According to Wayne Swan, the Treasurer, the strong Australian Dollar gave an unprecedented whack to tax revenue the Australian Government required for returning the budget of the nation to surplus. Swan, on his weekly economic note, stated that the spending on disability payments and the other program for improving schools – both are big ticket items in the budget which will be announced on 14th May for the year through June, 2014.
Swan stated further that the economy of Australia has been able to outperform that of the developed world for the last 5 years. However, it is a fact that this strength has caused a sustained high USD, therefore bringing a new set of challenges along with it. This has contributed to an unpredictable and at the same time, unprecedented whack to the revenue base of Australia.
The Government earnings have been slashed by the Australian Dollar’s resilience, thereby spurring the Prime Minister of Australia, Julia Gillard to drop her plans of boosting help for the low paid families, despite of the fact that Labor Party, which she leads, is currently trailing in the polls before the due elections set to happen in this September. The credibility of Labor party was damaged when in last December, the Government backtracked on returning the budget to surplus right in this fiscal year.
According to Swan, currently the responsible course of action would be to do whatever it takes for supporting the growth of Australia. Though Swan has taken the responsible course, he acknowledged that politics sometimes bound others. A recently released Newspoll published in the Australian newspaper showed that Labor Party is trailing to Liberal-National coalition of Tony Abbott, by 12 points on 2-party preferred basis.
In this week’s budget, the Government is facing revenue writedowns of around A$17 billion, according to Swan. Swan added that the spending plan should be outlining a path back to the budget surplus. As mentioned in a report by the Australian Broadcasting Corp., the Government is planning to make a cut in the public sector worth A$580 million. The reduction is going to occur on the course of the next 4 years. As reported by the Australian Financial Review on 11th May, the Australian budget will be targeting multinational corporations which funnel investments through Australia, in an attempt to eliminate the domestic tax liabilities of them.