Federal Budget 2012: Swan will unveil $1.5 billion surplus in tonight’s “fair go” budget

The Treasurer will tonight announce a $1.5 billion surplus in the federal budget, which he says will be “a fair go budget as well” that supports low and middle income earners. 

The surplus will increase to $2 billion in 2013-14 and will continue to grow over time, Wayne Swan told Cabinet last night.

The Government says the surplus allows the Reserve Bank to cut interest rates again.

The Treasurer, however, indicated Labor might not proceed with small, planned cuts to the company tax rate because of opposition from the Coalition and the Greens.

In a doorstop interview last night, Swan was repeatedly asked whether the Government would go ahead with its 1% tax cut for small and large businesses.

“What I’m saying is that the matter of the corporate tax cut is entirely a matter for Mr Abbott and the Liberals,” said Swan.

The budget is expected to include an extra cash payment for low-income earners and pensioners, in addition to the cash payment to low-income families announced on Sunday, according to Fairfax.

Swan said his fifth budget “will show that the Australian economy walks tall in the global economy, but supports low and middle income earners at home.

“It will also show that we in Australia have done so much better than many other countries around the world and what that means for Australia is that we can have confidence in our economic fundamentals,” said Swan.

“The other point I would make is that tax as a percentage of gross domestic product or a share of the economy will be lower than in any year under the previous Liberal government.”

The Victorian Employers’ Chamber of Commerce and Industry has warned the benefit of any surplus may be limited if budget cuts dig too deep.

“From a business perspective, pressure has been eased following the Reserve Bank’s cut to the cash rate last week and, further to this, the return to surplus expected to be announced tomorrow will be pleasing,” said VECCI chief executive Mark Stone.

“However, the surplus will only be effective if the reduction in spending doesn’t weaken the economy or increase the cost of doing business.

“There are a range of potential initiatives that the Government can implement or begin to plan for to further reduce the burden of business.

“Options include announcing a framework for broader tax reform or accelerating investment in skills, education and retraining.”