Govt on course for 2012/13 surplus

(AAP) - Economists are confident the federal government can return the budget to surplus in three years' time, given the strength of the economy.

One even believes it could be back in the black in two years, but Treasurer Wayne
Swan doesn't support such speculation.
Mr Swan and new Finance Minister Penny Wong released the final budget outcome for
2009/10 on Friday that showed a $54.8 billion deficit, or 4.2 per cent of gross
domestic product (GDP).
The result was a $2.3 billion improvement on the $57.1 billion deficit estimated at
the time of the May budget.
"Our No 1 fiscal priority is to get the budget back to surplus in 2012/13 .... The
outcome today shows we are on track to meet that commitment," Mr Swan told reporters
in Canberra in a joint conference with Senator Wong.
But Opposition Treasury spokesman Joe Hockey questioned how the pair could proudly
face the public and announce the biggest budget deficit in dollar terms in modern
Australian history.
"This shows yet again that Wayne Swan has never, and will never, deliver a surplus
budget," he said in a statement.
But economists believe he will, or at least he should, and would mark the fastest
return to surplus since the 1960s.
"The economy only flirted with recession ... whereas the early 1980s and 1990s
episodes were full-blown recessions," Westpac senior economist Andrew Hanlan said.
He said on current policy settings the budget should be returned to surplus as
planned, "given the strength of the Australian economy".
Commonwealth Securities chief economist Craig James believes a surplus could be even
earlier.
"It is possible that the accounts will be in the black in the 2011/12 year," Mr
James said.
But Mr Swan won't have a bar of that.
"We have put our forecast out there, we stick with our forecasts," he said.
"We don't count on commodity prices staying high forever."
Mr Swan noted the irony of questions about an earlier return to budget surplus,
given that many commentators had questioned the government's ability to achieve a
surplus in 2012/13.
"It's a new paradigm," Senator Wong quipped during her first press conference as
finance minister.
The government intended sticking to a strict fiscal discipline that would put a two
per cent cap on government spending.
Fiscal discipline was at the heart of "sustainable and strong growth".
"We are a minority government, we will have to negotiate many things in the
parliament, but returning the budget to surplus is not one which the government can
negotiate," Senator Wong said.
The final budget result was due to lower than estimated cash payments of $2.6
billion, cash receipts were also lower by $249 million, while total taxation
receipts were $14 million higher than previously forecast.
But Mr Hockey queried such variations.
"The variation between the outcomes and the forecasts shows again that Treasury
forecasts cannot be taken as gospel," he said.
But CommSec's Mr James said under-estimation on the budget outcome by the Treasury
was nothing new.
"Over the last eight years, the budget result has come in better than expected," he
said.
"This suggests that Treasury will again prove too gloomy about estimates of economic
growth and the budget position over the next year."
The final outcome statement said the budget felt the full force of the global
financial crisis in 2009/10, with revenues downgraded by almost $50 billion from its
pre-crisis level.
But Australia's economic growth was now strengthening and tax receipts were recovering.