Australia set to walk away from crisis with 2013 budget surplus
AUSTRALIA aims to become the first major economy to deliver a budget surplus since the onset of the financial crisis, its government said yesterday.
Treasurer Wayne Swan expects to deliver a A$1.5bn (£938m) surplus in the year to June 2013 after cutting spending on defence and overseas aid and abandoning planned tax cuts for companies and savers.
Swan gave a boost to Prime Minister Julia Gillard’s Labour party, which is struggling against the Liberal opposition, when he declared: “The deficit years of the global recession are behind us. The surplus years are here.”
The planned 2012-13 surplus comes after four consecutive years of deficit caused by measures put in place to avoid a recession after 2008. The 2011-12 year’s deficit will be A$44.4bn, up from the A$37.1bn forecast in November.
Swan has held his economic growth estimate at 3.25 per cent for the coming financial year and predicted the rate of unemployment would rise marginally to 5.5 per cent.
He pledged to divert spending to low income families and said a surplus provided the “best defence” against new global economic shocks. Some analysts have questioned, however, whether it is necessary when Australia’s central bank has recently cut interest rates.
Australia has weathered the slump better than many other developed nations with strong demand from China powering a resources boom. Only a handful of other developed economies, including Switzerland, Norway and South Korea, have returned to surplus since the crisis.