The 2016/17 Australian Federal Budget documents the Government's estimated revenue and expenditure over the next financial year, and is the primary fiscal tool used by the Commonwealth to achieve the economic goals objectives of economic growth, internal stability, and external stability. Policies and programs such as the 'Ten Year Enterprise Tax Plan', the 'Youth Jobs PH internship programme' and the 'Diverted Profit Tax', are just a few examples of how the Government plans to achieve its goals. .
This year's Budget projects revenue of $416.9b against expenditure of $450.6b, resulting in a total fiscal balance of -$37.1b or -2.2% of our GDP. However, this is smaller than the $40b deficit of the 2015/16 Budget, indicating the Budget is mildly contractionary. The Government aims for a gradual reduction in Budget deficits, projecting Budget surplus by 2020/21. Despite this, the Government has employed many discretionary changes in fiscal policy, to stimulate aggregate demand and supply in the economy, and thus, increase economic growth. The first measure is direct Government spending, with a major focus on investment in infrastructure. Despite strong economic growth in the past, capacity constraints have prevented Australia from producing at its full capabilities. An example is the mining sector, where the number of exports has been limited by inadequate roads, transport and ports. From 2013-14 to 2019-20, the Government has pledged $50 billion towards over 1,000 infrastructure projects, including the $594m Melbourne to Brisbane Inland Rail Project, $5B towards the Northern Australia Infrastructure Facility and the $2b National Water Infrastructure Loan Facility. Investment in capital benefits supply-side economics, as production costs are lowered, and goods and services are produced more efficiently. This not only stimulates economic growth, but makes Australia more competitive on the global market.
