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The Government will have to balance its budget by 2020-21 if it is to avoid an $8bn shortfall.

The Department of Finance (DFS) will have until February 2021 to balance the books and it is expected that the budget will be a little harder to keep on track because of a lack of cash.

The budget has been the subject of much debate in the last few weeks, with Treasurer Scott Morrison insisting it is a necessary measure to ensure we have enough cash to fund the Commonwealth and other public sector functions.

Under the government’s current spending plans, it would cost the Government an extra $2.4bn a year to balance.

“That will be tough,” Finance Minister Mathias Cormann said last night.

However, he said it was important to remember the plan was not just about making sure the budget was balanced, it was about providing the Government with the necessary resources to get the job done.

There will be some changes in the Budget, including a change to the Reserve Bank’s interest rate and a cut in the corporate income tax rate to 2.75 per cent.

Mr Morrison said it would be the first time in many years that the Reserve Board would change its policy on interest rates, which had led to the government having to cut back its borrowing and spending.

But he said the Reserve’s decision on interest rate would not impact on the government borrowing.

In a statement to the ABC, the Reserve said it had been studying the economic and financial effects of a lower interest rate environment for some time and was confident that “the appropriate policy for the medium term is appropriate”.

“We recognise that a lower rate environment is expected to have a greater impact on demand for Australian products and services,” the statement said.

A spokesman for Mr Morrison said the budget had not changed its target to reduce the budget deficit by $7.5bn to $12.5b by 2020.

What you need to know about the budget 2018-19: Budget measures to reduce budget deficits and fund public services What you need for the budget 2019-20: Budget forecast for 2020-11 and 2021-22 What you can do to keep up with the budget: Budget updates

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