CANBERRA, Australia – Australia’s treasurer says his economic blueprint for the fiscal year ahead will support jobs and growth without European-style austerity measures aimed at reining in the national deficit.
Treasurer Wayne Swan will unveil the budget in Parliament on Tuesday that is likely to be the last for the centre-left Labor Party government, widely expected to be defeated at elections on Sept. 14.
In December, his government abandoned a pledge to return the budget to surplus in the current fiscal year that ends on June 30. The cooling mining boom and a stubbornly high currency have slashed tax revenue from corporate profits.
“In this Budget we have made the choice to set out a pathway to surplus while supporting jobs and growth in the face of an uncertain world,” Swan wrote in a statement Tuesday.
“Others have a different view and want to pursue austerity measures, but the ongoing destruction of the European path of cutting to the bone is not for a country as strong and proud as Australia,” he added.
A year ago, the government forecast a 1.5 billion Australian dollar ($1.5 billion) surplus for the current fiscal year that would have made Australia the first major wealthy country to balance its books since the global financial crisis. But economists now predict a deficit of between AU$10 billion and AU$20 billion.
The government has announced a new levy to help pay for a new national disability insurance program and has promised more funding for schools.
Chinese demand for raw materials such as iron ore and coal kept Australia out of recession during the global economic crisis. But the mining investment boom is expected to peak this calendar year and the non-mining sector is not growing fast enough to make up for the mining retreat.
Australia’s central bank last week cut its key interest rate by a quarter percentage point to a record low 2.75 per cent in an effort to boost economic growth and to drive down the Australian dollar that has failed to track down with commodity prices. International investor interest in Australian bonds as a safe haven in global market turmoil has helped keep the currency buoyant.
Most economists were surprised by a fall in Australia’s jobless rate in April to 5.5 per cent from 5.6 per cent in March.