Treasurer Joe Hockey is set to announce that the federal budget deficit will almost double to $100 million over the next four years.
Six months ago the budget deficit was estimated to be $60 billion but this figure will increase by about $32 billion as a result of harsher tax forecasts, while a further $8 billion will come from revised savings overhauled in the Senate, The Australian reports.
The budget balance for the current financial year will roughly be $40 billion in the red.
Hockey said he wants the Government’s budget to be a “shock absorber” for the forecast decline in the terms of trade this year, the greatest fall since records were first kept in 1959.
Yesterday the Treasurer was adamant he had never set a target date for surplus, but substantial new spending cuts would almost certainly push back the possibility of balancing the budget by 2018/19.
Hockey told The Australian that total government cash receipts for 2014/15 would suffer a writedown of $21.7 billion to $379.5 billion, compared to the previous Labor government’s estimate of $401.2 billion.
The Treasurer said the writedowns in tax revenue come from lower company tax forecasts, while there was “lower income growth, due in part to falling export income compared to what we were expecting”.
The government planned to release its Mid-Year Economic and Fiscal Outlook (MYEFO) today, however this has been postponed until 1:30pm due to the siege in Sydney’s Martin Place.
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