Savage cuts return Australia to surplus

Australian Treasurer Wayne Swan declared the "deficit years of the global recession" over Tuesday, unveiling a Aus$1.5 billion budget surplus funded by deep cuts to defence and foreign aid spending.

Swan vowed an ambitious Aus$33.6 billion in savings, slashing Aus$5.5 billion from military spending and trimming Australia's overseas aid by Aus$2.9 billion, aalong with a raft of other reforms to tax and welfare benefits.

The measures will only deliver a modest Aus$1.5 billion (US$1.52 billion) surplus for the 2012-13 fiscal year starting July 1, but the Labor government has been determined to return the budget to black in a bid to salvage its popularity.

"Tonight we make a forceful statement that ours is one of the world's strongest economies," Swan told lawmakers in his budget speech.

"The deficit years of the global recession are behind us. The surplus years are here."

The budget forecasts a surplus of Aus$7.5 billion by 2015-16, a dramatic reversal of the present Aus$44 billion deficit requiring some of the deepest cuts to government spending seen in Australia for decades.

Defence was the major target, with Aus$5.5 billion in spending cut over the next four years, including a delay in the acquisition of 12 F-35 Joint Strike Fighter aircraft, scrapping some artillery purchases and sacking 1,000 civilian staff.

The government vowed there would be "no adverse impact on operations in Afghanistan" or East Timor and the Solomon Islands, where Australian troops are stationed in a peacekeeping capacity.

Overseas aid was also sacrificed, with Aus$2.9 billion in savings through the scaling back of development targets which Foreign Minister Bob Carr said would see funding "grow at a slightly slower rate" than forecast.

Australia was the only advanced nation to dodge recession during the global downturn due to the resilience of its mining exports to Asia, and it again leads the major economies by becoming the first to record a budget excess.

Swan said the surplus was a key buffer against renewed turmoil in Europe, where French leader Nicolas Sarkozy and the Greek government were unseated at weekend elections, threatening eurozone austerity plans.

"In these uncertain times there's an absolute premium on clear and credible fiscal policy and that's why the government has charted this course," he told reporters, adding that the "conditions demand a surplus".

"Every area of government spending has, in one way or another, been reined in in this budget."

Swan said Europe continued to cast a pall over the global economy, but he expected the Asian region to remain prosperous and buoy Australia, with some Aus$450 billion in mining sector investment slated for coming years.

Australia is forecast to grow by 3.25 percent in 2012-13 and 3.0 percent in each of the three following years.

Unemployment, which is currently at 5.2 percent, was put at 5.5 percent in 2012-13 and 2013-14 before dropping off to 5.0 percent, with inflation of 3.25 percent flagged for 2012-13 and 2.5 percent for the following three years.

All the figures are unchanged from Canberra's last budget outlook, issued in November.

Economists said the spending cuts would hurt economic growth and may see lower interest rates, which are at 3.75 percent following a surprise 50 basis-point cut this month.

"It will take a huge chunk out of the economy, we estimate around a one percent detraction from the economy," said AMP chief economist Shane Oliver.

"That should be enough to justify further interest rate cuts for the Reserve Bank."

Swan, whose government is struggling in the polls, denied the return to surplus was a populist political move.

"We've come back to surplus because we think it's good fiscal policy," he said.

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.

  • AFP monitoring deployment of Chinese seaplanes in Spratlys
    AFP monitoring deployment of Chinese seaplanes in Spratlys

    The Armed Forces of the Philippines (AFP) is adopting a wait and see approach amid reports that China will soon deploy seaplanes to further strengthen its maritime claims in the disputed Spratlys. Brig. Gen. Joselito Kakilala, spokesman for the military and commander of the AFP Civil Relations Service, said they have yet to ascertain the real purpose behind China’s continuing aggressive moves in the region. “We will wait and see before coming up with an official stand,” Kakilala said when …

  • US eyes access to Phl bases in 8 locations
    US eyes access to Phl bases in 8 locations

    The United States has asked for access to Philippine military bases in eight locations to rotate troops, aircraft and ships as Washington shifts its forces to Asia and as China expands its military presence in the South China Sea. US Defense Secretary Ash Carter, in a speech in Arizona, has outlined Washington’s next phase in its Asia “pivot,” deploying its most sophisticated destroyers, bombers and fighters to the region. The Asia “pivot” has already seen US Marines rotating through the …

  • Washington bucks China’s aggressive actions
    Washington bucks China’s aggressive actions

    Short of condemning China’s aggressive actions in the West Philippine Sea, a senior US military official said Washington does not support any act of coercion and bullying. “We don’t stand for coercion, bullying and aggressiveness,” said Brig. Gen. Christopher Mahoney, assistant US military director for  Phl-US Joint Balikatan Exercises 2015. At the sidelines of this year’s joint military exercises’ static aircraft display held at Clark Air Base in Pampanga, Mahoney told a media briefing that …

  • ‘Giving Bangsamoro police control is constitutional’
    ‘Giving Bangsamoro police control is constitutional’

    The proposed grant to the chief minister of the envisioned Bangsamoro region of operational control over police forces in the area is consistent with the Constitution, a senior administration lawmaker said yesterday. It is clear in the proposed BBL that the Bangsamoro police will be part of the Philippine National Police (PNP), while the Bangsamoro Regional Police Board (BRPB) will be part of the National Police Commission (Napolcom) and will carry out Napolcom’s mandate in the region,” he …

  • Noy off to KL for Asean meet
    Noy off to KL for Asean meet

    President Aquino will arrive here this afternoon with Manila hopeful of support from the Association of Southeast Asian Nations (ASEAN) to achieve peace and stability in the West Philippine Sea (South China Sea) as well as economic prosperity and inclusive growth among the people in the region. Philippine Ambassador to Malaysia Jose Eduardo Malaya III said that with respect to the dramatic developments in the South China Sea, Malaysian Foreign Minister Anifah Aman had called for the early …

  • Madrid Fusion Manila reignites Pinoy appetite for great food
    Madrid Fusion Manila reignites Pinoy appetite for great food

    After months of preparation and hard work from both the government and private sectors, the future of food is finally here in the country’s capital. Madrid Fusión Manila opened its doors on Friday to an international delegation who eagerly awaited the discussions of some of the most renowned and revered names in the culinary world. Madrid Fusión Manila is a historic gastronomic event marked by talks and exhibitions that showcases Spain and the Philippines’ shared cultural heritage, as well as …

  • Family receives execution order, visits Mary Jane
    Family receives execution order, visits Mary Jane

    As Philippine officials continue to plead for a stay in the execution of death convict Mary Jane Veloso, the Indonesian government has sent a notice to her family ordering her execution at an undisclosed date, the Department of Foreign Affairs (DFA) said yesterday. Foreign Affairs spokesman Charles Jose said Indonesian authorities also allowed Veloso’s family and her lawyers to visit her on Nebu Kambangan execution island. “The Prosecutor gave notice letter to the family of Mary Jane …

  • ‘Pinoys’ cheerful attitude backs tourism campaign’
    ‘Pinoys’ cheerful attitude backs tourism campaign’

    The 2015 World Happiness Report ranking the Philippines as 90th among 158 happiest countries is a validation of the government’s tourism campaign, “It’s more fun in the Philippines,” a Palace official said yesterday. The news did not come as a surprise as Filipinos are naturally cheerful, Secretary Herminio Coloma Jr. of the Presidential Communications Operations Office said. …

POLL

Should Aquino be held accountable over the Mamasapano operations?

Loading...
Poll Choice Options