Wayne Swan Insists Surplus on Track, No GST Amendments

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By Erik Pineda | November 5, 2012 6:00 PM EST

Australia's economic goals remain firmly in place, Treasurer Wayne Swan said on Monday, insisting that Labor's commitment of delivering a surplus by May 2013 is not a remote possibility.

Pointing to the recently released Mid-Year Economic and Fiscal Outlook (MYEFO), Mr Swan stressed that the surplus target of $1.1 billion, downward revised from previous projections of $1.5 billion, is wholly achievable owing to the spending adjustments laid out by the government over the next six months.

The Gillard Government has proposed wide-ranging cuts on federal expenditures, which mostly the public would feel via the reduced payments for baby bonus and public health insurance.

But a new report from Deloitte Access Economics has suggested today that slashing funds for government services alone will not necessarily power the government's aim of producing more savings and translate them to a surplus, which Labor critics said, has precariously adopted as its core economic road map.

Factors that were controllable by Canberra would likely frustrate that target, the Deloitte report said, such as the deliberate cooling down of China's economy, which is Australia's biggest market for its resources shipments.

The subsequent weakening of global commodities prices, particularly of coal and iron ore, took a big hit on projected government revenues, mainly hinged on the minerals resource rent tax (MRRT) that started rolling out July this year.

Three months after taking effect, the mining tax produced zero revenues for the government as the resource industry struggled to squeezed profits from meagre orders and plunging market prices for commodities.

According to Deloitte Director Chris Richardson, Canberra's budget plan seemed to have overlooked the impact of Beijing's economy to that of the local setting despite strong indications that "in recent months, it's been China that's still hurting the budget bottom line."

"For a couple of years now the government's had to keep scrambling and scrambling basically because the headwinds keep getting stronger," Mr Richardson was quoted by ABC as saying on Monday.

He had concluded that instead of arriving at a surplus, the government will be left to swallow a deficit, though in a much manageable scale of $4 billion as against to the mammoth 2012 budget shortfall of more than $43 billion.

The Deloitte report, however, was unacceptable for the government, Mr Swan told ABC on Monday.

"I certainly don't believe that (the Deloitte report) is correct . . . and of course, Deloitte Access Economics doesn't always get it right," the treasurer asserted.

In the same interview, Mr Swan reiterated too that Labor has no immediate plans to reassess the GST following the review submitted on Friday last week.

"We believe the GST, by lifting or broadening the base, would really hit people, particularly battlers, really hard," the treasurer told ABC, adding that doing so "is not a priority of this government."

But former New South Wales Premier Nick Greiner, who chaired the GST review panel, has maintained that it would be stupid of the government to dismiss outright any rethink or dialogue pertaining to improving the current from of the tax.

Mr Swan simply replied that he would issue a rejoinder on the matter and discuss it on state level within this year.

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