Return to budget surplus predicted for 2021

One of the big, and happy, surprises of the federal budget was Scott Morrison's confirmation of a projected return to surplus in four years.

The 2020/21 overflow of $7.4 billion appears healthy too. But, as the budget papers reveal, most of that good news comes down to updated accounting.

In 2020/21, the benchmark underlying cash balance measure will include the government's earnings from the Future Fund for the first time.

The fund, set up by former Liberal Treasurer Peter Costello to pay for the superannuation liabilities of public servants, gives the government a little piece of its investment action each year.

In the past decade, it's paid an average annual dividend of $3.2 billion.This will continue to 2020/21, when a jump to $4 billion will be tipped into the government's coffers. That money will suddenly become part of the cash balance, under laws allowing fund earnings to be available to meet government super liabilities.

Without that $4 billion, the surplus for 2020/21 was likely to be more like $3.4 billion, which still isn't bad. But, in fiscal terms, $3.4 billion is in that territory where projections risk undershooting, rather than overshooting.

The government will certainly be hoping the Future Fund really delivers.

SKY NEWS BUSINESS Anchor Ticky Fullerton will be asking the hard questions to government leaders and getting perspective from business leaders over the coming days.

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