Budget: Steady As You Go, But Savers Get A Gong

  As Federal Treasurer Wayne Swan was handing down the 2010-11, sharemarkets were falling, the euro was wiping out all the gains from Monday, oil, copper and other commodities weakened, but gold rose and & #160;investors fretted about Chinese inflation and signs the strong economic growth in that economy had peaked.So like it or not the promise to bring the budget into & #160;surplus three years ahead of forecast was well-timed as offshore investors continued to focus on deficits and debt..Australia isn't Greece or Spain, but now isn't time to be waving a red flag at bond markets and other investors with a huge surge in spending.Mr Swan & #160;estimated a & #36;A1 billion & #160;surplus in 2012-13, & #160; (2015-2016 in last year's budget) from & #160;the estimated & #36;A40.8 billion deficit for the year to June 30 2011 (2.9% & #160;of GDP), & #36;A6 billion down on the estimate in November.Australia's net debt is forecast to peak at 6.1% of GDP in 2011-12, half the level expected a year ago.The government will keep a 2% limit & #160;on spending growth until the surplus reaches 1% of gross domestic product.GDP is estimated to grow & #160;3.25% in the year through June 2011, after expanding 2% in the 2010 financial year, and 4% & #160;in 2012.The rollback of fiscal stimulus will subtract 1 percentage point from GDP in the 2010 calendar year and 0.75 point in calendar 2011, the budget said.The government expects to raise & #36;A12 billion over the next four years by boosting taxes on resource companies to 40%.To offset higher spending on health care, railways and border protection, the government is boosting & #160;taxes on tobacco by almost & #36;A5 billion by 2013-14. (Both measures already announced). & #160;With the deficit shrinking, the government expects to wind back issuance of government bonds to & #36;A56 billion in the year to June 30, 2011, from an estimated & #36;A60 billion in the current year.The Treasury predicts that Australia's terms of trade, a gauge of income from exports, will rise to a 60-year high in the fiscal year that begins July 1, boosted by price gains for iron ore and coal exports.The measure will retreat in 2011-12 as commodity prices & quot;moderate somewhat & quot; with rising production, the budget said.That echoes the forecasts of the Reserve Bank last Friday.Treasury estimates inflation at 2.5%, the Reserve Bank said 3%, but they measure it slightly differently.The government said & quot;unemployment is expected to fall further from 5.3% to 4.75% per cent by mid-2012, around the level consistent with full employment. & quot;The other key forecasts from the budget include:Household consumption spending rise by 3.5% next financial year. & #160;That will contribute 1.9 percentage points to the predicted 3.25% GDP growth.Business investment spending is forecast to rise by 7% in 2010-11, contributing another 1.2% points to GDP growth.Treasury predicts that employment will grow by 2.25% in 2010-11, pulling the unemployment rate down from 5.3% now to 5% by June 2011.That is expected to be followed by jobs growth of 2% in 2011-12, which would see unemployment fall to 4.75% by June 2012. & #160;Compensation of employees is forecast to increase by 7.25% in 2010-11 with wages growing 3.75% and the number of people in jobs rising by 2.25%.Treasury forecasts & #160;growth in exports of 5% next financial year, but this will be & #160;swamped by even stronger growth in imports (up 9%) meaning Australia's trade performance will subtract & #160;from GDP growth in 2011. & #160;  

Add Your Business

List your business

for more exposure
and more traffic!


Sydney

  [ Change ]
 
Today

Min: 11°
Max: 19°
Possible shower.
Tomorrow

Min: 12°
Max: 19°
Possible shower.
 

Account

Login

To access your account and listings



Remember me
   
   
   
 
 
Find Hunter Valley accommodation online