It's usually the first week in November
A fresh collapse in company tax collections has increased pressure on Treasurer Wayne Swan to make cuts to preserve the budget surplus in the mid-year update due in November.
The final budget outcome for 2011-12 was a deficit of $43.7 billion, close to the May budget forecast of $44.4 billion.
But Mr Swan said the figure masked “a hefty fall of $876 million in company tax receipts”, due largely to lower corporate profits.
The drop means the government took in the best part of $1 billion less in company tax in May and June than it expected in May. Unless things pick up it suggests that each month will bring in much less company tax than budgeted for in May, destroying the paper-thin forecast surplus of $1.5 billion.
It suggests the profit-based minerals tax which began in July will also fall short of expectations.
“This will hit government revenues significantly, which makes it harder to deliver a budget surplus,” Mr Swan said. “It means we will have to find more savings. But we have a proven track record of finding responsible and measured savings which accord with Labor values - and we’ll do that again.”
“We've had big revenue writedowns and of course there are challenges to the revenues, but we will absolutely stick with our fiscal discipline.”
Finance Minister Penny Wong said Labor’s approach would be very different to that demonstrated by the Coalition in the Treasurer's home state of Queensland...
“There the Premier told the public service they had nothing to fear, and then promptly sacked 14,000 people. We don't resile from the fact you have to make difficult decisions, but we certainly take a very different approach to the one that's been demonstrated in the Coalition states and the one which Joe Hockey brags about being the one he wants to implement."
Shadow Treasurer Joe Hockey said the 2011-12 deficit was double the $27 billion forecast when that budget was delivered in May 2011. “They are patting themselves on the back because they got $44 billion. I mean this is a joke, this is a serious joke,’ he told reporters in Sydney.
Mr Hockey said the government had fudged the numbers by making the 2011-12 deficit look bigger in order to make a 2012-13 surplus look possible, but said the deception would become harder in the mid-year budget update.
“Sooner or later the rubber hits the roads when it comes to the numbers. And Labor has to account for its $120 billion of new spending promises on top of their four record deficits already,” he said.
Mr Swan would not be drawn on whether the mid-year review would be brought forward from early November, when it is traditionally delivered six months after the May budget.
“In the last three months of the year which is when it normally is,” he told a Canberra press conference, giving himself licence to deliver the update as soon as next week.
Asked whether the economy could withstand another bout of budget tightening in order deliver the surplus he said he would do what he always did - “put in place the appropriate settings for the time”.
In today's Age
. Straight talk from the IMF about that surplus: we might have to postpone it
. More tax, new taxes - Treasury prepares the way
. Future Treasurers won't thank Wayne Swan