Australia will collect A$12 billion ($12.3 billion) less tax revenue in the year to June 30 than forecast by Treasury in October, placing pressure on the federal budget, Prime Minister Julia Gillard said.
“This unusually low revenue, which wasn’t forecast even a few months ago, creates a significant fiscal gap over the budget period,” Gillard said in the text of a speech she will deliver today in Canberra. “Spending is controlled but the amount of tax money coming to the government is growing much slower than expected.”
Gillard’s ruling Labor party, trailing in polls ahead of the September election, is attempting to boost economic credentials damaged when a slump in tax revenue forced her in December to abandon a pledge to return the budget to surplus. Australia’s first female leader is also pledging to increase funding for schools and disabled care, adding to pressure on government coffers before it presents next fiscal year’s spending plan on May 14.
After recording a A$44 billion deficit last fiscal year, the government forecast a budget surplus of A$1.08 billion in the 12 months ending June 30 in its October mid-year review,
Since then, the national budget has fallen behind projections due in part to the effects of the high Australian currency. The deficit was at A$23.6 billion for the first eight months of the financial year, A$5.7 billion wider than was projected in the government’s Mid-Year Economic and Fiscal Outlook, according to Treasury figures released April 12.
The amount of tax collected this fiscal year is now A$7.5 billion lower than the October forecast, Gillard said today.
“The prices for what Australian companies sell overseas are lower, imports are cheaper, local competition is fierce,” she said. “Those things add up to business making less profit than planned. When businesses make less profit than planned, it also means government gets less money in tax than expected.”
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