By Nick Mann | 21 December 2012
‘Dramatically lower’ tax revenue means Australia is now unlikely to achieve a surplus this financial year, Treasurer Wayne Swan revealed yesterday.
Swan’s admission came as the finance ministry’s Monthly financial statement for October showed a $3.9bn shortfall in revenues in the first four months of the financial year, which begins in July. Australia had hoped to achieve a $1.5bn surplus.
Swan attributed the ‘huge wack’ to revenue forecasts to the high value of the Australian dollar, which had caused a ‘very substantial hit’ in Australian companies’ profits in the early months of year.
‘In just four months, we have already seen the full hit to revenue that we were expecting for the whole year,’ Swan said. ‘Obviously, dramatically lower tax revenue now makes it unlikely that there will be a surplus in 2012/13.’
He stressed, however, that the situation was not a result of the government spending ‘too much’, noting that expenditure was actually $1.3bn below forecasts so far this year.
‘We will continue to exercise spending restraint, even in the face of the global volatility and uncertainty in the global economy,’ Swan said.
Funding for new policies in the government’s next Budget, such as school reforms, would be met by ‘changing priorities’ in other areas, he added.
Swan also ruled out further spending cuts this year to fill the hole in the Budget plans left by lower-than-expected revenues. ‘If we were to fill a temporary hole in taxation with further cuts, that would in fact impact upon growth and jobs and that wouldn't be the responsible thing to do in these circumstances,’ he said.
Tony Abbott, the leader of the opposition Liberal Party, said Swan’s admission was evidence the government had ‘completely and utterly failed’ to manage the economy.
‘For three years they’ve been boasting of this surplus. For three years they’ve been saying that this surplus was the badge of their economic credibility. Well, they don’t have it anymore. I want to stress, this is a fundamental failure from the government.
‘It’s a failure of competency, it’s a failure of trust, it is every bit as big a failure as the failure on the carbon tax. We will pursue this government every single day until the next election on its failure to deliver a surplus.’
