Australia Budget To Log Surplus In 2020-21

Australia's Treasurer Scott Morrison unveiled the budget 2017-18 in the parliament on Tuesday that comprised measures to improve housing affordability and a levy on big banks.

Morrison also forecast the budget balance to return to surplus in 2020-21. The budget deficit is expected to narrow to A$29.4 billion in 2017-18 from A$37.6 billion in 2016-17.

The budget is forecast to log A$7.4 billion surplus in 2020-21. The projected return to surplus comes despite considerable obstruction, Morrison said.

Government payments are also forecast to fall to 25 percent of GDP in 2020-21, returning close to the 30 year historical average, he said. Net debt as a share of GDP is expected to peak in 2018-19 before declining over the remainder of the forward estimates.

"We are taking practical action to arrest the deficit and the growth in our debt, and doing all we can to preserve our AAA credit rating," he said.

For infrastructure funding and financing, the government committed over A$75 billion over the next 10 years.

The treasurer said the government plans to increase defense spending to 2 percent of GDP in 2020-21, three years ahead of what it had first promised.

He announced measures to unlock supply of new homes and introduced incentives to improve housing outcomes.

On banking, the government introduced a major levy of 6 basis points on banks with liabilities above A$100 billion. The government also plans to create the Australian Financial Complaints Authority for dispute resolution.

The Medicare levy will increase by 0.5 percentage points to 2.5 percent to fund for the National Disability Insurance Scheme, Morrison said.

The government will impose a fee on businesses that employ foreign workers, which is expected to raise A$1.2 billion over four years.