Stephen Conroy (Victoria, Australian Labor Party, Deputy Leader of the Government in the Senate) Share this | Hansard source

I thank Senator Lundy for that very thoughtful question. The recently released Mid-Year Economic and Fiscal Outlook, MYEFO, clearly demonstrated that the budget has felt the full force of the global financial crisis. We know that the world faces the most significant upheaval in global financial markets since the Great Depression. The MYEFO figures are a dramatic reminder that, despite the fact that we are better placed than most countries to weather the global conditions, we are not immune. The MYEFO forecasts show an underlying cash surplus for 2008-09 of $5.4 billion, or 0.4 per cent of GDP. At budget, the surplus was $24.7 billion, or 1.8 per cent of GDP. This is a decrease of $16.3 billion since the 2008-09 budget. This decline is mainly due to the impact of the Economic Security Strategy package and the downward revision to tax receipts as a consequence of the global financial crisis.

The underlying cash surpluses for forward years are $3.6 billion in 2009-10, $2.6 billion in 2010-11 and $6.7 billion in 2011-12. Almost all of the decrease in the surplus beyond 2008-09 is due to the significant reduction in revenues associated with the global financial crisis. GDP growth is expected to slow to two per cent in 2008-09, three-quarters of a percentage point lower than we forecast in the May 2008 budget. This is slower but solid growth given the international conditions that we face. Let us remember that all members of the G7 group of advanced economies have now experienced negative growth at some point this year and the world’s major advanced economies are now expected to grow at their lowest rates in more than a quarter of a century.