Aussie budget backs small businesses
Print Edition
THE Australian government yesterday unveiled a budget it said would support small businesses and promote jobs growth as it sought to stimulate a flagging economy hit by slumping commodity prices.
The budget shifted away from a focus on reining in a huge deficit after harsh cuts to welfare, education and health sparked a voter backlash last year and triggered a challenge to Prime Minister Tony Abbott’s leadership.
Instead, the government will roll out a A$5.5 billion (US$4.4 billion) small business package, mostly tax cuts, to stimulate investment, as well as a A$4.4 billion boost to funding for family-focused policies such as childcare.
“In this budget, whilst we are continuing with a credible path of fiscal consolidation of around half a percent of GDP per year, we are mindful that we continue to deal with some headwinds, but we are coming through the most difficult days,” Treasurer Joe Hockey said.
“The Australian economy is going to grow faster. The deficit is coming down.”
The budget papers showed that forecast tax receipts had been cut by A$52 billion over the four years to 2017-18, driven by an almost 50 percent fall in the price of iron ore, Australia’s biggest export, and weak wages growth.
But Hockey said despite the hit to revenue, the budget deficit was expected to come in at A$35.1 billion, or 2.1 percent of GDP, in 2015-16, below analysts’ hopes of above A$40 billion.
The government also continued to forecast a return to surplus by 2019-20.
Australia has struggled to rebalance away from a dependence on mining as an unprecedented resources investment boom helped the economy avoid a recession for more than two decades.
Unemployment has edged up over the past year, peaking at an 11-year high of 6.3 percent in January. Consumer and business confidence were soft on economic concerns.
The central bank has tried to lift growth by cutting interest rates to a new record low of 2 percent at its last meeting.
The government forecast the jobless rate could rise to 6.5 percent in 2015-16 before falling to 6.25 percent the following year.
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