Australia’s Federal Finance Minister, Senator Penny Wong, has said the minority Labor government isn’t about to launch into a spending spree to garner votes for the federal election, planned for September.
Addressing a conference in the Victorian state capital, Melbourne, Senator Wong said it was critical Australia had a strong budget if it was to be successful in the Asian Century.
“We cannot allow ourselves to be deterred from this medium-term fiscal strategy even in an election year,” Senator Wong told the Asialink business lunch.
However conservative Liberal shadow treasurer Joe Hockey said he had serious doubts Labor Treasurer Wayne Swan would deliver an “honest” budget in May.
Senator Wong said this week’s national accounts highlighted the resilience of the economy, expanding by 3.1 per cent through 2012, even though the prospects in most western nations were poor.
The growth result was supported by a jump in exports during the December quarter, but economists said new data suggested that might not be repeated during the March quarter.
The Australian Bureau of Statistics said the monthly trade balance deteriorated to a seasonally adjusted deficit of $1.06 billion in January after a revised $688 million deficit in December, and compared with a $500 million trade gap forecast by economists.
Trade minister Craig Emerson attributed the drop in bulk commodity volumes to this summer’s floods in Queensland and cyclones in Western Australia.
He also pointed to a 5.4 per cent increase in capital goods imports as a sign of expanded productive capacity in the economy.
“Australia’s underlying trade performance remains healthy,” Dr Emerson said in a statement.
“However, the extreme weather of Australia’s summer and continued weakness in the global economy will influence monthly totals.”
He said in 2012, metal ore shipments dropped $1 billion in the month of the Chinese New Year.
“If this is repeated, we could see the deficit widen significantly in February, but this should be temporary,” Mr Pontoh said.
However, there was more positive news for the construction industry, with expansions in house building and engineering contributing to the sector’s strongest result since June 2010.
The Australian Industry Group-Housing Industry Association performance of construction index increased 9.4 points in February, but remained below the crucial 50-point mark that separates contraction from expansion, at 45.6 points.
“While it is only one month’s reading and comes after more than two and a half years of decline, the pick-up in house building activity is very welcome news,” Ai Group director of public policy Peter Burn said.