Australia’s government has announced AUS$16.4bn in new cuts in order to do good on its promise of budget surplus. The price of commodities in the global market is sliding fast, depriving Australia of billions of dollars worth of taxes.
The cuts, to be implemented over four years, are meant to protect against any future economic turbulence and lend confidence to the country’s finances.
Australia, one of only seven countries in the world to retain a AAA rating with a positive outlook by all three major credit agencies, has long since pledged to become the first developed country to operate a budget surplus. “Global volatility and substantial revenue writedowns have made returning the budget to surplus in 2012-13 much harder, but the government remains on track to deliver a surplus to help protect against global economic turbulence,” said Wayne Swan, the Treasurer, in a statement.
“While global headwinds, a high dollar and changing consumer behaviour are weighing on some sectors, the Australian economy is expected to outperform every major advanced economy this year and next.”
There are fears amongst commentators that the new budget cuts will add unnecessary pressure on the economy by taking money out of circulation just as the mining boom subsides. More pressure could result on the Reserve Bank of Australia lowering interest rates aggressively, harming the dollar, which continues to trade in record highs.
Swan has revealed a number of potential cuts, including a reduction in private healthcare rebates, limiting the budget for training programmes and lower ‘baby bonus’ payments – a type of financial aid for parents of newborns or newly adopted children.