Australia optimistic about budget

The aftershocks of the global financial crisis have hit revenues, Swan says. AFP photo

Australia is on track for a modest budget surplus, Treasurer Wayne Swan said yesterday ahead of this week’s unveiling of his fifth budget for the mining-powered economy.

Australia, which survived the global financial crisis without dipping into recession, has previously been forecast by the government to deliver a Aus$1.5 billion (US$1.6 billion) surplus for the 2012/13 fiscal year beginning July 1.

In releasing its mid-year figures late in 2011, the government said it expected the deficit to balloon to Aus$37.1 billion for the 2011/12 fiscal year. “It will be a modest surplus, the surplus will build over time,” Swan said yesterday.

Swan acknowledged the task had been made more difficult by revenue writedowns of Aus$150 billion over the past five years, and the budget was expected to contain significant belt-tightening.

“The aftershocks of the global financial crisis have hit our revenues,” Swan told the Nine Network.

Australia is benefiting from low unemployment and a mining and resources investment boom --factors that have helped persuade the government that “returning the budget to surplus is the right thing to do.”

“It’s the right thing to deliver a budget surplus, so we create a buffer if the global economy worsens at some time in the future,” PM Julia Gillard said yesterday.

 But the government admits that while Australia’s economic fundamentals are strong, the economy is in transition, which is making life tough for businesses outside the mining sector.