The Australian government’s bid to deliver the nation’s first budget surplus since the global financial crisis is being undermined by lower-than-expected tax revenue, Australian Treasurer Wayne Swan said.
“Tax collections were running a further A$2 billion [US$2.1 billion] behind estimates at the end of February, indicating the full-year shortfall is likely to be much larger,” Swan said in an e-mailed statement yesterday.
“Lower revenue means we will have to work much harder to find extra savings in the budget,” he added.
Australian Prime Minister Julia Gillard, whose government is slumping in opinion polls and faces an election next year, has pledged to end four years of deficits in the fiscal year that begins on July 1.
Her strategy has been threatened by global pressures including China’s economic growth slowdown, Europe’s debt crisis and elevated unemployment in the US.
“The ongoing global instability has had a big impact on our economy and our budget bottom line,” Swan said. “Since the global financial crisis struck, we’ve been forced to write down government tax revenues by A$140 billion. There will be more writedowns in next month’s budget.”
Australia’s underlying cash balance for the year to Feb. 29 was a deficit of A$29.4 billion, compared with a forecast made in November last year of a A$27.5 billion gap.
Governments across the region, including Japan, Indonesia and India, are grappling with slower tax revenue and trying to find ways to cut spending without exacerbating elevated unemployment.
Australia was the only major industrial economy to avoid a recession during the global downturn of 2009. Still, job growth stagnated last year and, until two interest-rate cuts late last year, the central bank maintained the highest benchmark borrowing cost in the developed world to temper inflation as a mining investment boom accelerated.
The Reserve Bank of Australia kept its benchmark interest rate unchanged at 4.25 percent this month after cutting borrowing costs in November and December to buttress the housing market, support jobs and boost confidence among consumers who are saving more.
Parliament is on hiatus until May 8 when the government will announce its budget.
“This will be a balanced budget — balanced in that it charts a responsible middle course and balanced in that it gets us back in the black well before our peers,” Swan said.
He’s previously said returning to surplus was “a vital economic imperative.”