News: 2012 Budget Economic Wrap

Treasurer Wayne Swan hailed the arrival of the “the surplus years” during his Budget speech.

As expected a return to surplus in 2012-13 ($1.5 billion) was forecast, followed by surpluses of $2 billion, $5.3 billion and $7.5 billion in the ensuing years.

Forecasting a budget is one thing, but it could be 15 months before we know whether it will be achieved.

The outlook for the current year’s balance sheet was not as bright, with a $44 billion deficit predicted.

But Mr Swan was upbeat about the future.

“The deficit years of the global recession are behind us. The surplus years are here,” Mr Swan said.

“Surpluses built on some difficult savings which avoid vulnerable Australians and frontline services and don’t compromise our investments in productivity.”

The introduction of the mining tax will certainly aid in delivering a surplus.

Forward estimates predict the mining tax will generate $3 billion in net tax receipts this coming fiscal year; $3.5 billion in 2013-14; $3.2 billion in 2014-15, and; $3.7 billion in 2015-16.

When combined with the existing petroleum resource rent tax, receipts from the two taxes should increase by a whopping 87.3%.

The controversial carbon price is forecast to bring in $7.69 billion in the 2012-13 financial year.

Unemployment is forecast to remain low for the next two fiscal years at 5.5%, while GDP growth is tipped to hit 3.25% and 3% respectively.

Inflation is expected to reach 3.25% in 2012-13, marginally outside the Reserve Bank’s target zone, but is forecast to return to 2.5% the following year.

Key Points of the 2012 Federal Budget

• GDP growth of 3.25% in 2012-13
• Unemployment 5.5% over next two financial years
• $33.6b in savings over forward estimates
• $44.7b in personal income tax cuts
• $3.6b Spreading the Benefits of the Boom package
• $714m loss carry-back scheme for businesses
• From July 1 small businesses can write off every eligible asset then buy for less $6500 and up to $5000 for vehicles
• $1b to implement stage one of National Disability Insurance Scheme
• $515m to address immediate dental care needs
• $50m for expansion of National Bowel Cancer Screening Program
• $234m for national eHealth agenda
• $3.6b to duplicate the Pacific Highway
• $54m to encourage maths and science studies at schools and universities
• $1.5b over five years for Remote Jobs and Community program
• An additional $225m for Jobs, Education and Training Child Care Assistance program