Australian Treasurer Wayne Swan projected a higher-than-expected A$3.1 billion ($2.7 billion) surplus in three years on surging tax revenue from mining companies as the government prepares to call an election.
The economy will expand 3 percent in 2010-11, less than the 3.25 percent forecast in May, Swan said in Canberra today. The government will raise an additional A$6 billion in resource company tax because of higher commodity prices, he said.
Swan released the first update to the nation’s outlook since Julia Gillard ousted Kevin Rudd as prime minister on June 24. The leadership change was followed by the biggest jump in consumer confidence in 13 months, a report today showed.
“Australia’s economy continues to lead the developed world, with a strong employment outlook and the budget back on track to return to surplus in three years,” Swan said in a statement released in Canberra.
Swan boosted the forecast 2012-13 surplus to A$3.1 billion from the A$1 billion predicted in May. He also narrowed the 2010-11 deficit projection to A$40.4 billion from A$40.8 billion and the 2011-12 gap to A$10 billion from A$13 billion.
The figures will have little bearing on the outlook for the supply of government bonds, said Joshua Williamson, an economist at Citigroup Inc. in Sydney. Australia needs between A$50 billion and A$60 billion of ongoing supply to function, he said.
“There’s very strong demand” for Australia’s AAA-rated debt, Williamson said by telephone. “There will continue to be pressure for the government to continue issuing bonds, certainly above that amount, even when we’ve gone back to surplus.”
The unemployment rate will drop to 4.75 percent in 2011-12, Swan said in today’s statement. A report last week showed the jobless rate held at 5.1 percent in June from the revised reading for May, almost half the level of the U.S.
Swan said the government remains committed to capping spending growth at 2 percent a year on average until the surplus reaches 1 percent of gross domestic product.
Gillard pledged to call an election this year after her elevation triggered a rebound in opinion polls for the ruling Labor Party. Speculation the ballot may be announced as early as this week intensified after Governor-General Quentin Bryce, whom the prime minister must ask to dissolve parliament, altered her travel plans.
Since taking over from Rudd, Gillard has struck a deal with BHP Billiton Ltd., Rio Tinto Group and Xstrata Plc to water down the mining tax to a 30 percent levy on coal and iron ore projects and vowed to reach a consensus on action to tackle climate change. No new climate policy has been announced.
The revenue numbers behind the scaled back levy were based on modeling provided by BHP, Rio and Xstrata, Treasury Secretary Ken Henry told a Senate committee yesterday.
Swan reiterated that the mining tax will contribute A$10.5 billion in the two years from July 1, 2012, to fund roads, rail and ports, tax cuts for small businesses and government contributions to pension savings for low-income workers.
A Westpac Banking Corp. and Melbourne Institute survey of 1,200 consumers conducted between July 5 and July 11 and jumped 11.1 percent to 113.1 points.
Bryce’s decision to delay travel boosted the likelihood the national election will be held on Aug. 28, the Sydney Morning Herald newspaper reported yesterday after Gillard signaled that a vote announcement could be made within days.
The governor-general will be out of Australia from July 17-21, according to a statement released by her office two days ago.