Australia's government on Tuesday unveiled an election-focused budget to shore up economic growth amid a rocky transition from dependence on mining, doling out tax cuts for individuals and businesses. The annual announcement came as the central bank slashed interest rates to a new record low of 1.75 percent, following recent unexpectedly weak consumer prices, in order to stimulate the economy. "This cannot be just another budget because these are extraordinary times," Treasurer (finance minister) Scott Morrison told parliament in Canberra in a prepared speech. "Australians know that our future depends on how well we continue to grow and shape our economy as we transition from the unprecedented mining investment boom to a stronger, more diverse, new economy... This is a very sensitive time." While Australia has avoided a recession for 25 years and is one of only a handful in the world with triple A credit ratings, growth in non-mining industries has so far failed to fill the gap left by a massive resources investment boom. Australia has been hurt by waning demand from its largest trading partner China and falling commodity prices, with soft wages growth also squeezing government revenue. The economy grew 3.0 percent last year, but was forecast in the budget papers to slow to 2.5 percent expansion in 2016-17. The government said the 2016-17 deficit was estimated to come in at Aus$37.1 billion (US$28.1 billion), or 2.2 percent of GDP, with Morrison touting a need for Australia to "live within our means." Morrison and Prime Minister Malcolm Turnbull were delivering their first budget. They are trying to balance the need to rein in the deficit and debt while driving growth in jobs and the economy. The treasurer said two key revenue-generating measures — a crackdown on tax avoidance by multinational firms and an increase in cigarette excise — would raise Aus$3.9 billion and Aus$4.7 billion respectively over the next four years. But with an eye on national polls expected in July, he said the new revenue would not be banked by the ruling Liberal-National coalition if it stayed in office, but used to fund tax cuts for companies and individuals. Corporate tax rates would be slashed over the next decade, with small businesses the first to benefit from the lower rates, while the middle tax bracket for individuals was raised. Some Aus$2 billion would be invested in water infrastructure projects and Aus$3.4 billion allocated for urban rail projects, Morrison added in a budget he called "a practical, targeted and responsible economic plan."
