Finance Minister Penny Wong says savings in the federal government’s mid-year budget review will be fair and impact least on the most vulnerable.
The government is expected to release its Mid-Year Economic and Fiscal Outlook (MYEFO) as early as this week.
Senator Wong said yesterday the International Monetary Fund’s latest round of world economic forecasts had downgraded global growth, notably for Australia’s important trading partners China and India.
“Obviously that has an effect on the Australian budget,” she said.
But while global circumstances had changed, Australia’s national account was growing around trend, the minister said.
The government will continue its approach to offset new spending.
“We’ll take the same approach we’ve always taken, to take savings that do focus on what are priorities, what are fair savings, what are savings that least impact on the most vulnerable in the community,” she said.
Returning the budget to surplus in 2012-13 was sensible, Senator Wong said.
“You want the government at a time when the economy is growing to be putting fiscal policy back on a more normal setting, after the very loose settings that had to be in place after the global financial crisis,” she said.
“To put it simply, you want the government to give the Reserve Bank room to move when it comes to interest rates.”
Senator Wong would not rule out speculation that Defence would be the focus of budget savings once again.
“We’re very conscious that Defence has made a very important contribution to the fiscal strategy,” she said.