The main features of the current fiscal policy have been to achieve the short term goal of consistent economic growth, the medium term goal of fiscal balance over the duration of the business cycle, and the long term goal of repaying public debt. Of these goals, the effect on the level of economic activity in the Australian economy is the most important,

The effects of the budget on the economic activity of Australia's economy have varied over recent years. The current government has gone from large surplus budgets in its first term in 95-96, contractionary fiscal policy, expansionary fiscal policy from 99-02, to the current neutral or slightly contractionary fiscal policy. After a recession in 1992 the Australian economy regained its momentum, and as such the fiscal policy of the following years had a contractionary effect on economic activity. This is reflected by the high surpluses reaching $13.5bn in...