The Crest of the Commonwealth of Australia Treasury Portfolio Ministers
Picture of Wayne Swan

Wayne Swan

Deputy Prime Minister and Treasurer

3 December 2007 - 27 June 2013

11 May 2010

NO.041

2010-11 Budget – Responsible Management and a Faster Return to Surplus

The 2010-11 Budget delivers the highest standards of responsible economic management to strengthen our economy and secure future growth.

The Budget converts Australia's successes during the global recession into even lower unemployment and a stronger, more secure economy for working families.

Through a new benchmark of strict fiscal discipline, the Rudd Government is returning the Budget to surplus in three years, three years early, and ahead of every major advanced economy.

The Government is also delivering major economic reforms so Australia can prepare for future challenges and take full advantage of the opportunities ahead.

The 2010-11 Budget will build a modern tax and retirement incomes system, boost national savings, invest in renewable energy, and deliver historic health and hospital reform.

The Budget also builds on the Government's historic investments in skills and infrastructure so we can build up our economic capacity and face the future with confidence.

Fiscal responsibility

The Budget is projected to return to surplus in 2012-13, three years ahead of schedule and ahead of every major advanced economy.

Net debt is now expected to peak lower and earlier at just 6.1 per cent of GDP – half the level expected one year ago, and less than one-tenth of the average across the major advanced economies.

The budget deficit of $40.8 billion for 2010-11 (2.9 per cent of GDP) is almost $6 billion less than the forecast at the Mid‑Year Economic and Fiscal Outlook (MYEFO), and more than $16 billion less than expected one year ago.

All new spending has been offset over the forward estimates, and real payments growth has been held to below 2 per cent, meeting our strict fiscal rules.

The Government has extended its fiscal strategy to continue building surpluses and achieve a rapid reduction in net debt.

The Government will maintain the 2 per cent cap on real spending growth, on average, until the surplus reaches 1 per cent of GDP.

A strong and strengthening economy

The Australian economy has far outperformed the expectations of a year ago, having emerged from the global recession as the strongest performing economy in the developed world.

This time last year we expected our economy to enter a recession, with GDP forecast to contract by ½ per cent in 2009-10. Instead the Budget estimates that GDP will grow by around 2 per cent.

The economy is expected to rebound powerfully from the recent downturn, with forecast real GDP growth of 3¼ per cent in 2010‑11 and 4 per cent in 2011-12.

Our unemployment rate, already the second lowest compared to the major advanced economies, is set to fall further, to 4¾ per cent by mid‑2012.

Fiscal and monetary policy, a strong financial system, our close ties with Asia, and the hard work and resilience of the Australian people combined to protect Australia from the worst global recession since the Great Depression.

An agenda for the future

The 2010-11 Budget is all about preparing Australia to meet future challenges with confidence and make the most of the opportunities ahead.

Growing the whole economy

The Government is determined to manage the next mining boom better than our predecessors managed the last. This means we must manage our resource wealth sustainably – capturing a fairer share for all Australians and turning it into other forms of wealth that last.

Taxing mining super profits fairly through the Resource Super Profits Tax (RSPT) means we can afford to:

  • Cut the company tax rate in two stages – to 29 per cent in 2013-14 and 28 per cent in 2014-15;
  • Give small business companies a head start – with a cut to 28 per cent in 2012-13; and
  • Give all small businesses an instant write‑off for all assets costing up to $5,000, and a simple but generous depreciation pool for other assets.

This will boost our economy's competitiveness, expand investment and job opportunities, and spread the spoils of the boom more broadly, to the benefit of working families.

Independent modelling indicates introducing the RSPT and cutting the company tax rate will boost investment by 2.1 per cent, lift real wages by around 1.1 per cent in the long run, and put an extra $450 a year into the pockets of workers on average earnings.

Proceeds from the RSPT will also be used to boost retirement savings, particularly for low and middle income Australians, and ensure that infrastructure investment becomes a permanent feature of state and federal budgets.

Investing in renewable energy

The Budget demonstrates the Government's firm commitment to tackling the challenge of climate change.

While the collapse of bipartisan support and slow international progress has forced a delay to the CPRS, the Government is getting on with the job building a future for renewable energy in Australia.

The Budget includes a new $652 million Renewable Energy Future Fund as part of an expanded $5.1 billion Clean Energy Initiative.

The fund will leverage private sector investment to support renewable energy projects, and the development and deployment of low-emissions technologies.

It also will be used to increase Australia's take-up of energy efficiency measures in both households and businesses.

Building skills and infrastructure

The 2010-11 Budget also builds on the Government's core productivity agenda with major new investments in skills and infrastructure so we can expand economic capacity. This will help our country grow sustainably with low inflation into the future.

The Government is investing nearly $1 billion in the Australian Rail Track Corporation to fund rail freight works across Australia.

The Government has also announced a state infrastructure fund, with estimated inflows of more than $5.6 billion over the next decade, beginning with $700 million in 2012-13. This will see infrastructure investment become a permanent feature of state and federal budgets.

The Government's Skills for Sustainable Growth strategy will invest $661 million to boost the skills of our workforce and lift the productive capacity of the economy.

The Budget also delivers key measures to ensure our education and training systems are in the best position to meet the skills we need for the future.

The Skills for Sustainable Growth strategy will provide up to 70,000 new training places and support 22,500 new apprentices.

Saving for the future

The Government will boost national savings by gradually increasing the Superannuation Guarantee from 9 per cent now to reach 12 per cent by 2019-20. It is estimated that this major reform will help 8.4 million Australians become more financially secure in their retirement.

The Budget also includes steps to boost private savings outside of the superannuation system with new tax incentives.

From 1 July 2011, Australians will receive a 50 per cent tax discount for the first $1,000 of interest they earn on a range of savings products, deposits held in banks, building societies and credit unions, or on bonds, debentures and annuity products.

This change is expected to make interest-bearing products more attractive to savers, which will have positive flow‑on effects for competition in our banking system.

This new incentive to save is expected to benefit around 5.7 million Australian depositors in 2011-12, helping to secure our financial system and strengthen our economy.

Better Health and Hospitals

The ageing of our population and rising health costs pose a serious long-term challenge for our nation.

This Budget builds on our National Health and Hospitals Network – a major economic reform with the simple goal of better health and better hospitals for every Australian.

A further $2.2 billion investment in the health system in this Budget takes the Government's new investment in health reform to $7.3 billion over five years, and $23 billion over the rest of the decade.

Tonight's announcements include:

  • A $772 million investment in our GPs and primary care services to ensure better medical facilities, patient access and advice at a local level;
  • $523 million to train and support our nurses, including in aged care and in our rural and regional communities; and
  • $467 million to modernise our health system by providing an electronic health record for every Australian who wants one.

Easing the cost of living

In the 2010-11 Budget, the Government is delivering the next round of personal income tax cuts to help millions of families with cost of living pressures and boost participation in the Australian workforce.

These personal tax cuts starting from 1 July this year mean the Government will have delivered $47 billion in tax relief over four years, targeted particularly at low and middle income Australians.

From 1 July this year, individuals will be able to earn up to $16,000 and not have to pay income tax (up from $11,000 in 2007-08) due to the Government's increases to the Low Income Tax Offset.

The Budget delivers on the Government's commitment to make tax time simpler for working families.

A standard deduction will be phased in over two years so that $500 will be available to taxpayers from 1 July 2012, increasing to $1,000 from 1 July 2013.

This means less time with the Tax Pack, and for 6.4 million Australians it also means a bigger tax return.

All of the various measures announced in the 2010-11 Budget tonight play their part in the Rudd Government's plan to build a stronger, more secure economy for working families.

CANBERRA
11 May 2010