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Australian Treasurer says deficit 'uncomfortable'

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(Globalpost/GlobalPost)

Australian Treasurer Wayne Swan admitted Sunday it was politically "very uncomfortable" to fail to return the budget to surplus as forecast, but blamed unprecedented shortfalls in government revenue.

Swan, who will deliver his sixth annual budget on Tuesday, said a year ago that the national accounts should come out of deficit this financial year.

But a fall in tax revenues has forced him to delay the surplus.

"What has changed has been a fundamental writedown of revenue, which is unprecedented, which couldn't be forecast or predicted," Swan told the Nine Network.

As the country prepares for elections in September, which opinion polls suggest will be won by the conservative opposition led by Tony Abbott, Swan said voters could question why the surplus had not been achieved.

But he said he was faced with the choice of cutting spending to the bone to maintain the surplus, a course which would affect jobs, or explaining the fall in revenue forecasts.

"I'll take my medicine; I'll accept the politics of this are very uncomfortable," he said.

"But getting the big economic decisions right to support Australian jobs is what people expect of me, no matter how uncomfortable that is politically."

Swan first announced the backdown on the budget surplus in December, and he has since confirmed revenue writedowns of at least Aus$17 billion (US$17 billion) for the 2012-13 financial year.

The Treasurer defended the government's handling of the mining-powered economy, saying Australia was in "good shape" but the high Australian dollar had dragged on the economy.

"We have outperformed every other developed economy over the past five years and we will continue to do that over the next few years," he said.

"But coming with that has been a very strong and high Australian dollar.

"And that strong and high Australian dollar has caused an unprecedented set of circumstances in terms of the tax collections for the Commonwealth Government through last year and early this year."

The high dollar has squeezed domestic industries at a time when fluctuating commodity prices due to cooling Chinese growth have seen export earnings fall.

Swan said the government planned to return to surplus, and the timeline for this would be revealed in the budget papers released on Tuesday evening.

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http://www.globalpost.com/dispatch/news/afp/130512/australian-treasurer-says-deficit-uncomfortable