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Thursday, 23 September 1999
Page: 10396


Mr ANDREW THOMSON —My question is addressed to the Treasurer. Can he inform the House whether the budget surplus for the financial year 1998-99 is likely to be in line with that forecast in the 1999-2000 budget?


Mr COSTELLO (Treasurer) —The end of the financial year for 1998-99 was, of course, on 30 June 1999. At the time of the budget, which we did in May, we estimated that the outcome would be a surplus of $2.9 billion. I have been advised by the Department of the Treasury and the Department of Finance and Administration that the actual outcome, the underlying cash surplus, for the year completed 1998-99 will not be the estimated $2.9 billion but in fact will be $4.2 billion, exceeding the estimate made in the May budget. In addition to that, in the 1998-99 budget the Commonwealth reduced net debt by over $24 billion. That was, of course, principally from the proceeds of asset sales and, because the budget was in underlying surplus, every last dollar of asset sales went to reducing Commonwealth net debt. Mr Speaker, that compares with the 1995-96 budget which, you will recall, the Labor Party said would be a surplus but ended up as a $10.6 billion deficit some months later.

Obviously, in relation to 1999-2000 and the following year, 2000-01, there will be addi tional new expenditures that were not forecast at budget time, principally in relation to East Timor. As a result of Australia's commitment in military and humanitarian terms, there will be considerable new expenditures to maintain the force in East Timor and to engage in the humanitarian aid that is required. We expect that those expenditures, which were unforeseeable at the time, but are absolutely necessary—and the government has given a commitment that the Australian forces in the field will not suffer from a lack of resources in any way whatsoever in relation to that—will have to be funded as new expenditures under the budget. We expect to be able to announce some of the impact of that when we do the mid-year reviews in November of this year. But, of course, one of the measures that allow us to make that commitment in East Timor is the fact that the budget is now in surplus. If Australia had not been able to run a strong economy in the last couple of years, we would not have been able to mount the operation that we have and, consistent with those requirements, the government is still determined to exercise a strong fiscal line in the years in front of us.