Government unveils $44.7billion underlying deficit: Midday roundup

The Federal Government has unveiled a smaller underlying deficit of $44.7 billion, prompting Federal Treasurer Wayne Swan to laud Australia’s public finances as “among the strongest in the developed world.”

“That’s despite the impact of the global financial crisis, the devastating natural disasters earlier this year and the impact of the high Australian dollar on revenue,” Swan said.

He reaffirmed the Government’s commitment to return the budget to surplus in 2012-13 despite expectations that revenue would weaken as global turmoil continues.

Finance Minister Penny Wong said 2010/11 saw the first decline in real spending growth in more than 20 years.

Swan says a change to GST not going to happen

Federal Treasurer Wayne Swan says changing the GST would be “a lazy solution” amid calls for a broadening or increase in the consumption tax ahead of next week’s Tax Forum.

“It’s not a path the government is going down and I’m absolutely proud to say that,” Swan said this morning.

“But I for one, as treasurer of this country, will not stand by while someone wants to argue a case that any change in business taxation has to be paid for directly by the punters of Australia,” he said.

“The government rejects that position.”

Share market opens flat after moderate US lead

The Australian share market opened flat this morning after a positive lead from the US, where investors regained composure after the German parliament approved a European bailout package.

The benchmark S&P/ASX200 index was up 16.2 points or 0.4% to 4024.5 at 12.00 AEST while the Australian dollar fell slightly to $US0.97c.

AMP shares rose 1.56% to $3.91, Commonwealth Bank shares gained 0.53% to $45.75, Westpac shares fell 0.58% to $20.43 and NAB rose 0.41% to $22.59.

In the US the Dow Jones Industrial Average rose 143 points or 1.3% to 11,153.

German support for boosted Eurozone bailout fund heartens markets

Overnight Germany approved boosted powers for the Eurozone bailout fund, dimming fears that the country will stop supporting debt-laden countries in the zone.

Under the new deal the $614 billion fund will be able to buy government bonds and lend money to banks and governments before crisis hits.

“This shows the clear determination of the coalition on this issue,” Rainer Bruederle, the Free Democrats’ parliamentary leader is quoted saying.

“We have made an important decision for Europe,” he says.