The Government has earmarked an extra $2.1 billion for capital spending in its election-year budget as it benefits from a stronger forecast track of economic growth in the next few years that will swell its tax take.
The Half Year Economic and Fiscal Update lifts the Treasury's economic growth forecasts for the next three years, with real gross domestic product now expected to grow 3.6 per cent on an annual average basis in the June 2017 year, up from the 2.9 per cent pace it projected in the May budget.
On average, the Treasury expects growth to average 3 per cent a year over the next five years.
The latest Treasury forecasts add an estimated $7.6b to core Crown tax revenue between 2017 and 2020, compared to its expectation back in May. At the same time, expected core Crown expenses through to 2020 have been trimmed by a total of $2.1b.
The Treasury says economic growth is being driven by high net migration inflows and tourist arrivals, and relatively low interest rates, which are combining to stoke residential construction, services exports, market investment and private consumption.
