THE NEWS WRAP: Australia set for a decade of government deficits

Australian state and federal government deficits are set to reach 4% of GDP, or $60 billion in real terms, unless governments make tough cuts to “share the pain”, according to as assessment by the Grattan Institute.

“Everyone will have to share the pain [in order to get the budget back into surplus]. Victoria’s Kennett [government] showed what could happen in the early 1990s. It was explicit about saying that everybody was going to have to share in bringing the budget back into surplus.”

The dire assessment comes after Treasurer Wayne Swan revealed $7.5 billion has been wiped off federal government revenues since October, striking a “sledgehammer blow” to the federal budget.

“We have seen the terms of trade come down but the dollar didn’t move. That’s caused a hit, if you like a sledgehammer, to revenues in the budget since the mid-year update of something like $7.5 billion. And of course the impact won’t just be in this financial year. It will also be across the forward estimates,” Swan said.

Billabong to reveal its fate tomorrow

Billabong is expected to make a major announcement tomorrow as it wraps up takeover negotiations with its former US head, Paul Naude, and private equity firm Sycamore Partners.

At 60 cents a share, Naude’s bid falls well below both the $1.10 bid the consortium initially offered in December and the $3.30 a share bid from private equity firm TPG in February last year, which Billabong rejected.

Earlier this month, Billabong announced it would give Naude and Sycamore Partners 10 days exclusive access to the company’s accounts for due diligence.

Target pursuing Texan company over counterfeit MAC makeup

Wesfarmers-owned retail chain Target is pursuing Mudd Puppy Cosmetics and its owner, Marcy Dickerson, through US courts in order to identify how the company obtained its MAC cosmetics range.

The legal action comes after Target was forced to remove its MAC products from shelves after the cosmetics line’s owner, Estee Lauder, launched legal action against the retailer for allegedly selling counterfeit products.

Overnight

The Dow Jones Industrial Average closed up 0.07% on Friday to 14,547.51. The Aussie dollar is down to US102.59 cents.