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24

Australian Federal and State Budgets - An Overview

NSW Fiscal Responsibility Act 2005:Targets85

Fiscal Target No.1 (Medium Term)

Fiscal Target No.2 (Medium Term)

Reducing the Level of Government Net Financial Liabilities, as a Proportion of Gross State Product (GSP), to 7.5 per cent (or less) by 30 June 2010 Maintaining General Government Net Debt, as a proportion of GSP, at (or below) its 30 June 2005 level (0.9 per

cent of GSP)

Fiscal Target No.3 (Long Term)

Reducing

the

Level

of

General

Government Net Financial Liabilities, as a Proportion of GSP, to 6 per cent (or

less) by 30 June 2015

Fiscal Target No.4 (Long Term)

Maintaining

Underlying

General

Fiscal Target No.5 (Long Term)

Government Sector Net Debt, as a Proportion of GSP, at (or below) its 30 June 2005 level (0.8% of GSP) - Unless an Increase is Required, in Net Debt, to Reduce One or More Components of General Government Net Liabilities Eliminating Total State Sector Unfunded Superannuation Liabilities by 30 June 2030

Significantly, a note to the legislation identifies certain internal and external factors which impact upon the budget. It states:

Fiscal sustainability requires that the Government be able to manage financial risks and financial shocks in future periods without having to introduce significant and economically or socially destabilising expenditure or revenue adjustments in those future periods. What is considered consistent with fiscal sustainability will vary depending on the strength and outlook for the economy, the structure of expenditure and revenue of the budget, the outlook for the State’s credit rating, demographic and social trends that will affect the budget, and the nature of financial risks faced by the Government at any given time. 86

Internal needs and pressures, including requirements for infrastructure development, which in a NSW context includes recent demands for funds to build the North West Rail Line and completion of the duplication of the Hume Highway , drive some factors.87 Other factors are external in nature, with international

85

See Fiscal Responsibility Act 2005 (NSW), sections 6-7.

86

See Fiscal Responsibility Act 2005 (NSW), Note to s 3.

87

In his budget for 2009-10, the state Treasurer advised that his government proposed to spend around $14 billion on infrastructure in the 2009-10 financial year. NSW Treasury, Budget Statement 2009-10 (NSW Treasury, Sydney, 2009), Budget Paper No. 2, p.3-14.

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