The mid-year budget forecasts a surplus of $5 billion this financial year, down from the $7.1 billion estimated ahead of the federal election.
The Government still expects to deliver a surplus each year for the next four years, but the latest forecast banks $23.5 billion, down from the $45 billion trumpeted in the budget.
"Our devastating drought has already taken a quarter of a percentage point off GDP growth and reduced farm output by a significant amount over the last two years," Treasurer Josh Frydenberg said. "[GST revenue is] lower than the states would have hoped, indeed the Government would have hoped, but, in fact, they're pretty consistent with where the states have been forecasting it," Mr Frydenberg said.
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