Australia set for 'modest' budget surplus

Australia is on track for a modest budget surplus next financial year, Treasurer Wayne Swan said Sunday ahead of this week's unveiling of his fifth budget for the mining-powered economy.

Australia, which survived the global financial crisis without dipping into recession, has previously been forecast by the government to deliver a Aus$1.5 billion (US$1.6 billion) surplus for the 2012/13 fiscal year beginning July 1.

An excess would represent one of the fastest budget reversals in Australian history, overcoming a current year deficit predicted to be at least Aus$37.1 billion.

"It will be a modest surplus, the surplus will build over time," Swan told the Nine Network on Sunday, without revealing a precise figure.

The Treasurer said delivering a surplus had been made more difficult by revenue writedowns of Aus$150 billion over the past five years, and the budget was expected to contain significant belt-tightening.

Australia is benefiting from low unemployment and a mining and resources investment boom.

"A budget surplus is the clearest sign we can send of the strength of the Australian economy," said Prime Minister Julia Gillard, adding returning to surplus was "the right thing to do".

But the government admits that while Australia's economic fundamentals are strong, life is tough for businesses outside the mining sector, particularly industries which are being squeezed by the high Australian dollar.

"We understand this isn't everybody's boom," Gillard said.

On Friday the Reserve Bank of Australia slashed its growth forecast for the 12 months to June 2012 from 3.5 percent to 2.75 percent, citing sluggish exports due to global economic turmoil and the robust Australian dollar.

The statement came just three days after it cut its official interest rate by 50 basis points to 3.75 percent -- its largest reduction since February 2009 -- in a move seen as jump-starting sluggish growth.

Some economists saw delivering a budget surplus as needlessly weakening the economy in the circumstances.

"It is just illogical," former RBA board member Warwick McKibbin told Dow Jones Newswires this week.

DeLoitte Access Economics analyst Chris Richardson said he too would not want to see the government cut too hard given the economy's fragility.

But he said if the government's cost-cutting budget prompted the central bank to cut interest rates further, it could peg back the Australian dollar, improving margins for manufacturing, tourism and education.

Shane Oliver, chief economist at AMP Capital Investors, was in favour of returning to surplus, and estimated it would be about Aus$1 billion.

"The economic backdrop is not so bad that we need further fiscal stimulus," he said. "If we can't get back to surplus when unemployment is around 5.2 percent and commodity prices are high when will we?"

The budget to be released on Tuesday comes amid mounting speculation that Prime Minister Gillard, who is performing dismally in opinion polls, will face a challenge to her leadership from within Labor's ranks.

Swan dismissed the question, saying: "The prime minister is as tough as nails, and she ain't going anywhere."

Loading...

Editor’s note:Yahoo Philippines encourages responsible comments that add dimension to the discussion. No bashing or hate speech, please. You can express your opinion without slamming others or making derogatory remarks.

  • Sy moves up, Villar enters Forbes list of billionaires
    Sy moves up, Villar enters Forbes list of billionaires

    Eleven Filipinos are included in Forbes’ 2015 list of richest people in the world. Filipino-Chinese tycoon Henry Sy Sr. continues to be the wealthiest man in the Philippines. The 90-year-old SM supermalls, banking and property tycoon ranked 73rd among the world’s richest with an increased net worth of $14.2 billion from $11.4 billion last year. Sy’s net worth was attributed to the continued growth of his SM Investments Corp. and his more recent venture, the City of Dreams Manila resort and …

  • Jolo apologizes to Bong in visit
    Jolo apologizes to Bong in visit

    Cavite Vice Gov. Jolo Revilla wept and embraced his father as he apologized for the “accidental” shooting incident in their Ayala Alabang residence, the family’s spokesman said yesterday. Lawyer Raymund Fortun came out of the private room at the Asian Hospital and Medical Center in Muntinlupa City to speak to reporters, who were barred from entering the hospital compound during the visit of Sen. Ramon “Bong” Revilla Jr. …

  • Australian drug smugglers being taken to Indonesian island for execution - media
    Australian drug smugglers being taken to Indonesian island for execution - media

    By Jane Wardell and Beawiharta SYDNEY/DENPASAR, Indonesia (Reuters) - Two convicted Australian drug smugglers were removed from a prison in Bali on Wednesday to be taken to an Indonesian island where they will be shot by firing squad, Australian media reported. The planned executions of Myuran Sukumaran, 33, and Andrew Chan, 31, have ratcheted up diplomatic tensions amid repeated pleas of mercy for the pair from Australia and thrown a spotlight on Indonesia's increasing use of the death …

  • US billionaire says WWII Japanese ship found in Philippines
    US billionaire says WWII Japanese ship found in Philippines

    Microsoft co-founder Paul Allen said Wednesday he had found one of Japan's biggest and most famous battleships on a Philippine seabed, some 70 years after American forces sank it during World War II. Excited historians likened the discovery, if verified, to finding the Titanic, as they hailed the American billionaire for his high-tech mission that apparently succeeded after so many failed search attempts by others. Allen posted photos and video online of parts of what he said was the …

  • Another source of SAF execution video identified
    Another source of SAF execution video identified

    The National Bureau of Investigation (NBI) is still tracing the source of the video showing one of the wounded police commandos being finished off by Muslim rebels during the encounter in Mamasapano, Maguindanao last Jan. 25. A source from the Department of Justice (DOJ) said they have identified two persons who first uploaded the video that went viral over social networking sites. The supposed source of the video was elusive and claimed that somebody just placed it on an external drive. The …

  • Pacquiao big hit so far in Vegas sports books vs Mayweather

    LAS VEGAS (AP) — Manny Pacquiao has always believed he can do what 47 other fighters before him have failed to do — beat Floyd Mayweather Jr. in the ring. …

  • World's oldest person wonders about secret to longevity too
    World's oldest person wonders about secret to longevity too

    TOKYO (AP) — The world's oldest person says 117 years doesn't seem like such a long time. …

  • N. Korea fires missiles in anger at South-US military drills
    N. Korea fires missiles in anger at South-US military drills

    North Korea fired two short-range ballistic missiles into the sea and vowed "merciless" retaliation Monday as the US and South Korea kicked off joint military drills denounced by Pyongyang as recklessly confrontational. The annual exercises always trigger a surge in military tensions and warlike rhetoric on the divided peninsula, and analysts saw the North's missile tests as a prelude to a concerted campaign of sabre-rattling. "If there is a particularly sharp escalation, we could see the …

POLL

Should Aquino be held accountable over the Mamasapano operations?

Loading...
Poll Choice Options