Prime Minister Julia Gillard remains determined to deliver a budget
surplus in the 2013 election year, despite ongoing signs of a sluggish
economy.
The federal government believes the economic fundamentals
remain strong, but admits there's downward pressure on corporate tax
receipts due to weaker commodity prices and a high Australian dollar.
"Our last economic update had us at trend growth and that's
why the last economic update had us with a surplus," Ms Gillard told ABC
radio on Friday.
"We are still determined to deliver the surplus."
But shadow treasurer Joe Hockey said figures this week
showing the economy expanded by just 0.5 per cent in the September
quarter - for a sub-trend annual growth 3.1 per cent - undermines the
prime minister's surplus commitment.
"Ever since the mid-year budget update the prime minister and
the treasurer have been crab-walking away from their 2012/13 surplus
promise," he said in a statement.
"Time and again they have refused to repeat their guarantee to deliver a surplus this financial year."
Opposition Leader Tony Abbott believes the government is building up to dump the projected $1 billion surplus.
"Yet another broken promise from a government which is just
incompetent and untrustworthy to its core," he told reporters in Toowoon
Bay, NSW.
However, the Australian Greens would welcome the government dropping the surplus and leaving the budget in deficit.
"You would be hard pressed to find an economist that says a
surplus is a good idea," Greens senator Larissa Waters told reporters in
Canberra.
"A surplus delivered off the back of single parents, off the
back of an underfunded NDIS that won't start for years, that's not a
surplus that benefits Australians."
The latest international trade figures for October released on Friday reflect the challenges facing the economy.
Australia's trade position deteriorated as lower commodity
prices, particularly for coal products, and a high Australian dollar
constrained export earnings.
The goods and services balance widened to a $2.09 billion
deficit in October, from a downwardly revised $1.42 billion shortfall in
September, marking the biggest seasonally adjusted trade gap since
March 2008 when the global financial crisis hit.
The value of imports rose three per cent, but exports were
flat and fell 9.5 per cent over the year, creating ramifications for the
nation's terms on trade.
RBC Capital Markets strategist Michael Turner said the
national accounts report released on Wednesday showed income measures
were uniformly weak in the September quarter as a result of the four per
cent fall in the terms of trade - which was almost 14 per cent lower
over the past year.
"The early data for (the December quarter) suggest more of
the same ahead, as activity shifts to a sub-trend pace," he wrote in a
client note.
Capital imports rose by 13 per cent in October as business
took advantage of the continuing strength of the dollar, while the
currency dampened export revenue.
The Reserve Bank of Australia cut the cash rate again this week in anticipation of these dynamics.
"We think the adjustment process throughout the economy will require a lower cash rate still," Mr Turner said.
No comments:
Post a Comment