![The 2017-18 Budget papers](/content/dam/images/g/w/0/1/r/w/image.related.afrArticleLead.620x350.gw05uh.png/1494331619831.jpg)
A return to surplus
![Underlying cash](http://web.archive.org./web/20170509151126im_/https://data.afr.com/2017/05may/Winestock_webgraph1.png)
Once again the government is predicting a return to surplus but not until the final year of the four year projections that appear in the budget.
The government has of course made similar predictions in each of its previous three budgets but has then postponed the happy day because of unforseen events. The twist this year is that the government has adopted a new accounting rule which distinguishes between "good" and "bad" debt.
Under the old treatment which focuses on the "underlying cash balance" there is no surplus till 2020-21 but under the new "net operating balance" which does not include money spent on "good" infrastructure the budget is back in the black one year earlier in 2019-20.
Debt is still debt
![Underlying cash](http://web.archive.org./web/20170509151126im_/https://data.afr.com/2017/05may/Winestock_webgraph3.png)
Forgetting about whether it is good or bad, gross debt will keep growing to $600 billion over the next few years and then keep climbing.
Yet if you look at "net debt" relative to the size of the economy the picture is not that bad.
Net debt will almost halve as a share of gross domestic product over the next 10 years as the economy grows much faster than debt rises. Also net debt allows for the value of the infrastructure assets which the government will add to its balance sheet.
Tax and spend
![Underlying cash](http://web.archive.org./web/20170509151126im_/https://data.afr.com/2017/05may/Winestock_webgraph2.png)
The big difference between this and previous Coalition budgets is that it has tried to balance the budget by raising taxes and not just by cutting spending.
In fact, in total it has increased revenue by $20.7 billion over the next four years and the big ticket items are an increase in the Medicare levy, a levy on banks and higher uni fees.
That has helped it pay for the extra money for schools and a few other goodies without putting the AAA credit rating in jeopardy.
The economy stupid
![Underlying cash](http://web.archive.org./web/20170509151126im_/https://data.afr.com/2017/05may/Winestock_webgraph4.png)
The economy is expected to start growing at close to its long-run average of around 3 percent which will provide a crucial boost to the budget.
The mining boom is over but the government is hoping its infrastructure spending plus strong growth in our key trading partners will compensate.
The government is even predicting wages will start to rise faster than inflation in the next few years.
Scott the builder
![Underlying cash](http://web.archive.org./web/20170509151126im_/https://data.afr.com/2017/05may/AFRG-Winestock_webgraph5.png)
Treasurer Scott Morrison has identified at least six large new projects that he will fund with so-called 'good debt'.
It remains to be seen whether the projects are "shovel ready" so they can be delivered in time to fill the hole left as the mining boom fades.
The other big question is whether the projects are well chosen and will boost the economy.
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