Australia flags tough budget due to floods

Massive floods that hit Australia this year helped slash US$4.75 billion from national revenues, Treasurer Wayne Swan said Sunday as the government promised a tough and potentially unpopular budget.
The centre-left Labor government of Prime Minister Julia Gillard has already signalled spending cuts in the May 10 budget, in part due to the unprecedented floods that hit coal exports and destroyed key transport infrastructure.
Swan said the deluge which flooded much of coal-producing Queensland state and swamped farmland in Victoria, had combined with muted consumer sentiment, a strong Australian dollar and a weaker-than-expected share market recovery to force officials to revise the revenue forecasts announced in November.
"Besides the terrible hit to our communities, the floods and cyclone have had a substantial impact on our economy and government tax receipts," Swan said in his weekly economic note.
"The summer's natural disasters, continued consumer caution, the subdued recovery in household wealth, and the higher dollar are all weighing heavily on government revenues."
Figures revealed Sunday showed that national tax collections for the first eight months of the financial year -- which begins in on July 1 in Australia -- were down some Aus$4.5 billion ($4.75 billion) on forecasts.
Personal income tax collections were about Aus$1 billion lower and business tax collections some Aus$3 billion lower than expected, Swan said.
Swan made no mention of where cuts might fall when he delivers the budget, but Finance Minister Penny Wong said the "hit on revenue" would have an impact on how the government drew up its fiscal plans.