women in the workplace.

This includes employment programs to support women’s leadership and development, and increase opportunities for women in science, technology, engineering and mathematics (STEM), business and male-dominated industries.

Supporting manufacturing and research and development

The COVID-19 pandemic has shone a light on the critical importance of supply chains and having a flexible, adaptable and innovative manufacturing capability.

The Government’s $1.5 billion Modern Manufacturing Strategy is a long-term plan to support Australia’s economic recovery.

The Government is investing an additional $2 billion through the Research and Development Tax Incentive.

Energy security and market reforms

Nationally, household electricity prices have fallen by 4.7 per cent since December 2018, with wholesale electricity prices decreasing over the past 12 months. To maintain lower prices, the Government will work with private providers to increase dispatchable generation capacity and the National Cabinet to ensure an efficient and integrated system.

The Government is securing Australia’s electricity, fuel and gas supplies to keep prices low, create new jobs and support local industries.

Supporting resilient regions

The Government continues to stand with regional Australia who has withstood flood, fire, drought and now, COVID-19. Through a regional package of more than $550 million the Government will support our regions to recover from the impacts of COVID-19. This builds on support provided through the $1 billion COVID-19 Relief and Recovery Fund.

A more secure and resilient Australia

The Government is building water infrastructure for the 21st Century helping to increase our water security, build regional resilience, deliver jobs and grow our critical agriculture sector. An investment of $2 billion for new projects under the National Water Infrastructure Development Fund will support the next generation of water infrastructure through the Grid.

The Government is also investing $270 million in the Murray-Darling Communities Investment Package which will improve the health of the Basin while supporting regional development.

To ensure that Northern Australia can continue to benefit from infrastructure to support essential services, the Government has extended the Northern Australia Infrastructure Facility (NAIF) for an additional five years, to June 2026, and expanded its lending criteria.

Protecting our environment

The Government is investing $47.4 million to protect our oceans and restore their health and is committing $29.1 million to reduce the risk of chemical contamination on Commonwealth land.

The Government will invest $249.6 million over four years to modernise recycling infrastructure, reduce waste and recycle more within Australia.

Preventing, detecting and treating COVID-19

In this Budget, the Government is investing $4.9 billion for a range of health measures ensuring Australians continue to receive the medical care and support they need throughout the pandemic. The flexible and scalable response enables the health system to respond, protecting all Australians.

Supporting Australians through the pandemic

The Government is providing unprecedented financial assistance to Australians to support them through the COVID‑19 pandemic, including:

  • The JobKeeper Payment
  • Additional income for individuals
  • Two additional Economic Support Payments for pensioners and other eligible recipients
  • Temporary access to superannuation

Your Future, Your Super

The Government is committed to making Australians’ super work harder for them to boost their retirement savings.

The Government’s Your Future, Your Super reforms are the next phase of the Government’s reform agenda and will see Australians save $17.9 billion over the next decade.

Keeping Australians safe

Australia’s cyber security capabilities are strong, but the threats we face online are increasing. COVID-19 has highlighted how much we live and work online. The Government will provide an additional $201.5 million to deliver the 2020 Cyber Security Strategy.

The Government is supporting those who keep us safe by committing $300.2 million to the AFP to strengthen their capacity to keep Australians safe in an increasingly complex threat environment.

Supporting our region

Australia has a deep and abiding interest in the stability, prosperity and resilience of the Pacific and Southeast Asia, reflected in the Pacific Step‑Up and other initiatives. The Government is ensuring recovery in our region:

  • Investing in the COVID-19 Vaccine Access and Health Security Program in Pacific and Southeast Asian countries.
  • The Australian Infrastructure Financing Facility for the Pacific
  • COVID-19 Recovery – Support to the Pacific and Timor‑Leste
  • Delivering security infrastructure projects in the Southwest Pacific

Appendix A: Budget aggregates

The table below shows the main cash and accrual budget aggregates for the Australian Government general government sector over the period from 2019-20 to 2023-24. The underlying cash deficit is estimated to be $213.7 billion in 2020-21. The net operating deficit is estimated to be $197.9 billion in 2020-21.

  Actual Estimates
Receipts 469.4 463.8 451.9 482.6 526.4 1,924.7
Per cent of GDP 23.7 23.8 22.5 23.0 23.9  
Payments(b) 549.6 677.4 563.9 570.5 593.3 2,405.2
Per cent of GDP 27.7 34.8 28.0 27.2 26.9  
Net Future Fund earnings(c) 5.0 na na na na na
Underlying cash balance(d) -85.3 -213.7 -112.0 -87.9 -66.9 -480.5
Per cent of GDP -4.3 -11.0 -5.6 -4.2 -3.0  
Revenue 486.3 472.4 464.1 491.4 538.1 1,966.0
Per cent of GDP 24.5 24.3 23.1 23.4 24.4  
Expenses 578.5 670.3 567.5 574.9 596.6 2,409.3
Per cent of GDP 29.2 34.4 28.2 27.4 27.1  
Net operating balance -92.3 -197.9 -103.4 -83.5 -58.5 -443.3
Per cent of GDP -4.7 -10.2 -5.1 -4.0 -2.7  
Net capital investment 4.0 7.8 9.9 11.0 10.8 39.6
Fiscal balance -96.3 -205.7 -113.3 -94.5 -69.3 -482.9
Per cent of GDP -4.9 -10.6 -5.6 -4.5 -3.1  
Net Future Fund earnings(c) 5.0 3.7 3.8 4.0 4.3 15.8
Headline cash balance -93.9 -230.0 -123.8 -100.8 -56.2 -510.7

(a) Total is equal to the sum of amounts from 2020-21 to 2023-24.
(b) Equivalent to cash payments for operating activities, purchases of non-financial assets and net cash flows from financing activities for leases.
(c) Under the Future Fund Act 2006, net Future Fund earnings will be available to meet the Australian Government's superannuation liability from 2020-21. From this time, the underlying cash balance includes expected net Future Fund earnings.
(d) Excludes net Future Fund earnings before 2020-21.

Appendix B: Revenue and spending

Total revenue for 2020-21 is expected to be $472.4 billion. Total expenses for 2020-21 are expected to be $670.3 billion.

Where revenue comes from (2020-21)

The chart shows relative sizes of the sources of revenue for 2020-21. Individuals income tax is the largest source of revenue followed, in order, by: Company and resource rent taxes; sales taxes; non-tax revenue; fuels excise; customs duty; superannuation taxation; other taxation; fringe benefits tax; and other excise.

Where taxpayers’ money is spent (2020-21)

The chart shows how much money is spent on different functions of government for 2019-20, based on expense estimates. Social security and welfare are the largest functional expense, followed by: Other economic affairs, Other purposes; Health; All other functions; Education; Defence; and then General public services.

Appendix C: Major initiatives - payments

This table summarises the major payments initiatives in the 2020-21 Budget and their impact on the underlying cash balance. More comprehensive information is provided in Budget Paper No. 2, Budget Measures 2020-21.

Initiatives(a) 2020‑21
JobKeeper Payment extension(b) -15,600 - - - -15,600
Infrastructure Investment - states and territories(c)(d) -653 -1,834 -2,349 -1,908 -6,744
JobMaker Hiring Credit(c) -850 -2,900 -250 - -4,000
Further economic support payments(b) -2,512 -43 -3 - -2,558
Ageing and Aged Care(e) -716 -390 -438 -485 -2,029
Infrastructure Investment - road safety and upgrades(c) -1,003 -1,001 -1 -1 -2,008
Access to COVID-19 vaccines and consumables(b) -1,165 -704 - - -1,870
Modern Manufacturing Strategy(c) -79 -454 -587 -389 -1,510
Boosting apprenticeships wage subsidy(c) -409 -822 9 7 -1,214
Supporting our hospitals - continuation(b) -1,103 - - - -1,103
Research Package(c) -1,040 -38 89 -78 -1,067
Guaranteeing Medicare and access to medicines - extension(b) -1,040 .. .. .. -1,040
National Water Grid - investing in a long-term approach to water infrastructure(c) -21 -202 -326 -481 -1,031
Local Roads and Community Infrastructure Program - extension(c) -500 -500 - - -1,000
Employment Services 276 240 253 158 927

(a) Impact on underlying cash balance. '..' denotes not zero, but rounded to zero. Figures are rounded to the nearest million and totals may not sum due to rounding.
(b) Part of the Government's COVID-19 Response Package.
(c) Part of the Government's JobMaker Plan.
(d) Sum of Infrastructure Investment - Australian Capital Territory; New South Wales; Northern Territory; Queensland; South Australia; Tasmania; Victoria; and Western Australia.
(e) Refers to the measure on page 90 of Budget Paper No. 2.

Appendix D: Major initiatives - receipts

This table summarises the major receipt initiatives in the 2020-21 Budget and their impact on the underlying cash balance. More comprehensive information is provided in Budget Paper No. 2, Budget Measures 2020-21.

Initiatives(a) 2020‑21
Temporary full expensing to support investment and jobs(b)(c) -1,500 -11,400 -18,100 4,300 -26,700
Bringing forward the Personal Income Tax Plan and retaining the low and middle income tax offset(b) -6,940 -16,870 5,730 250 -17,830
Temporary loss carry-back to support cash flow(b)(d) -2 -3,121 -2,271 540 -4,854
Research and Development Tax Incentive — supporting Australia’s economic recovery(b) -310 -450 -590 -650 -2,000
Migration Program — 2020-21 planning levels -70 -85 -115 -117 -388
Increase the small business entity turnover threshold - -25 -55 -25 -105

(a) Impact on underlying cash balance. Figures are rounded to the nearest million and totals may not sum due to rounding.
(b) Part of the Government's JobMaker Plan.
(c) The financial impact of this measure is estimated to decrease receipts by $3.2 billion over the medium term.
(d) The financial impact of this measure is estimated to decrease receipts by $3.9 billion over the medium term.

Appendix E: Detailed economic forecasts

Domestic economy detailed forecasts(a)
Outcomes(b) Forecasts
2019‑20 2020‑21 2021‑22
Real gross domestic product -0.2 -1 1/2 4 3/4
Household consumption -2.6 -1 1/2 7
Dwelling investment -8.8 -11 7
Total business investment(c) -1.8 -9 1/2 6
By industry
Mining investment 4.8 5 1/2 1 1/2
Non-mining investment -3.7 -14 1/2 7 1/2
Private final demand(c) -2.9 -3 1/2 7
Public final demand(c) 5.6 5 3/4 2 1/2
Change in inventories(d) -0.4 0 1/4
Gross national expenditure -1.2 -1 6
Exports of goods and services -1.6 -9 2
Imports of goods and services -7.1 -9 1/2 8 1/2
Net exports(d) 1.1 -1/4 -1
Nominal gross domestic product 1.7 -1 3/4 3 1/4
Prices and wages
Consumer price index(e) -0.3 1 3/4 1 1/2
Wage price index(f) 1.8 1 1/4 1 1/2
GDP deflator 1.9 -1/4 -1 1/2
Labour market
Participation rate (per cent)(g) 63.4 65 1/4 65 1/2
Employment(f) -4.3 2 3/4 1 3/4
Unemployment rate (per cent)(g) 7.0 7 1/4 6 1/2
Balance of payments
Terms of trade(h) 1.0 -1 1/2 -10 3/4
Current account balance (per cent of GDP) 1.8 2 -1 1/2

(a) Percentage change on preceding year unless otherwise indicated.
(b) Calculated using original data unless otherwise indicated.
(c) Excluding second hand asset sales between the public and private sector.
(d) Percentage point contribution to growth in GDP.
(e) Through-the-year growth rate to the June quarter.
(f) Seasonally adjusted, through the year growth rate to the June quarter.
(g) Seasonally adjusted rate for the June quarter.
(h) The detailed forecasts are underpinned by price assumptions for key commodities: Iron ore spot price assumed to decline to US$55/tonne free-on-board (FOB) by the end of the June quarter 2021; metallurgical coal spot price assumed to remain at US$108/tonne FOB; and thermal coal spot price assumed to remain at US$51/tonne FOB.

Note: The detailed forecasts for the domestic economy are based on several technical assumptions. The exchange rate is assumed to remain around its recent average level — a trade weighted index of around 62 and a $US exchange rate of around 72 US cents. Interest rates are assumed to move broadly in line with market expectations. World oil prices (Malaysian Tapis) are assumed to remain around US$46 per barrel.
Population growth is assumed to be around 1.2 per cent in 2019‑20, 0.2 per cent in 2020-21 and 0.4 per cent in 2021-22.
Source: ABS Australian National Accounts: National Income, Expenditure and Product; Balance of Payments and International Investment Position, Australia; Labour Force, Australia; Wage Price Index, Australia; Consumer Price Index, Australia; unpublished ABS data and Treasury.

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