SYDNEY – Australia’s budget woes deepened Tuesday, with the government downgrading revenue forecasts by a further 5 billion Australian dollars ($5.1 billion) as the nation’s mining boom comes off the boil.
Finance Minister Penny Wong said government income was now expected to be AU$17 billion less than originally expected due to the strength of the Australian dollar despite softer commodity prices.
“The Treasury and the government are facing the challenge of a situation which has not really happened before, and that is the dollar staying stubbornly high despite what we call the terms of trade — that is, the prices of the things we sell to the rest of the world — coming off,” Wong said. “That rather unusual set of circumstances is driving this very large shift in profits, the downward shift in profits. So firms are earning less profits and therefore a reduction in revenues to government.”
It is the second substantial increase in estimated writedowns unveiled by the center-left Labor government in as many weeks, with Prime Minister Julia Gillard on April 29 upgrading the shortfall from AU$7.5 billion to AU$12 billion.