In a Budget aimed at a looming election and in a buoyant economy, Prime Minister Kevin Rudd's government is promising a return to a surplus in three years.Treasurer Wayne Swan said the no-frills Budget would return to a slim $A1 billion surplus in the 201
In a Budget aimed at a looming election and in a buoyant economy, Prime Minister Kevin Rudd’s government is promising a return to a surplus in three years.
Treasurer Wayne Swan said the no-frills Budget would return to a slim $A1 billion surplus in the 2012-13 fiscal year — three years earlier than the government forecast a year ago.
Net debt would be totally repaid in 2018-19 — also three years ahead of schedule — after peaking at $A91 billion, or 6.1% of gross domestic product, in 2011-12.
Billions of dollars of stimulus spending helped Australia avoid recession during the global financial crisis but also forced the government to borrow to finance the budget shortfall.
Even so, Australia's debt remains extremely low by the standards of other developed economies.
Spending plans
Spending plans include $A652 million over four years to encourage private investment in renewable energy projects such as solar and wind. The investment will help Australia meet its target of having 20% of the country's power coming from renewable sources by 2020.
The Budget also injects $A2.2 billion into the national health system over four years.
Other features include more funding for sport and a parental leave scheme.
The Budget documents predict the Australian economy will grow 2% in the current fiscal year, then accelerate to 3.25% in 2010-11 and 4% in the following year.
Swan told Parliament the balanced budget would be achieved "ahead of any of the major advanced economies."
The strategy blunts the opposition Liberal Party's portrayal of the government as reckless spenders who were burdening future generations with mounting debt.
But the new blueprint for Australia's $A1.2 trillion economy hinges on government plans announced earlier this month to cash in on booming profits in the mining industry.
Mining tax
A 40% Resource Super Profits Tax would be introduced in July 2012 and raise an anticipated $A9 billion in additional revenue a year from big mining companies that have benefited from Chinese and Indian industrial demand for minerals and energy.
The government plans to use this extra money to offset revenue lost from cutting company tax from 30-28% by July 2014, which in turn would help businesses make bigger contributions to their employees' pension funds.
But the Liberals have already said they won't support the new mining tax in the Senate — where Labor holds a minority of seats and needs opposition support to pass laws — because it would drive mining investment overseas.
The Australian Chamber of Commerce and Industry has welcomed the planned early return to surplus while opposition treasury spokesman Joe Hockey said the three-year target would not be reached because it was based on optimistic forecasts of future mining investment and exports.
