Canberra - The Australian government Tuesday unveiled a budget it said would support small businesses and promote jobs growth as it sought to stimulate a flagging economy hit by slumping commodity prices.
The budget shifted away from a focus on reining in a huge deficit after harsh cuts to welfare, education and health sparked a voter backlash last year and triggered a challenge to Prime Minister Tony Abbott's leadership.
Instead, the government will roll out a Aus$5.5 billion (US$4.4 billion) small business package, mostly tax cuts, to stimulate investment in the sector, as well as a Aus$4.4 billion boost to funding for family-focused policies such as childcare.
"In this budget, whilst we are continuing with a credible path of fiscal consolidation of around half a percent of GDP per year, we are mindful that we continue to deal with some headwinds, but we are coming through the most difficult days," Treasurer Joe Hockey said.
"The Australian economy is going to grow faster. The deficit is coming down."
The budget papers showed that forecast tax receipts had been cut by Aus$52 billion over the four years to 2017-18, driven by an almost 50 percent fall in the price of iron ore -- Australia's biggest export -- and weak wages growth.
But the treasurer said despite the hit to revenue, the budget deficit was expected to come in at Aus$35.1 billion, or 2.1 percent of GDP, in 2015-16, below analysts' expectations of more than Aus$40 billion.
The government also continued to forecast a return to surplus by 2019-20.
Australia has struggled to rebalance away from a dependence on mining as an unprecedented resources investment boom helped the economy avoid a recession for more than two decades.
Unemployment has edged up over the past year, peaking at an 11-year high of 6.3 percent in January. Consumer and business confidence were soft on economic concerns.
The central bank has sought to stimulate growth by cutting interest rates to a new record low of 2.0 percent at its last meeting.
The government forecast that the jobless rate could rise to 6.5 percent in 2015-16 before declining to 6.25 percent the following year.
Economic growth was projected to remain below-trend at 2.75 percent in the coming financial year before lifting to around trend growth of 3.25 percent in 2016-17.
Despite the multi-billion dollar spending measures, Capital Economics' Paul Dales said the stimulatory policies were insufficient to boost growth.
"The treasurer has decided to turn his back on the economy and not provide a helping hand," he said in a note, adding that when last year's and this year's budgets were combined, expenditure was reduced rather than increased.
AFP
