13 May 2015
Hockey banks on spectacular return to growth
Treasurer Joe Hockey's second budget is built on a risky forecast that Australia will roar through an unprecedented three decades of continuous economic growth.
Joe Hockey's second budget is built on a risky forecast that Australia will roar through an unprecedented three decades of continuous economic growth, raising questions about why the government has opted to slow the pace of budget repair.
Growth is set rebound from a short-term dip back to its long-term average pace by no later than next year, according to Treasury's estimates.
And that will happen despite the fact that this year's budget will create a modest drag on growth, equal to about 0.5 per cent of gross domestic product over the next two years.
The burst of growth – built on a rebound in the terms of trade later this decade – will generate a flood of new revenue that will start producing surpluses early next decade, according to the forecasts.
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