THE AUSTRALIAN government has found $17 billion in its budget to achieve a small surplus in three years the Treasurer and Finance Minister revealed today.
The mini-budget was jointly announced by Treasurer Chris Bowen and Finance Minister Penny Wong and contained controversial plans for a new tobacco tax and banking levy.
The new taxes, along with deep cuts to foreign aid, will help Australia achieve a “modest” budget surplus of $4 billion in 2016-17.
“Australia’s economic fundamentals remain strong and the outlook remains positive, with solid growth, moderate unemployment and contained inflation,” the statement said.
The budget deficit is currently in the order of $30.1 billion.
The Treasurer revealed a $33 billion shortfall in expected tax receipts and revenue due in part to reduced Gross Domestic Product (GDP).
“With the economy currently facing a period of transition and falling terms of trade, budget cuts in the near term to offset the lower than expected revenues would put growth and jobs at risk,” the Ministers said.
Faster than expected falls in mineral and energy commodity prices and reduced demand from China means the non-mining sectors of the economy will need to lead growth in the future.
Speaking to journalists following the release of the mini-budget the Mr Bowen defended the new banking levy and said it was up to the banks whether they pay the levy out of profits or pass the cost on to consumers.
Chris Bowen was appointed Treasurer following the latest Labor leadership spill in June. Mr Bowen replaced Wayne Swan who had held the post since December 2007.
Mini-budget breakdown
- $5.3 billion raised from a new tobacco excise, tax rise of 12.5 per cent every year for four years
- $1.1 billion spend to pay for the PNG deal. The government will save $600 million in onshore processing costs
- $879 million cut to foreign aid budget
- $733 million raised from a new banking levy. The levy will help fund a bank bailout in the event of a financial crisis
- $582 million raised from inactive superannuation accounts
- $600 million saving from a public service efficiency drive, equivalent to 2.25 per cent of the public service budget
- $420 million in new aid to PNG
- Unemployment is expected to rise to 6.25 per cent
- No cuts to health or education
