From the AFR comes some old news but worth repeating:
Treasury will have to look for up to $12 billion in savings this financial year if the Gillard government is to deliver its promise of returning the federal budget to surplus in 2012-13, an analysis by Macquarie Bank has found.
Treasurer Wayne Swan forecast a budget surplus of $1.5 billion for 2012-13 in this year’s May budget but Macquarie analysts have found the commodity forecasts underpinning the surplus have deteriorated over the past three months, putting the government’s budget surplus promise in jeopardy.
The Treasury forecast the terms of trade would fall by 5.75 per cent this financial year but Macquarie has estimated that by the end of 2012, the terms of trade will be about 10 per cent lower than Treasurer expected.
“Being conservative … the government could easily be searching for $10 billion in savings … to make up the potential revenue shortfall,” Macquarie Economics Research said in its Budget Update published on Tuesday.
Regular readers will note that they had these estimates weeks ago. It’s important to note, however, that they are based upon commodity prices not getting worse, which is quite possible, or better, which is less likely.
