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.

  • Militants want US Marines pulled out of Negros
    Militants want US Marines pulled out of Negros

    The militant group Bagong Alyansang Makabayan (Bayan) is calling for the pullout of US Marines who arrived in Sagay City, Negros Occidental last Wednesday to train Special Action Force (SAF) commandos and members of the allied forces. The SAF commandos and the allied forces will secure the Asia-Pacific Economic Cooperation (APEC) ministerial meeting in this city. Bayan-Negros secretary general Christian Tuayon said the US troops might violate the human rights of activists, especially those …

  • China subs outnumber US fleet – admiral
    China subs outnumber US fleet – admiral

    China is building some “fairly amazing submarines” and now has more diesel- and nuclear-powered vessels than the United States, a top US Navy admiral told US lawmakers on Wednesday, although he said their quality was inferior. Vice Admiral Joseph Mulloy, deputy chief of naval operations for capabilities and resources, told the House Armed Services Committee’s seapower subcommittee that China was also expanding the geographic areas of operation for its submarines, and their length of …

  • Pacman mega fight tax exemption up to Congress, BIR
    Pacman mega fight tax exemption up to Congress, BIR

    Malacañang is leaving it up to Congress and the Bureau of Internal Revenue (BIR) to consider a proposed special tax exemption for boxing icon Manny Pacquiao in his much-awaited fight with Floyd Mayweather. Deputy presidential spokesperson Abigail Valte said yesterday it will have to be discussed by Congress because lawmakers are the ones who enact tax exemptions, special or general. Pacquiao has been dogged by unsettled tax obligations with the BIR. …

  • Couple married 67 years holds hands in final hours together
    Couple married 67 years holds hands in final hours together

    FRESNO, Calif. (AP) — After spending 67 years together as devoted husband and wife, there was no question how Floyd and Violet Hartwig would end their lives — together. …

  • Binay backs house arrest for JPE, GMA
    Binay backs house arrest for JPE, GMA

    Vice President Jejomar Binay yesterday supported proposals to put Sen. Juan Ponce Enrile and former President now Pampanga Rep. Gloria Macapagal- Arroyo under house arrest. “Government prosecutors are opposing house arrest for… Enrile. Binay issued the statement after the 91-year-old Enrile was rushed to the Makati Medical Center on Thursday due to pneumonia. House arrest for him would be the compassionate thing to do,” he added. …

  • 3 Pinays on Forbes power women list
    3 Pinays on Forbes power women list

    Three Filipina executives, who are all daughters of known business tycoons in the country, made it to Forbes’ list of the 50 most powerful businesswomen in Asia. Teresita Sy-Coson, vice chairman of SM Investments and chairman of BDO Universal Bank, was included in the list for the fourth year in a row since its inception. “Under her (Sy-Coson) lead SMIC became the largest listed company on the Philippine Stock Exchange by market cap. Also in the 2015 list is 70-year-old Helen Yuchengco-Dee, …

  • Hijacked Indonesian vessel found in Davao
    Hijacked Indonesian vessel found in Davao

    An Indonesian cargo vessel that was hijacked a month ago in North Sulawesi, Indonesia has been found stuck in the waters off Mati, Davao Oriental, the Philippine Coast Guard (PCG) reported yesterday. PCG spokesperson Armand Balilo said the PCG- Southeastern Mindanao district was informed on Feb. 23 that the M/T Rehoboth was found aground off Barangay Cabuaya. Four personnel from the local PCG district office were sent to verify the report. The vessel was reportedly hijacked by …

  • Phl now biggest grower of GM crops
    Phl now biggest grower of GM crops

    The Philippines is now the twelfth biggest grower of genetically modified (GM) crops. …

POLL

Should Aquino be held accountable over the Mamasapano operations?

Loading...
Poll Choice Options