mead cohen berger shevtsova garfinkle michta grygiel blankenhorn
Bad Budget News Down Under

Australia’s Prime Minister Julia Gillard might want to start putting her resume together. Australia fiscal outlook was revised downward substantially today, and it’s bad news for Gillard and the ruling Labor party. The AP reports:

Australia’s government said Monday that its tax revenue has continued to fall in recent months as company profits declined and the mining boom that kept the nation out of recession cools.

Prime Minister Julia Gillard said revenue for the fiscal year ending June 30 will be 12 billion Australian dollars ($12.4 billion) less than the Treasury Department forecast in October when a slender budget surplus of AU$1.1 billion was predicted.

The struggling PM was already facing a tough fight as her party, riven by internal struggles, trailed its opposition in the polls. This news won’t help; tax revenue from the mining industry is falling, leaving Oz to face a budget deficit and some spending cuts. This is not what you want to tell the voters as the election approaches.

[Julia Gillard image courtesy of Getty Images]

Features Icon
show comments
  • Andrew Allison

    The latest example of spending a windfall (mining) rather than putting some of aside for a rainy day?

    • crocodile chuck

      The Labour gov’t (under Rudd) was in the process of establishing a ‘super profits tax’ on minerals. The mining co’s spent A$22M on a vicious campaign against this. It cost Rudd his office, and the tax was watered down such that it collects nothing NB 85% of shareholders of the two biggest global miners are offshore.

    • Jim Luebke

      Mining is pretty regular, for Australia. As long as the world economy is going, they export raw materials.

  • BrianFrankie

    As an Australian resident, I can report that this is indeed big news, dominating the news cycles for the past few days. It does provide an interesting contrast to the US and Western Europe, where large deficits seem to be accepted almost as a matter of course. Australia still expects its government to actually balance their budget, and citizens get upset when it does not. Very refreshing.

    This deficit is a function of several trends. First and foremost, reckless government spending on all sorts of entitlements has ballooned the liability side of the ledger, and it is unclear whether there will be an ability to ramp back these very politically popular spending provisions. But almost as importantly, the government over the past three years has instituted several new taxes. Specifically, they increased the mining royalty tax, and passed a greenhouse gas tax. These combined new expenses have sidelined some new mining projects, and also curbed production from existing projects, resulting in tax revenues falling short of anticipations. Same old story, repeated in so many different places at so many different times it is a wonder it retains the ability to surprise anyone.

  • teapartydoc

    Granholm II.

© The American Interest LLC 2005-2016 About Us Masthead Submissions Advertise Customer Service