Australia’s budget is forecast to return to a surplus a year earlier than previous forecast, Treasurer Scott Morrison said in the budget 2018-19, presented on Tuesday.
According to the latest estimate, the budget will log a small surplus of A$2.2 billion or 0.1 percent of GDP in 2019-20, following a small estimated shortfall of 0.8 percent of GDP in 2018-19.
The surplus is expected to rise to A$10.96 billion in 2020-21 and then to A$16.6 billion in 2021-22.
The government has kept a tight rein on spending and is now no longer borrowing to pay for everyday expenses, Morrison said.
The treasurer said the return to surplus will enable a reduction in debt. Net debt is expected to peak at 18.6 percent of GDP in 2017-18 and is projected to fall to 14.7 percent by 2021-22.
The government said the momentum in the Australian economy is building and it is moving into the 27th year of consecutive growth.
The economy is expected to grow by a solid 2.75 percent in 2017-18 and growth is forecast to rise further to 3 percent in 2018-19 and 2019-20.
Morrison announced tax relief to middle and lower income earners, to encourage working Australians and to assist with cost of living pressures.
By 2024-25 around 94 percent of taxpayers are projected to face a marginal tax rate of 32.5 percent or less compared with 63 percent if the system is left unchanged.
The government will invest around A$2.4 billion to boost Australia’s public technology infrastructure.
On healthcare, Morrison guaranteed additional funding for the Medicare Benefits Schedule and the Pharmaceutical Benefits Scheme through the Medicare Guarantee Fund. A credit of A$35.3 billion will be made for 2018-19.
To reduce the black economy operators using cash to avoid their tax, he introduced an economy-wide cash payment limit for large cash transactions of A$10,000.
The center-right government is set to face federal election within an year.
Paul Dales, an economist at Capital Economics, said even if the Budget helps the coalition win next year’s election, a weaker economy than the Treasurer is expecting probably means the projected surpluses turn out to be wishful thinking.