This Budget deals with today’s challenges and builds the foundations for the future.

Australia’s economy is the standout performer in the developed world. We have avoided recession, kept Australians in jobs and are now bringing the budget back to surplus, ahead of every single major advanced economy.

Returning the budget to surplus is central to our plan to build an even stronger economy. It sends a very clear signal to the world about our strong economic fundamentals, and gives the Reserve Bank flexibility to cut interest rates further if it thinks that is needed.

While uncertainties remain in the global economy, Australia is also in the right place at the right time, as the weight of global economic activity shifts towards our region.

This is creating vast opportunities for Australian businesses, and driving a huge pipeline of investment that will support economic growth into the future, however it is also creating challenging conditions for parts of our patchwork economy.

But our success in supporting the economy and jobs during the global financial crisis means the economy faces the future from a position of strength.

This Budget builds on this success by making the critical investments that Australia needs today, to increase productivity, boost workforce participation and encourage businesses to invest and grow.

It helps businesses facing pressures in our patchwork economy with an innovative loss carry back initiative to help them through hard times and encourage them to invest in order to prepare for the future.

Importantly, the Budget delivers much-needed cost of living relief for Australian families – particularly on low and middle incomes.

It also takes the first steps towards important social reforms – in particular, a National Disability Insurance Scheme – as well as Aged Care reform and a blitz on dental waiting lists

This Budget gets the long term settings right so that we can convert the significant opportunities of the Asian Century into lasting prosperity over the medium and long term.

Return to surplus and fiscal update

Returning the budget to surplus in 2012-13 is appropriate given the strong fundamentals in our domestic economy and the challenges in the global economy.

Australia’s economy is over 7 per cent larger than it was before the GFC, while many other countries are still making up lost ground, with some now re-entering recession.

The Australian economy is expected to grow around trend over the next two years, outperforming every major advanced economy over the next two years. Real GDP growth is forecast to be 3¼ per cent in 2012-13 and 3 per cent in 2013-14.

We have an unemployment rate below every major advanced economy in the world bar one, and the unemployment rate is expected to remain low with a ’5′ in front of it.

Since Labor took office, more than 750,000 jobs have been created, in contrast to the 27 million jobs that have been lost across the world over the same period.

We have an economy with solid growth, low unemployment, and a record pipeline of investment in resources of around $455 billion, while at the same time achieving contained inflation.

The value of our economy is now more than $1.4 trillion, up from just $1.1 trillion when Labor came to office. This is an extraordinary achievement given it has come during the most destructive period in the global economy since the Great Depression.

Just as the Government stepped in to support the economy and protect jobs during the GFC, the Government is stepping back, ensuring that we don’t generate price pressures in the economy.

This continues to give the RBA flexibility to reduce interest rates if it thinks that is needed, which is important for workers and businesses under financial pressure.

Returning to surplus also locks in confidence, and is Australia’s best defence at a time when the global economy is changing dramatically. It creates a buffer in uncertain times and is a very clear sign of our strong economy.

The Government’s consistent and credible budget strategy has seen Australia achieve the gold-plated AAA credit rating from all three major global ratings agencies for the first time in our history.

However structural changes in our economy have reduced the Government’s revenue base over the short and medium term, with heightened global turmoil towards the end of last year contributing to weaker revenues than expected at the Mid-Year Economic and Fiscal Outlook in November last year.

Downward revisions to revenue collections have hit the budget balance by a further $12 billion across both 2011-12 and 2012-13 compared to the last forecasts in the mid-year budget update in November. This obviously makes the task of returning to surplus that much harder and takes the total write-down in tax collections since the 2008-09 Budget to around $150 billion over five years. This means that tax as a proportion of GDP in 2011-12 and the previous two years is the lowest it has been since 1993-94.

Taxes as a proportion of the economy remain below 23 per cent of GDP across the forward estimates. This is well within the Government’s commitment to keep taxes below 23.7 per cent of GDP.

The Government has made responsible and targeted savings to ensure Australia’s public finances and economy remain strong.

These responsible decisions improve the sustainability of government finances over the forward estimates, while protecting low and middle income earners and the frontline services Australian families rely on in health and education.

Our strict fiscal discipline means that payments as a proportion of the economy are expected to remain below 24 per cent from 2012-13 to the end of the forward estimates. The last time there were four successive years with the payments to GDP ratio below 24 per cent was more than 30 years ago.

As a result, the budget is on track for a surplus of $1.5 billion in 2012-13, growing over the forward estimates.

Cost of living relief and Benefits of the Boom Package

The Government will deliver a new Benefits of the Boom package – including major tax reforms, increases in the pension and family payments – to help families with the cost pressures they face every day.

This package includes $1.8 billion in extra support for families through more generous family payments, with more than 1.5 million families receiving a boost to their Family Tax Benefit (FTB) Part A from 1 July next year.

More than a million families will receive an increase of at least $300.

This assistance builds on the tripling of the tax free threshold from 1 July this year, delivering tax cuts to all taxpayers earning up to $80,000.

This is the largest increase in the history of the tax free threshold which will see up to an extra one million people not having to lodge a return.

Around 1.4 million Australians will benefit from the introduction of a new lump sum Supplementary Allowance to help recipients of Parenting Payment and allowances manage unexpected living expenses.

The payments of a total of $210 a year for singles or $350 a year for couples ($175 each; $87.50 per instalment) will indexed by the Consumer Price Index to keep pace with inflation, will not be means tested and is tax-free.

The lump sum payments will be paid twice yearly – $105 per instalment for singles and $87.50 per instalment for each person who is a member of a couple.

The Benefits of the Boom package is funded by revenue from the Minerals Resource Rent Tax arising from the rejection by the Opposition and the Greens of the planned company tax cut.

The Government is also providing 1.3 million Australian families with children at school with a new cash payment to help make ends meet.

Each year, families will receive a new Schoolkids Bonus worth:

• $410 for each child in primary school
• $820 for each child in high school.

This new guaranteed payment will help the families of 2.2 million school kids pay for uniforms, books, school excursions, stationery, and other costs like music lessons and sports registration fees.

The Government’s fiscal strategy of returning the budget to surplus ensures the Reserve Bank continues to have the flexibility for further interest rate cuts if it thinks that’s necessary.

Lower interest rates provide relief for workers and businesses right across Australia.

The Reserve Bank’s official interest rate is now 300 basis points lower than when the Government came to office.

Its current rate of 3.75 per cent is lower than at any time under the previous government.

A family with a mortgage of $300,000 is now paying around $3,500 a year less in repayments now than when the previous government left office.

Supporting those most in need: the first stage of a National Disability Insurance Scheme

The Gillard Government will kick start the most fundamental social policy reform since Medicare in this Budget, with a $1 billion investment to launch the first stage of Australia’s first ever National Disability Insurance Scheme.

A full NDIS will give Australians with a significant and permanent disability the peace of mind to know their needs will be addressed with dignity, no matter where they live, what their circumstances or how they acquired their disability.

The Government has committed $1 billion in this Budget to fund launch locations of the NDIS, delivering care and support over a person’s lifetime, as recommended in the Productivity Commission’s landmark report.

From July 2013, launch locations around the country will start to lift the standard of help for around 10,000 people with a significant and permanent disability – growing to 20,000 people from mid-2014.

People with significant and permanent disability will have their needs assessed, and start to receive personalised care and support.

The Government will negotiate locations with States and Territories who are willing to play their part, and will continue to work with all states and territories on the design, governance and funding arrangements for the full scheme.

The lessons we learn from the first stage will inform our conversations with the states and territories on the national roll-out of a National Disability Insurance Scheme.

National Dental Scheme

There is a direct correlation between those on lower incomes and below average standards of dental health. To address this issue Government is delivering $346 million to help reduce waiting lists for those on low incomes trying to access dental services in public clinics. This will deliver dental services to the estimated 400,000 people on public waiting lists.

In addition, the Government will provide funding for health workforce initiatives to support the relocation of dentists to work in rural and regional areas where there is a shortage of dentists. The Government will also provide infrastructure funding for dental clinics to expand capacity to deliver these services.

Continuing our Strong Investment in Infrastructure

This Government will continue its strong record of investing in infrastructure to expand our productive capacity, relieve congestion and improve road safety.

As a result of this Budget, all of the projects assessed as ‘Ready to Proceed’ on Infrastructure Australia’s 2009 priority list have now been funded. Under the Nation Building programs, the Government is investing $36 billion in land transport infrastructure over six years through to 2013-14.

The Government will fund a range of additional measures in the 2012-13 Budget.

In this Budget, the Gillard Government will provide an extra $3.6 billion for the full duplication of the Pacific Highway by the end of 2016, provided it is matched by the NSW Government.

The Government will also continue funding for critical road safety programs, including $350 million per year for the Roads to Recovery program and $60 million per year for the Black Spots program.

The Government will support the development of the Moorebank Intermodal Terminal, which will help to reduce business costs and relieve bottlenecks and urban congestion in the Port Botany precinct.

The Government will provide $232 million toward the Torrens and Goodwood rail project to help ease congestion on Adelaide’s suburban and freight rail networks.

The Government is continuing the roll-out of the National Broadband Network. Over the next three years, NBN Co will commence work in over 1,500 communities covering 3.5 million premises throughout Australia.

Living Longer. Living Better: delivering overdue reform of the aged care system

The Gillard Government will deliver landmark changes to the aged care system, to ensure older Australians have more choice and higher quality care.

People have overwhelmingly said they want to age well in their own homes, so under the $3.7 billion Living Longer. Living Better package more people will get to stay in their home for longer. The package includes around $577 million in new investment.

The Government is increasing the number of Home Care Packages by two thirds – from around 59,900 to almost 100,000. Contributions for Home Care will also be reformed to make them more equitable from 1 July 2014. Nobody in the system prior to that time will pay more, and full pensioners will continue to pay no more than the basic fee.

For those that do need to move into residential aged care, they will have more choice about how they pay for the residential aged care place. Contributions for residential care will be made more equitable and sustainable, with reforms to commence on 1 July 2014 and only applying to new or significantly refurbished facilities. People will be protected by a $25,000 annual cap on care fees in residential care and a $60,000 lifetime cap on care fees across both residential and home care.

The Government will also redirect $1.2 billion to improve the aged care workforce, a critical element of ensuring a sustainable, high quality aged care system.

Helping businesses with an economy in transition

The 2012-13 Budget delivers major new benefits for Australian businesses, many of which are facing serious pressures in our patchwork economy.

Australia’s 2.7 million small businesses are the engine room of our economy, employing almost 5 million Australian workers, or nearly half of the private sector workforce across the country.

The Gillard Government is committed to helping Australian small businesses grow, prosper and create jobs. In the depths of the worst global recession in 75 years, Labor acted decisively to keep the doors of small business open through targeted fiscal stimulus, bank guarantees to secure the flow of credit to small business, and through our highly successful $3.7 billion small business investment allowance.

The Gillard Government will introduce a loss carry back scheme to provide immediate tax relief for businesses which report a loss.

In its first four years, this major tax reform will provide assistance to around 110,000 companies struggling with the challenges of an economy in transition, helping them ride out difficult times and invest for the future.

Currently businesses are able to carry forward losses to offset future profits and therefore reduce their tax bills.

This reform will allow businesses to ‘carry back’ their losses, applying them to their previous tax paid, and receive a refund on some of that tax paid.

The 2012-13 Budget also funds major tax breaks for Australian small businesses using the proceeds of the Minerals Resources Rent Tax. Together with our reforms to put a price on carbon, the MRRT means that from 1 July this year, small businesses will be able to instantly write-off any new business asset worth up to $6,500, for as many assets as they purchase. This important measure will be worth more than $1 billion to Australian small businesses in 2013-14 alone.

From 1 July this year, we will also let small businesses instantly write-off the first $5,000 of a motor vehicle. We recognise that for many small businesses their biggest asset is a ute or van. This very significant tax break will help free up cash flow and encourage businesses to reinvest and grow.

In the 2012-13 Budget, the Government is also extending its highly successful Small Business Advisory Service program with $27.5 million over four years to continue supporting Australia’s small businesses with vital advice and assistance.

The Gillard Government is also establishing the first Australian Small Business Commissioner who will be a point of contact for small business services and information.

The 2012-13 Budget builds on the Government’s strong track record of managing the economy in the interests of working Australians, growing our nation’s productive capacity and building the foundations for a prosperous future.

While our political opponents talk Australia down, we believe our country has a bright future.

We are investing in difficult long-term reforms such as the NDIS, aged care reform, putting a price on carbon, the Minerals Resource Rent Tax, the NBN and improvements to the tax system.

These are initiatives that will ensure Australians can make the most of the opportunities ahead in the Asian Century while staying true to the things Labor has always stood for – front-line services for working Australians, jobs and help for those who need it most.

This is a fair and balanced budget in the interests of working Australians that will ensure our economy remains the standout performer in the developed world.