By Gemma Daley May 9 (Bloomberg) — Australian Treasurer Wayne Swan said the deficit in the May 11 budget will be less than forecast last year, with a “stronger” outlook and 2 percent cap on government spending. The budget will have a “stronger” outlook, yet revenue will be lower amid the global financial crisis, Swan said. The budget was forecast to deliver a A$57.7 billion ($51.1 billion) deficit in the year ending June 30, according to the mid-year budget review published in November. “The outlook will be better and the outlook will be stronger,” Swan told Nine Network television today. “You will see a very disciplined budget.” Australia is “better placed” than any other advanced economy to deal with any global slowdown caused by the sovereign debt crisis in Greece, Swan said. The Reserve Bank of Australia last week said the economy could be buffeted by global fallout. Australia, the world’s biggest exporter of coal, iron ore and alumina, skirted the global recession because of surging demand from China and India. “China made a running start out of the global financial crisis and really propelled, in many ways it saved the Australian economy,” BHP Billiton Ltd. Chief Executive Officer Marius Kloppers told Australian Broadcasting Corp.’s Inside Business program today. “The high debt levels, unemployment and so on are going to continue to be a drag on global economic growth rates overall.” Resource Tax A 40 percent tax on resource profits, announced by the government on May 2 with a 2012 start date, will affect investments, jobs and growth in the Australian economy, Kloppers said. Australia’s gross domestic product will rise 3 percent this year, 3.5 percent in 2011 and the country will continue to be among nations leading the world on raising borrowing costs, the International Monetary Fund said on April 23. In January, it forecast GDP growth of 2.5 percent and 3 percent respectively. Swan said the “no frills budget” would contain few sweeteners for voters ahead of an election this year. The government, elected in 2007, trailed the opposition Liberal- National coalition in a Newspoll published last week. “There is simply no room for that, we are very serious about our strict budget rules and 2 percent cap on spending,” Swan said. “As well as that, offsetting all new spending.” Swan said there would be “modest” income tax cuts, which were announced when the government won office, from July 1. Travel Overhaul Finance Minister Lindsay Tanner said an overhaul of domestic and international travel for politicians and their staff would reap A$160 million in savings in the next four years. The government spends A$500 million on travel every year. “We are now using the Australian government’s collective buying power to put in place a new travel deal for the government and this is another step in reducing waste,” Tanner said in a statement e-mailed today. To contact the reporter on this story: Gemma Daley in Canberra at gdaley@bloomberg.net
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Australian Treasurer Swan Says Budget Deficit to Be Lower Than Forecast
