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Australia plans to cut business tax, subsidize child care and balance budget in 5 years

CANBERRA, Australia – Australia announced cuts to foreign aid, lower taxes for small businesses and cheaper child care in an annual budget that tries to balance paying off debt with energizing an economy that’s being sapped by China’s slowdown.

Treasurer Joe Hockey revealed to Parliament on Tuesday a budget blueprint that will deliver a surplus in the 2019-20 fiscal year despite a recent slump in the price of iron ore, Australia’s most lucrative export.

The deficit for the current fiscal year is forecast at AU$39.4 billion, less than the AU$40.4 billion predicted in December but AU$10 worse than the government had forecast a year ago.

Cuts in spending will be used to finance new programs including AU$5.5 billion to give more than 2 million small businesses tax breaks and AU$ 4.4 billion to help 165,000 parents pay for child care.

Indonesia is the biggest loser from Australia’s plan to slash its foreign aid budget by almost 20 per cent to 4.1 billion Australian dollars ($3.2 billion) in the next fiscal year which begins on July 1.

Weeks after recalling its ambassadors from Jakarta in protest at the executions of two Australian drug traffickers, the government plans to cut Indonesian aid by 40 per cent next year to AU$323 million.