Australian Economic Growth Cut, Imposes New Spending Cuts

The Australian Government has lowered its economic growth forecast to 3% from a previous forecast of 3.25% for the financial year 2012/13, according to the update to the May 2012/13 budget released by Deputy Prime Minister and Treasurer Wayne Swan on Monday.

In addition to that, the country’s trade activity is expected to decline by 8% during this financial year against a previous forecast drop of 5.75%, whilst inflation is likely to remain well controlled, the unemployment rate is expected to remain low at 5.5% in 2012.13 and 2013/14.

The Australian Government has slashed its forecast surplus for this financial year to 1.1 billion Australian dollars from 1.5 billion Australian dollars due to the lower commodity prices and dropping tax revenue.

Meanwhile as part of its austerity measures, a number of changes have been implemented in various sectors such as the private health insurance rebate will be limited to inflation, visa application fees will be increased, the baby bonus payment for the second and subsequent children will be cut from 5,000 Australian dollars to 3,000 Australian dollars, funds for Labor’s trades training centers program will be delayed, and the Medicare teen dental program will be shut down.

Swan also announced that large companies with an annual turnover of more than 1 billion Australian dollars will soon have to pay tax on a monthly rather than quarterly basis, a measure that improves government revenues through interest payments.