1 Feb 2009

Australian budget deficit inevitable - Treasurer

11:30 am on 1 February 2009

Australian Treasurer Wayne Swan says the global downturn means a budget deficit is inevitable.

Because of the downturn in the mining boom and the Chinese economy, he said Australian company tax receipts were expected to be down $A50 billion over the next four years.

Mr Swan told the Nine Network that would result in a very big hit to the budget bottom line and a temporary deficit was "inevitable."

Since September, the government has spent around $A48 billion in stimulating the economy with a promise to create around 240,000 jobs and to save another 250,000.

The Reserve Bank of Australia is expected to make another substantial cut in the interest rate on Tuesday. It is currently 4.25% - the lowest in six and a half years.

Surplus revised downwards

In November, the Government revised its expected budget surplus from $A22 billion to $A5 billion.

Finance Minister Lindsay Tanner said on 23 January the Budget was still in surplus.

However, the ABC reported many economists believed the Budget had already slipped into the red.