Tuesday, 6 June, 2023

Australia eyes first budget surplus in 15 years

CANBERRA: Resource-rich Australia is projecting its first budget surplus in 15 years, the country's treasurer said Tuesday, heralding a commodities-fuelled victory for the year-old centre-left government.

"We are now forecasting a surplus this year, smaller deficits after that," Jim Chalmers told media, hours before unveiling what is expected to be a Aus$4 billion (US$3.6 billion) surfeit, reports AFP.

Chalmers touted the "biggest budget turnaround on record" as evidence of "responsible economic management", as his party seeks to define itself as careful custodians of the public purse.

The Labor party came to office in May 2022 after nearly a decade of conservative rule that saw state coffers strained by the Covid-19 pandemic, sweeping tax cuts and soaring defence spending.

A conservative government led by Scott Morrison promised a budget surplus in 2020 but was unable to deliver due to the pandemic.

Australia last posted a budget surplus in 2007, a year when the iPhone was first launched and conservative John Howard was still prime minister.

The projected surplus for this financial year will be delivered thanks in part to rising tax income -- caused by record-low unemployment -- but above all sky-high commodity prices.

Vast and sparsely populated, Australia is teeming with ores, fuels and minerals that have sustained decades of almost unbroken economic growth.

The country is a leading exporter of iron ore, which reached an all time price high in 2021, and coal, which reached record soon after.

In March, iron ore prices were more than double what the government had initially forecast -- as traders eyed increased demand from China as it reopens its borders.

Decades-old efforts to diversify Australia's economy away from resources that are dug or pumped from the ground have come to little.

Iron ore, coal and gas remain the country's three largest exports, even as countries worldwide rush to decarbonise.