Address to the Canberra Branch of the Economics Society of Australia – “Policy Reforms to Strengthen the ‘New Economy'”November 14, 2000
Mid Year Review,Â Fuel,Â Roads,Â Employee EntitlementsNovember 16, 2000
2000-01 Mid-Year Economic and Fiscal Outlook Revises Up Growth and Surplus
The 200001 Mid-Year Economic and Fiscal Outlook (MYEFO), released today,
demonstrates the continuing strength of the Australian economy. The forecast for economic
growth in 200001 has been revised up from 3- per cent to 4 per cent since the
2000-01 Budget, reflecting in particular a stronger export performance.
Consistent with stronger economic and employment growth, the underlying cash surplus is
expected to be $4.3 billion in 2000-01, $1.5 billion higher than estimated at the
200001 Budget. In accrual terms, the fiscal surplus is expected to be $8.4 billion,
$3 billion higher than estimated at the Budget.
The improved fiscal outlook for 2000-01 reflects higher than expected revenue
collections, partly offset by increased expenses.
The MYEFO also reports that transitional factors affecting GST revenue have reduced the
amount of budget balancing assistance the States will require from the Commonwealth in
2000-01 and 2001-02. These transitional factors derived from early monthly GST
collections are expected to produce a one-off increase in net GST revenue of
$2.25 billion in 2000-01 and appear to arise from:
Estimated GST revenue is unchanged in the forward years, reflecting the fact that, at
this stage, first quarterly returns have not yet been all received. Future projections of
GST revenue are subject to much greater uncertainty than is the case with other revenue
In 2000-01, Commonwealth general government net debt is estimated to fall to its lowest
level as a percentage of GDP since 1990-91. Net debt is forecast to continue falling
through the forward estimates period as the Government delivers surpluses and in addition
its privatisation program. Net debt has fallen from a high of almost 20 per cent of
GDP in 1995-96 to 6.4 per cent in 2000-01 a net reduction of over
Employment is now expected to increase by a strong 3 per cent in 2000-01,
compared with 2 per cent at Budget, largely reflecting rapid employment growth
in the September quarter 2000 and the upward revision to the overall economic growth
forecast. The unemployment rate is expected to continue its downward trend, to below
6 per cent by the June quarter 2002.
Through the year to the June quarter 2001, ongoing inflation is forecast to
be around 3 per cent, revised up from 2 per cent at Budget. The
upward revision reflects the impact of higher world oil prices and the lower exchange rate
relative to the levels assumed in the Budget, rather than any significant step up in
domestic wage or general inflationary pressures. The headline Consumer Price Index is
forecast to increase by around 5 per cent through the year to the June quarter
2001, which takes into account a one off increase in prices of around
2 per cent flowing from The New Tax System. In 2001-02, headline
inflation is expected to be around the bottom of the 23 per cent target
The current account deficit is expected to decline significantly to around 4 per
cent of GDP in 2000-01, down from 5 per cent of GDP in 1999-2000.
An electronic version of the 200001 MYEFO can be found at: www.budget.gov.au.
15 November 2000