Australian Prime Minister Julia Gillard on Monday warned voters to brace for an austere election-year budget, unveiling a A$12 billion (US$12.4 billion) slump in revenues due to the strong dollar.
Gillard, who is tipped to lose her bid for a third Labor government term in September, said the “unusually low revenue, which wasn’t forecast even a few months ago” would require serious belt-tightening.
“The amount of tax revenue the government has collected so far this financial year is already A$7.5 billion less than was forecast last October,” Gillard said in major pre-budget speech.
“Treasury now estimates that this reduction will increase to around A$12 billion by the end of the financial year (to June 30).”
She warned that the “extraordinary revenues” of the pre-financial crisis mining boom were a thing of the past and the current picture was “in part, a return to normality” as the economy transitions away from the resources sector.
Gillard blamed the robust Australian dollar, which has traded at or above parity with the greenback since October 2010, for squeezing trade-exposed industries and company tax earnings.
The depressive impact on prices meant nominal gross domestic product — a measure of the economy incorporating inflation — was currently running at an annualised rate of 2.0 percent, compared with predictions of 5.0 percent a year ago.
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