Mr GEORGIOU (2:46 PM) —My question is addressed to the Treasurer. Would the Treasurer inform the House of the benefits of sound budget management and of how Australia's fiscal performance compares with that of other OECD countries?

Mr COSTELLO (Treasurer) —I thank the honourable member for Kooyong for his question. I can inform him that, over the last seven budgets since the government was elected in 1996, Australia's net debt has been reduced by $60.7 billion. As a consequence of that, the Commonwealth debt to GDP stands at five per cent. That compares with an OECD average of 47.3 per cent. So Australia's Commonwealth debt to GDP is around one-tenth of the OECD average. The importance of sound budget management is to deal with the big structural questions that are confronting all advanced industrial societies, such as the ageing of the population.

This government remains committed to addressing those areas that will challenge our finances with the ageing of the population—in particular, pharmaceuticals, health care, disability and welfare reform. In addition to that, Western countries, including Australia, are facing increased security challenges. One of the advantages of having Australia in a strong budget position is that we can meet the security challenges both for domestic security and for defence purposes, including for the brave men and women of Australia who are serving overseas in Iraq at the moment.

Further, sound budget management allows the government to identify those areas of key national investment. We have made it clear that, in this coming budget, the first priority for the Australian government will be our servicemen and servicewomen in Iraq. The government will ensure that the troops are properly and adequately funded. We will make sure that Australia's financial resources, as well as other resources, are put behind those troops and that they enjoy the full support of the Australian government.

There are a number of countries in the OECD that are currently running very large deficits. The average fiscal deficit for the OECD at the moment is 2.9 per cent of GDP. In the United States, with the president's latest financial plan, the Office of Management and Budget is forecasting a budget deficit of 3.5 per cent of GDP. In Australian terms, that would be equivalent to a budget deficit of $A25 billion. The fact that the Australian government is forecasting a slight surplus—the fact that we have been able to maintain that position whilst investing in security—indicates some of the strengths of budget management in Australia of recent years, which is something that this government has made a priority and will continue to make a priority in the forthcoming budget in May.