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The federal government has lowered its forecast for growth and will make $16.4 billion in new savings over four years to return the budget to surplus.
Treasurer Wayne Swan today released an update to the May 2012-13 budget, laying out changes to the baby bonus and the way big companies pay tax, as well as further reforms to private health insurance.
Mr Swan said that while Australia’s economic fundamentals remained strong, worsening global conditions had cut almost $22 billion from tax receipts over the forward estimates and $4 billion alone in 2012-13.
‘‘The weaker global outlook and lower than expected commodity prices, along with the general easing of price pressures in the economy, are again slowing the recovery in tax revenue,’’ Mr Swan said in a statement.
The domestic growth forecast has been cut since the May budget. Real gross domestic product (GDP) is now forecast to grow at around trend, at 3 per cent in 2012-13 and 2013-14.
This is a downgrade of one quarter of percentage point since the May budget. Australia’s terms of trade is also forecast to worsen, declining by 8 per cent this financial year compared to a previous forecast fall of 5.75 per cent.
But unemployment rate is expected to remain low at 5.5 per cent in 2012-13 and 2013-14, while inflation is likely to remain well-contained.
‘‘The government has responded to the more challenging global outlook by delivering $16.4 billion in new savings over the forward estimates,’’ Mr Swan said. ‘‘These savings strike the right balance, minimising any impact on the economy and on the community’s most vulnerable, while still maintaining strong public finances.’’
The government also cut its forecast surplus for this year to $1.1 billion, from $1.5 billion. But it raised the surplus for 2013-14 to $2.2 billion, from $2 billion.
As part of its savings measures, private health insurance (PHI) rebate costs will be reformed further.
From 1 April 2014, the premium to which the rebate is applied will move in line with consumer price index, or the commercial premium increase, whichever is lower.
The rebate as it currently applies will remain unchanged.
Mr Swan said this will save about $700 million over the forward estimates and ensure the rebate remains on a sustainable footing.
Further long-term savings include changes to the Baby Bonus and removal of concessional treatment for ’in-house’ fringe benefits if they are accessed through a salary sacrifice arrangement.
There will also be changes to the way large companies pay their tax, moving from quarterly to monthly installments.
The government said this will better align tax payments with the way businesses pay GST and make payments closer to when the income is earnt, like wage and salary earners.