SYDNEY: Australia’s central bank governor called on the nation’s politicians to tackle the “real issue” of the country’s growing budget deficit, saying action was needed to retain credibility in financial markets.
Treasurer Joe Hockey is expected to unveil a further blowout in the government’s federal deficit in his mid-year economic and fiscal outlook tomorrow, with some estimates of a Aus$5bn ($4.1bn) increase to Aus$35bn.
Government revenue has been hurt by sharp declines in commodity prices in a resources-driven economy where iron ore is the country’s largest export.
Weakening demand from Australia’s largest trading partner China has also weighed on growth.
“I think much of the public debate about the fiscal position still is carried on as though that reality isn’t actually real,” Reserve Bank of Australia chief Glenn Stevens told The Australian Financial Review.
Stevens said there has been an “over-simplification” in debates about the government deficit, which saw the Tony Abbott-led administration unveil a tough budget in May that seeks to cut back spending and welfare. AFP
