Joint Party Room meeting

24 March 2015

Treasurer
Minister for Finance
1

The focus of the 2015 Budget

will be to build a stronger
Australian economy

Initiatives in the Budget will be focused

on jobs, growth and opportunity

Small business package

Childcare reform
Infrastructure investment
Free trade agreements
Integrity in our tax and welfare systems
3

Main beneficiaries from the Budget

will be families and small business
The IGR showed that our future prosperity will rely
on boosting workforce participation and increasing
productivity
PC Childcare Report showed that roughly 165,000
parents with children aged under-13 would like to
work but are not able to
Small business employs around 4.5 million people
but could create even more jobs and innovation

State of the books

MYEFO showed we are on track to return to
surplus
Despite weaker global outlook
Despite historic iron ore price collapse
Despite impact of the Senate

Falling global growth forecasts

6

Per cent

Per cent

Forecasts
5

5
October 2014
WEO

0
2000

2002

2004

2006

2008

2010

2012

2014

2016

Source: IMF January 2015 World Economic Outlook.

6

Iron ore
150 US$/t, FOB

US$/t, FOB 150

2012-13 Budget- $136

135

135
2013-14 Budget - $121

120

120

105

105
2014-15 Budget - $95

90

90

75

75
2014-15 MYEFO - assumption - $60

60
45
Mar-12

Today - $50.2
Jul-12

Nov-12

Mar-13

Jul-13

Nov-13

Mar-14

Jul-14

Nov-14

60
45
Mar-15

Source: Platts and Treasury.

7

All new spending will be offset

by savings that are
responsible and fair

We will continue to improve the Budget

bottom line each and every year
MYEFO showed average of 0.6% of GDP
consolidation
Must continue a sensible path of fiscal
consolidation
Monetary policy and fiscal policy must work
hand in hand
9

Pace of budget consolidation (MYEFO)

Source: MYEFO.
10

The cash rate and the pace of consolidation

Cash rate (Per cent)

Change in underlying cash balance ($b nominal)

4.0

12

3.5

11

Change in underlying cash balance (RHS)

3.0

10

2.5

2.0

Market Expectations of the RBA cash rate (LHS)

1.5

1.0

6
2014

2015

2016

2017

2018

Source: Treasury, RBA and ASX.

11

We will get the Budget back

to surplus as soon as possible

12

Building a stronger Australia

and getting back to living
within our means

13