Australia to reveal Monday how it plans to ensure budget surplus

CANBERRA: The Australian government will outline the extent of savings it needs to make to deliver on its promise of a budget surplus for the year to next June when it releases a mid-year budget update on Monday amid falling commodity prices.

Australia has delivered consecutive budget deficits since 2008 due to stimulus spending to help Australia avoid recession after the global financial crisis.

It faces elections in the second half of 2013 and is determined to restore the budget to surplus to head off opposition attacks on its economic credentials.

Treasurer Wayne Swan said he would announce "significant" savings in the Mid-Year Economic and Fiscal Outlook to offset lower than expected government revenue as a result of renewed weakness in the global economy and lower commodity prices.

"The toughest conditions in the global economy in generations have cut a swathe through traditional sources of revenue," Swan said.

"And the renewed weakness in the international economy combined with lower-than-expected commodity prices has further hit revenues.

This will require more savings to be found in our budget."

In its May budget, the government promised it would return a surplus of A$1.5 billion ($1.5 billion), or 0.1 percent of gross domestic product, by mid-2103.

Since May, government revenue has been hit by falling commodity prices, a slowdown in the economies of its major trading partners and lower-than-forecast revenue from its controversial tax on coal and iron ore profits.

China's slowing economic growth has cut once red-hot demand for Australia's resources. Iron ore prices have fallen around 15 percent, thermal coal by 9 percent and coking coal some 30 percent since the mining tax was launched in July, placing pressure on the budget forecast that the tax would provide an estimated $13.4 billion over its first four years.

Miners including BHP Billiton, Rio Tinto and Xstrata have shelved expansion plans and cut production.

Swan didn't provide any detail of the proposed savings cuts or revisions to forecasts made in May but reaffirmed a commitment to returning a surplus.

Finance Minister Penny Wong said in an interview with Sky News on Sunday that although global circumstances had changed, the Australian economy was still growing "at around trend growth".

"And in those circumstances, what you want to do is bring the budget back to surplus."