The context for the 2011–12 Budget differs considerably in some respects from that of last year's Budget. The 2010–11 Budget was framed in the context of the Global Financial Crisis and the resulting sharp deterioration in the world economy, the worst since the Great Depression. While there has since been some recovery in the world economy, the effects of the downturn linger and so continue to affect this year's Budget in different ways.
At the same time, new challenges are emerging which are testing those responsible for framing the Budget. Among these challenges is the long-term shift in the weight of the global economy towards Asia and China in particular. This shift poses challenges and opportunities for the Australian economy in the short- and long-terms. The most obvious and immediate opportunities and challenges are those resulting from what the budget papers refer to as mining boom mark II. This boom shares many features with the previous boom—mining boom mark I—including potentially strong growth in exports of minerals commodities, large increases in business investment driven by the mining sector, and the expansion of those sectors that are related to mining investment and exports. However, mining boom mark II also shares many challenges experienced during mining boom mark I. They include how to deal with inflationary pressures as demand presses on capacity in particular sectors while other sectors are not experiencing the same pressure, the ease with which resources are able to move to the expanding sectors, and how to share the benefits of the boom widely across the economy. This assumes that there will be no further major disruptions to the world economy. As discussed in the 'key features' item below, considerable uncertainties remain about prospects for the world economy.
As in previous years, the Parliamentary Library has produced the Budget Review. It examines key aspects of and measures contained in the Budget to assist parliamentarians in their consideration of these issues. The first article, Budget 2011–12: Key features, as well as examining uncertainties in the world economy, contains a macroeconomic analysis and commentary on the Budget including the assumptions that underpin the Government's fiscal policy and the estimates of revenue and expenditure that underlie that policy. The other articles examine key measures that cover a wide range of areas across all portfolios.
As with previous Budget Reviews, this year's has been prepared under time pressures with a view to making it available to parliamentarians as soon as possible. While care has been taken to ensure that the articles are accurate and balanced, they are based on information that was publicly available at the time of preparation. The articles do not intend to make value judgements about the relative importance of different measures or provide a comprehensive assessment of the Budget.
Parliamentarians are invited to raise points requiring amplification or clarification directly with the research specialist concerned and general comments on papers are also welcome. Any other feedback should be forwarded to me. Clients are also reminded that in addition to the Budget Review the Library publishes the Opinion and analysis of the Budget in the media page on our website (http://libiis1/library_services/budget_library/index.htm).