Australia Government Revenue Expected to Fall

Australia faces a “massive hit” to government revenue, pushing the nation further into deficit ahead of an election in September, Treasurer Wayne Swan said.

The national budget fell a further A$4.6 billion ($4.8 billion) into deficit in the first four weeks of 2013, taking the total shortfall to A$26.8 billion for the first seven months of the financial year, according to Treasury figures released by the government March 15. Just three week ago, Swan predicted a reduction in revenue would add just A$2 billion to the deficit in January.

“One of the big challenges we face is a massive hit to government revenues,” Swan said in a weekly economic note yesterday. Revenue downgrades “will inevitably continue to impact beyond the current year.”

Labor Prime Minister Julia Gillard’s bid to overcome the opposition Liberal-National coalition’s lead in opinion polls is being damaged by weaker growth, lower prices for Australia’s resources, and a strong local currency that’s curbing tax receipts. Gillard, the nation’s first female leader, was forced in December to abandon a pledge to return the budget to a surplus this year.

“We will not put growth and jobs in our economy at risk by cutting further and deeper in the near term to fill in a hole in revenues,” said Swan.

In its October mid-year review, the government forecast a budget surplus of A$1.08 billion in the 12 months ending June 30. It recorded a A$44 billion deficit last fiscal year.


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Mingze Wu

Mingze Wu

Currency Analyst at Market Pulse
Based in Singapore, Mingze Wu focuses on trading strategies and technical and fundamental analysis of major currency pairs. He has extensive trading experience across different asset classes and is well-versed in global market fundamentals. In addition to contributing articles to MarketPulseFX, Mingze centers on forex and macro-economic trends impacting the Asia Pacific region.
Mingze Wu