As the recent national accounts data demonstrated, our transition from the investment boom in the mining sector to a more diversified, innovative and people driven economy is underway.
This transition is creating a new and emerging momentum in our economy.
Our economy is heading in the right direction – with growing confidence, strong jobs growth and improving business conditions.
Australians know this and are already out there working, saving and investing, to make this happen.
As a national Government it is our job to provide economic leadership through this transition, to nurture and protect this momentum and back Australians as they continue to back themselves.
We achieve this by placing jobs and growth at the centre of our policy agenda, which in turn enables us to address our many social and national security challenges.
Strengthening our nation’s finances is a core component of our national plan for jobs and growth.
Our plan is straightforward - responsibly restrain expenditure while supporting economic growth to lift revenues.
The release of today's Mid-Year Economic and Fiscal Outlook demonstrates that the Turnbull Government is holding to this plan.
Despite revenue write downs of almost $34 billion caused by falling commodity prices, a declining terms of trade, weaker global growth and the adoption of a more realistic domestic growth outlook we continue patiently and responsibly on the path to budget balance.
The underlying deficit is projected to contract from 2.3 per cent to 0.7 per cent of GDP over the budget and forward estimates.
Government payments as a share of GDP have been brought back to 25.9 per cent, falling to 25.3 per cent in 2018-19, while real growth in payments has been reduced from 2.0 per cent to 1.8 per cent per annum over the forward estimates.
All policy decisions taken since the Budget, including the cost of Senate negotiations, have been more than offset by savings measures, adding almost $400 million to the bottom line.
These results better the average of market expectations and are the result of the Government focussing on what it can control rather than what it can’t.
Critically we have adopted a measured approach, avoiding extreme responses that would place a hand brake on household consumption and business investment growth and unnecessarily threaten the fresh new momentum emerging in our transitioning economy.
Net exports and household consumption are currently more than offsetting the expected falls in business investment following the mining boom. It is important that continuing momentum drives expansion in the non-mining sectors of our economy to drive future growth and jobs.
Underpinning the fiscal outlook is an Australian economy that continues to demonstrate resilience in the face of strong global headwinds.
Australia’s real GDP growth is forecast to strengthen from 2½ per cent this year to 2¾ per cent next, with 3 per cent projected growth thereafter.
The inclusion of this more realistic outlook should be seen as a statement of confidence.
More importantly it presents a more positive story on jobs with an upward revision to the employment outlook and a reduction in the forecast unemployment rate since the Budget.
Recent jobs data indicates even these estimates may be too conservative.
There are 340,000 more Australians in jobs than a year ago, reflecting the transition in the economy to growth in more job intensive sectors.
The Government and the Australian people know the challenges we face.
That is why we are continuing to roll out our national plan for growth and jobs that is backing Australians by opening up trade, boosting innovation, building new infrastructure, modernising the way we deliver products and services, working to deliver a more growth friendly tax system and strengthening the budget.
With interest rates at historic lows, a lower exchange rate assisting our export and import-competing industries and capital utilisation on the increase, the conditions are now right for business to invest and the transition to continue.