Big savings needed to reach surplus: Swan

14 Oct 2012, 4:55 pm   -   Source: AAP

Treasurer Wayne Swan says the government needs to find large savings to counteract more revenue shortfalls, so it can deliver a budget surplus this year.

Treasurer Wayne Swan says significant savings are needed to offset further revenue writedowns for the federal government to deliver a budget surplus in 2012/13.

He says challenges from the high Australian dollar and a change in consumer behaviour are having an impact on the local economy and hence the federal budget.

"The weaker global outlook and recent decline in commodity prices will also hit our budget revenues significantly," Mr Swan said in his weekly economic note on Sunday.

"These headwinds mean we'll have to find some substantial savings to return the budget to surplus in 2012/13, but we remain committed to doing just that."

Treasury has forecast a thin $1.5 billion budget surplus for 2012/13, a turnaround from a $43.7 billion deficit in the previous year.

Health Minister Tanya Plibersek said all government departments, including her portfolio, would have to find money in the mid-year budget update expected for release before the end of November.

Ms Plibersek said savings could be found in administration, while not cutting front-line health services.

"When you make savings, there's good ways to making savings and bad ways if you target waste and mismanagement," she told Network Ten.

But Australian Greens leader Christine Milne said the government should be more flexible in returning the budget to surplus rather than for a political objective.

"The surplus is getting ridiculous in the discussion of the economy because we've already seen public servants losing their jobs. We had 4000 public servants lose their jobs federally last year," Senator Milne told Sky News.

Mr Swan said delivering a surplus was the best defence for Australia amid worries over the global economy.

"(It) shows we are committed to responsible budget management," he said.

He said the global economic outlook remained uncertain, with the International Monetary Fund (IMF) last week lowering its forecasts for world growth this year and next.

The IMF also upgraded Australia's growth in 2012 to 3.3 per cent, from three per cent, but lowered the outlook for the following year to three per cent, from 3.5 per cent.

"We've outperformed our peers by a long way in recent years and we're expected to continue to outperform them in the years ahead," Mr Swan said.

Mr Swan has been in Tokyo for the annual meetings of the IMF and the World Bank.

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