By Nick Mann | 9 May 2012
The Australian government will record an Aus$1.5bn (£935m) budget surplus in 2012/13 as it benefits from strong economic growth and ‘responsible and targeted’ public spending savings, the country’s treasurer Wayne Swan said yesterday.
Delivering the annual budget speech, Swan said ‘strict fiscal discipline’ meant the country’s Labor government would reverse the Aus$44bn (£27.5bn) budget deficit recorded in 2011/12 and instead return to surplus ‘ahead of every major advanced economy’.
Reduced consumer spending had ‘ripped billions from our revenue base’, with tax receipts as a percentage of gross domestic product not expected to recover to pre-crisis levels for ‘some years’, he said.
But making Aus$33.6bn (£21bn) of savings over the next four years through redirecting and cutting government spending will help to improve the sustainability of government finances, he said. Around half of this will involve spending cuts, with changes to benefits, deferred increases in aid and defence reductions on the cards.
As a result, government spending as a proportion of GDP is expected to remain below 24% for the next four years – the first time it will have done so for more than 30 years.
Swan said: ‘Australia's economy is the standout performer in the developed world. We have avoided recession, kept Australians in jobs and are now bringing the budget back to surplus, ahead of every single major advanced economy.’
Returning the country’s budget to surplus would send a ‘very clear signal’ to the world about Australia’s strong economic potential, as well as giving its central bank the flexibility to cut interest rates if necessary.
Swan said the country would also benefit from forecast economic growth of 3.5% in 2012/13 and 3% the following year while Australia’s unemployment rate, currently the second lowest in the developed world, will remain below 6%.
He also announced plans for a new package of benefit payments and tax breaks, which he said would ensure lower- and middle-income families benefit from the country’s mining boom. The Benefits of the Boom package will be funded from the proceeds of the Mineral Rent Resource Tax, which will be levied on Australian mine operators from July 1 2012.
‘These new measures are good for low- and middle-income families because they will help them make ends meet and get ahead,’ Swan said. ‘And [they’re] good for our economy because they will help struggling manufacturers, retailers and other businesses that risk being left behind because of the high dollar.’
