A wafer-thin $1.5 billion surplus for 2012-13 will be the centrepiece of a budget that Treasurer Wayne Swan will say provides a buffer against uncertain global conditions and allows for interest rate cuts.
A WAFER-THIN $1.5 billion surplus for 2012-13 will be the centrepiece of a budget that Treasurer Wayne Swan will say provides a buffer against uncertain global conditions and allows for interest rate cuts.
The surplus would be $2 billion in 2013-14 and would continue to grow over time, Mr Swan told cabinet in a briefing last night. He said this was also ''a fair go budget'' that would deliver some ''really good Labor reforms'' including funding for the proposed disability insurance scheme and the ''schoolkids bonus''.
But in caucus, the budget decision to move single mothers off the parenting payment and onto the lower dole when their youngest child turns eight has already come under fire, with left-wingers Doug Cameron and Stephen Jones criticising it.
Prime Minister Julia Gillard responded brusquely, telling Senator Cameron she had ''answered that''. Earlier, she said she would not answer questions that had been flagged in the media, a reference to a report quoting Senator Cameron saying he would raise the single parent issue in caucus.
Financial markets took an ominous turn on the eve of today's budget, with share prices battered as investors reacted with alarm to the results of elections in France and Greece, where voters overwhelmingly rejected politicians aligned with harsh economic austerity programs.
Australia's sharemarket fell more than 2 per cent, cutting billions from the value of local stocks.
A good reception for the budget is vital for Ms Gillard to try to get some traction. But with Speaker Peter Slipper standing aside while criminal and civil allegations against him are dealt with and the highly damaging report into Craig Thomson - now on the crossbenches - finally out yesterday, Labor is apprehensive about the budget being partly drowned out by these political controversies.
The government has reached its surplus through a combination of large-scale savings and shuffling spending between years.
Opposition Leader Tony Abbott said it would be based on ''fiddled figures''.
Mr Swan said: ''It's overwhelmingly the case that the surplus is the right thing to do, with our economy expected to grow around trend and with low unemployment.'' The International Monetary Fund had endorsed that position.
The surplus had been hard to achieve, Mr Swan said, with write-downs of revenue of more than $15 billion since the mid-year budgetry review and about $150 billion since the global financial crisis. But the ''substantial savings'' were ''responsible, targeted and have been made primarily with a view to protecting working families, the most vulnerable in the community, and frontline services''.
Addressing her caucus, in which MPs are deeply worried about Labor's low vote and many are questioning her leadership, Ms Gillard said the government would conquer the political pressure it was under.
Frequently Asked Questions about this Article…
What size budget surplus did Treasurer Wayne Swan announce for 2012–13 and 2013–14?
Treasurer Wayne Swan said the 2012–13 budget would produce a wafer-thin $1.5 billion surplus, rising to about $2 billion in 2013–14.
How did the government say the surplus would affect interest rate policy?
Mr Swan said the surplus provides a buffer against uncertain global conditions and 'allows for interest rate cuts' — that is the government's stated position on how the fiscal outcome could give scope for monetary easing.
Which household measures were funded or changed in the budget that everyday investors might notice?
The budget included funding for the proposed disability insurance scheme and a 'schoolkids bonus'. It also proposed moving some single mothers off the parenting payment and onto the lower unemployment benefit when their youngest child turns eight—a change that drew criticism from within Labor.
How did financial markets react around the time of the budget?
Financial markets turned nervous on the eve of the budget after election results in France and Greece, and Australia's sharemarket fell more than 2%, trimming billions off local stock values.
Was the surplus universally accepted by political and international commentators?
No. Opposition Leader Tony Abbott called the surplus based on 'fiddled figures', but Mr Swan said the surplus was the right thing to do and noted the International Monetary Fund had endorsed that position.
How did the government say it achieved the surplus — through revenue or spending changes?
The government said the surplus was reached through a combination of large-scale savings and shuffling spending between years. Mr Swan noted there had been revenue write-downs of more than $15 billion since the mid‑year review and about $150 billion since the global financial crisis.
Could political controversies affect how the budget is received by investors?
Yes. The article said political controversies — including Speaker Peter Slipper standing aside while allegations are dealt with and the damaging report into Craig Thomson — made Labor apprehensive that the budget could be partly drowned out by politics, which can affect market and investor sentiment.
What should everyday investors watch after this budget announcement?
Investors should watch how markets respond to the budget and related global events, any official moves on interest rate policy (the government said the surplus 'allows for interest rate cuts'), and developments on key budget measures such as the disability insurance funding, the schoolkids bonus and welfare changes that were highlighted in caucus debate.
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