The global financial crisis has forced the Rudd Government to slash its budget forecasts amid claims a loss in revenue
The global financial crisis has forced the Rudd Government to slash its budget forecasts amid claims a loss in revenue will impact on infrastructure investment.
Mid-year economic outlook figures released today show a massive drop in expected budget surpluses.
According to the outlook, the Government has had to revise its 2008-09 forecast surplus down from $21.7 billion to $5.4 billion.
The 2009-10 figures have also changed, with the Government now expecting a surplus of $3.6 billion instead of $19.7 billion.
According to reports from the ABC, Treasurer Wayne Swan says the Government will need to make “tough decisions” about infrastructure investment.
Fiscal balance is expected to decline almost $20 billion this year, from the previously forecasted figure of $23.1 billion to $5.8 billion.
GDP is expected to fall from 1.8 percent to 0.4 percent this financial year. It is also expected to fall in 2009-10 from 1.5 percent to 0.3 percent.
“Almost all of the decrease in the surplus beyond 2008-09 is due to the significant reduction in revenues associated with the global financial crisis,” the outlook says.
“Expected taxation receipts have been revised down by $4.9 billion in 2008-09, by $12.2 billion in 2009-10, $12.4 billion in 2010-11 and $7.9 billion in 2011-12.”
According to the outlook, the downward revisions are due to lower forecasts of capital gains tax and company tax.
The economy is still forecasted to grow by 2 percent the next year, but this is three-quarters lower than previously forecast.
Trade is also expected to drop by 8 ½ percent, with expectations of a 5 percent increase in unemployment.