Treasurer Wayne Swan will look to win back or axe some of Australia’s climate programs to find the savings needed to return the Budget to surplus next year.
The West Australian understands Treasury has identified overlap in some of the 230-plus Federal and State programs aimed at encouraging reduction in carbon emissions.
Mr Swan and the expenditure review committee have signed off on the cuts, for release at the time of the mid-year Budget review, due within a fortnight.
So significant are the proposed savings, it has been dubbed “a mini-Budget”, the first since the Hawke government’s similar move in 1989.
Some of the savings are believed to be in climate programs, potentially in the incentives offered to households installing solar photo-voltaic cells on their roofs.
The Productivity Commission found in June that State-based feed-in tariffs paid to homes with solar arrays “overlapped completely” with the target to have 20 per cent of the nation’s energy needs from renewable sources by 2020.
“They (feed-in tariffs) did not lead to any additional abatement and only added to the total financial costs of meeting the target,” the commission found.
The uncertainty caused by the European debt crisis has led to Treasury downgrading projected revenues, beyond the estimated $130 billion write-down forecast at the May Budget, putting the return to surplus in 2012-13 in peril.
The Government is desperate to achieve the return to surplus to rebuild voters’ trust.
However, ministers also believe that big savings would give the Reserve Bank greater opportunity for another cut in official interest rates.
Speaking in Hawaii yesterday, Prime Minister Julia Gillard said that though the global economic circumstances had made returning to surplus more difficult, the Government remained committed to the task.
The final Budget figures for the 2010-11 year showed a fall of about $2 billion in tax revenue in the final months of that financial year.
Although the economy is growing, key sectors, particularly retail, continue to struggle.
Figures out yesterday showed the average balance on the nation’s more than 14 million credit cards fell by $10.30 in September.
The average balance is now growing at its slowest pace in 17 months in confirmation that consumers are holding on to their cash.
