Australian Treasurer Wayne Swan declared the “deficit years of the global recession” over yesterday, unveiling a A$1.5 billion (US$1.52 billion) budget surplus funded by deep cuts to defense and foreign aid spending.
Swan vowed an ambitious A$33.6 billion in savings, slashing A$5.5 billion from military spending and trimming Australia’s overseas aid by A$2.9 billion, along with a raft of other reforms to tax and welfare benefits.
The measures will only deliver a modest A$1.5 billion surplus for the 2012-2013 fiscal year starting on July 1, but the Labor government has been determined to return the budget to black in a bid to salvage its popularity.
“Tonight we make a forceful statement that ours is one of the world’s strongest economies,” Swan told lawmakers in his budget speech. “The deficit years of the global recession are behind us. The surplus years are here.”
The budget forecasts a surplus of A$7.5 billion by 2015-2016, a dramatic reversal of the present A$44 billion deficit requiring some of the deepest cuts to government spending seen in Australia for decades.
Defense was the major target, with A$5.5 billion in spending cut over the next four years, including a delay in the acquisition of 12 F-35 Joint Strike Fighter aircraft, scrapping some artillery purchases and sacking 1,000 civilian staff.
The government vowed there would be “no adverse impact on operations in Afghanistan” or East Timor and the Solomon Islands, where Australian troops are stationed in a peacekeeping capacity.
Overseas aid was also sacrificed, with A$2.9 billion in savings through the scaling back of development targets, which Australian Foreign Minister Bob Carr said would see funding “grow at a slightly slower rate” than forecast.
Australia was the only advanced nation to dodge recession during the global downturn because of the resilience of its mining exports to Asia, and it again leads the major economies by becoming the first to record a budget excess.