Australia’s government will end 23 years of spending growth to ease inflation from the biggest mining-investment boom in the nation’s history and plans measures to help companies hurt by a record-high currency.
The underlying cash deficit will narrow to A$22.6 billion ($24.4 billion) in the 12 months to June 30, 2012, less than half the A$49.4 billion gap this financial year, Treasurer Wayne Swan said in Canberra today. The government plans A$22.2 billion in savings over the next four years that it projects will help deliver a A$3.5 billion surplus in 2012-13.
“With the investment pipeline ramping up and unemployment falling, the boom will test our economy and our workforce, and price pressures will reemerge,” Swan told parliament. “The dollar is around post-float highs and this makes it difficult for some sectors, particularly those that compete in international markets.”
The currency soared 20 per cent in the past year as surging iron ore and coal shipments to China and India spur investors to bet the Reserve Bank of Australia will raise interest rates to contain inflation.
