Australia’s national budget fell further into deficit in February due in part to the effects of the high local dollar, taking the total shortfall to A$23.6 billion ($24.9 billion) for the first eight months of the financial year, according to Treasury figures.
The gap in the financial year to Feb. 28 was A$5.7 billion wider than was projected in the government’s Mid-Year Economic and Fiscal Outlook, primarily due to lower tax revenue and higher personal benefit payments, the statement said.
“These revenue write-downs will inevitably have a big impact in 2012-13, but they will also have an impact across the entire forward estimates,” Finance Minister Penny Wong’s office said in an e-mailed statement today. Revenues fell due to “the substantial hit to company profits as a result of the unusual divergence between the sustained high dollar and the terms of trade, continued global uncertainty and subdued price pressures.”
Labor Prime Minister Julia Gillard’s bid to overcome the opposition Liberal-National coalition’s lead in opinion polls is being damaged by weaker growth, lower prices for Australia’s resources, and a strong local currency that’s curbing tax receipts. Gillard, the nation’s first female leader, was forced in December to abandon a pledge to return the budget to a surplus this year.
In its October mid-year review, the government forecast a budget surplus of A$1.08 billion in the 12 months ending June 30. It recorded a A$44 billion deficit last fiscal year. It had forecast a deficit of A$17.9 billion for the fiscal year’s first eight months.
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