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Gillard Ends 42 Years of Spending Gains to Return to Surplus

Australia’s government will cut spending for the first time in at least 42 years as Prime Minister Julia Gillard ends four years of budget deficits, giving the central bank flexibility to lower interest rates.

The underlying cash surplus will be A$1.54 billion ($1.56 billion) in the 12 months to June 30, 2013, Treasurer Wayne Swan said in Canberra yesterday. Expenditures are forecast to fall to A$364.2 billion next year, the first drop in figures dating back to 1971. The A$44.4 billion deficit this year is the third-largest on record and 3 percent of gross domestic product.