Page 5538 - Week 13 - Wednesday, 17 November 2010
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MS GALLAGHER: I thank Mr Hargreaves for the question. The commonwealth Treasury released the 2010-11 midyear economic and fiscal outlook, known as the MYEFO, on Tuesday, 9 November, which did contain both positive and negative news for the territory. The MYEFO indicate continued signs of recovery on a national level and this is clear in their improved economic data which is published in the report. The Australian economy is forecast to grow at 3¼ per cent in 2010-11 and this has been upwardly revised from their pre-election economic and fiscal outlook of three per cent.
The forecast growth rate for the 2011-12 year is 3¾ per cent. This strong economic growth nationally is supported by strong demand from an emerging Asia which is driving the terms of trade towards historic highs. The employment growth rate has been revised up to 2½ per cent in 2010-11, compared to 2¼ per cent in the pre-election economic outlook, and remains unchanged at two per cent for 2011-12. The unemployment rate is expected to fall, the national rate, to 4½ per cent by the end of June 2012.
The MYEFO is clearly good economic news for Australians, which, of course, include the residents of our local community here in the ACT, with the improved domestic outlook likely to have beneficial impacts on the local ACT economy and the budget.
However, while the budget welcomes the positive news on the economic front, of course there are risks on the horizon, including those around the uncertainty in global financial markets, particularly those in the European economies, large exchange rate movements and the fluctuations in some major taxes and revenue. Financially, the commonwealth budget remains on track to return to surplus in 2012-13 despite this continued global uncertainty and the impact of the higher Australian dollar on revenues.
In good news for the territory, the commonwealth did not use the MYEFO to slash outlays or significantly reduce public service employment levels. Both of these things would have had a significant impact on the territory. Instead, the commonwealth has found savings to offset its election commitments and has once again committed to holding growth in expenditure to below two per cent. This, of course, ensures that with forecast growth in revenue the commonwealth budget will return to surplus by 2012-13.
Notwithstanding the strong national economic growth and increasing commonwealth revenue over the forward estimates, total commonwealth revenue has been revised down by $2.1 billion in 2010-11 and $11.9 billion over the four years to 2013-14 since the pre-election economic outlook. This mainly reflects the impact of the Australian dollar on company tax receipts, weaker capital gains tax collections and earlier than anticipated utilisation of past tax losses.
GST collections continue to be weaker than anticipated, and this latest report did revise down the GST payments by $360 million in 2010-11, $530 million in 2011-12, since the pre-election economic fiscal outlook. Of course this has an impact on the
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