By Judith Ugwumadu | 17 December 2013
Australia’s coalition government today warned that its budget could remain in deficit for the next decade as it issued its first economic update since winning the election three months ago.
The Liberal-National coalition forecast a A$47bn budget shortfall this year, compared to an August projection of A$30.1bn. The government expects the deficit to narrow to A$17.7bn (1%of GDP) in 2016/17.
Treasurer Joe Hockey said that more than half the deterioration in Australia’s budget position was due to the softer economy. The country’s real GDP 2014/2015 growth forecast was downgraded from 3% to 2.5%.
‘This reflects a sharper-than-forecast fall in resources investment and a slower recovery in the non-resources sectors,’ Hockey added.
The government is now committed to restoring public sector finances and expects its budget to return to sustainable surpluses that build to at least 1% of gross domestic product by 2023/24.
Hockey pledged to cut government spending in the 2014/15 budget, as recommended by Australia’s newly established National Commission of Audit. This body was established to ensure that taxpayers’ money was spent wisely and in an efficient manner.
Hockey added that deficit cutting needed to be matched by economic growth and productivity in order to deliver sustained growth in living standards over the decades ahead.
‘Quality investments in infrastructure, significant reductions in red tape and a system of government that encourages innovation will support productivity growth and, in turn, stronger economic growth,’ he said.
