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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