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Budget on track to balance

Treasurer Scott Morrison insists the federal budget is on a trajectory towards balance, not greater deficits.

Government expenditure as a proportion of GDP will begin to decline in 2016 after peaking, while net debt will peak next year and decline from that point.

“By international standards though, our debt does remains modest, but by our own standards as a Coalition government we greatly lament the level of debt we currently have,” Mr Morrison told the Bloomberg Summit in Sydney on Wednesday.

The Coalition government came to power in 2013 promising a budget surplus in its first year, and every year thereafter.

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The Abbott government’s first budget statement, the 2013 mid-year economic and fiscal outlook, doubled the projected deficits in the budget forward estimates.

The Coalition was heavily criticised after the 2014 budget was handed down, for adding $10 billion of new expenditure – $9 billion to recapitalise the Reserve Bank’s foreign reserves, and the scrapping of Labor’s plans to rein in the tax relief on leased vehicle and to tax superannuation incomes above $100,000 a year.

Labor subsequently blocked a number of savings measures announced in the 2014 budget, which added to budget deficits over the forward estimates.

The 2015/16 budget deficit is forecast to be $35.1 billion.

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