The fed gov lowered its growth forecast and will make more than $16 billion in savings to return to surplus.
THE Government will raid private health insurance, the baby bonus, company tax payments and even lost bank accounts to plug a $16.4 billion hole in its spending plans.
Treasurer Wayne Swan today released a progress report on the Budget delivered in May which revealed a huge fall in tax receipts.
This meant the Government would have to find $4 billion in savings over the remaining eight months of 2012-13, and further spending cuts for the following three years.
Even with the outlined cuts contained in a mini-budget released by Mr Swan, the forecast 2012-13 Budget surplus of $1.5 billion was reduced to a slender $1 billion.
The last Budget projected the surplus would rise to $7.5 billion over four years, but this has been lopped to $6 billion.
Mr Swan said the fallout from economic "storm clouds'' in Europe, Asia and the United States has made returning the budget to surplus much harder.
"It's pretty obvious to all that ... this mid-year review has been put together amid storm clouds which are hanging over the global economy,'' he said.
Wayne Swan and Penny Wong hold joint press conference in Canberra Picture: Ray Strange
"This lower global growth outlook has had another very big whack at government tax revenues and has made it harder to deliver a surplus.''
Mr Swan said anyone who suggested Australia is immune from the global fallout is "kidding themselves''.
The Government is determined to maintain a surplus of some dimension as a matter of economic and political principle, but it will be picking some unwanted fights to muster the necessary savings.
Individuals will be hit this year and over the coming three years.
The Private Health Insurance Rebate will be pegged to the CPI increase - the inflation rate - or the rise in commercial rate, whichever is lower. The Government hopes to save $700 million from this measure.
Treasurer Wayne Swan has tweetedhe'll deliver a $1bn surplus in the mid-year budget. File picture: Kym Smith
Mr Swan said the rebate currently cost $5 billion a year and was growing rapidly so that the bill could reach $8 billion by 2022.
He denied he was trying to get rid of the rebate by stealth, following means testing in the Budget.
Further, the rebate will no longer cover any of the two per cent penalty levied on those who do not take out private health cover after age 30. That is expected to bring in an extra $398 million.
The Baby Bonus will be cut back for a $500 million saving. Presently, second and third children receive the $5000 granted for a first child. But this will be cut to $3000.
"After the first child you have bought the cot, the pram, and the other items you can use again,'' Mr Swan told reporters.
The Government also is concerned that the scheme might not be affordable without restrictions as it has grown by about 70 per cent over almost a decade.
And it needs money for other spending demands, in particularly the extra costs of off-shore processing of asylum seekers, extra school funding, and the start of a National Disability Insurance Scheme.
The MYEFO shows there will be an increase in payments of about $1.2 billion for immigration-related programs in 2012/13 - "mainly owing'' to higher-than-expected numbers of boat arrivals.
The figure includes the "consequential impacts'' of an extra 6250 places in the refugee intake and an increase in the family reunion stream of the migration program.
The government says it will provide $54.6 million over four years to increase the family reunion stream by 4000 places from 2012/13 onwards.
The blow-out also reflects the "forecast impact'' of government policies for offshore asylum seeker management.
The MYEFO mentions the capital costs involved in re-establishing the asylum seeker processing centres on Nauru and Papua New Guinea's Manus Island, but details are scant.
"Expenditure for this measure is not for publication as the contracts to build these facilities are currently subject to commercial negotiations,'' the MYEFO papers say.
To offset some of these costs, the government will increase a number of visa application charges for skilled graduates, partners, working holiday makers and temporary workers.
The measures are estimated to increase revenue by about $520 million over four years.
The biggest single block of savings will come from making big companies pay their tax monthly rather than quarterly. Getting hold of the cash earlier is expected to save the Government $8.3 billion over four years. It will start with companies having a $1 billion turnover in January, 2014.
Company tax receipts are down some $13.5 billion, largely because of the slump in commodity income - particularly a 30 per cent dive in iron ore prices, now partially recovered - following the end of the mining price boom.
State governments will this financial year have to endure a $765 million reduction in specific grants which Mr Swan said was part of an agreed indexation scheme rather than a distinct cut.
The Treasurer said the indexation scheme meant payments to states fell as Commonwealth tax revenue fell.
The length of time banks must keep unclaimed deposits before handing the money over to the Government has been reduced from seven years to three years, with the Government hoping for a $300 million windfall in 2013-14 alone.
The decline in mineral prices on the global market means the Government's mining tax - the Mineral Resources Rental Tax - will collect about $9 billion over four years instead of the forecast $13 billion.
This will not affect the Budget's bottom line but could prevent the Government delivering on promises it said the tax would fund, including tax relief for small business.
Mr Swan said the reduced spending drive would not slow the economy or the most vulnerable, and he said Opposition Leader Tony Abbott would not be able to promise the same.
"And there's a very clear contrast between what we've done here and the slash and burn cuts that have been made by state governments around this country,'' said Mr Swan.
"Or will be made by Mr Abbott as he faces up to the fact that he's got a $70 billion crater in his budget bottom line.''
The hospitality industry, already suffering from the high Australian dollar which is keeping visitors away, is furious that the Government today increased the cost of tourist visas.
The Australian Tourism Export Council said backpackers and other elements in the price-sensitive youth market would decide against an Australian visit.
Mini-budget comes under attack from all sides
The Government has a ''cook-the-books surplus'' and will never produce a real one, Opposition Leader Tony Abbott said today in a scathing attack on the Government's mini-budget.
''This is plainly another instance of fiscal fiddling to get the Government out of a jam,'' he said.
But the Opposition has held off declaring its support or rejection for legislation which would be needed to implement the mini-budget measures.
Mr Abbott said families would suffer so the Government can look better, a reference to changes to the Baby Bonus and the Private Health Insurance Rebate.
He said Treasurer Wayne Swan had a political strategy and not an economic one when he pledged an election year surplus of just $1.1 billion.
''This is a Government that will never ever deliver an honest Budget surplus,'' Mr Abbott told reporters.
Shadow Treasurer Joe Hockey said there was no plan to fund some $120 billion in Government promises.
He said the Government would need an extra $30 billion in tax revenue this year alone.
Business has been quick to criticise the mid-year Budget recasting.
There are ''clear risks in calling on business to provide the lion's share of the savings,'' said Australian Industry Group chief executive Innes Willox.
''The biggest contribution to the savings announced today is the earlier payment of company tax by large businesses from the start of 2014,'' said Mr Willox.
''This will detract from cash flows and will impose higher compliance costs in 2014-15 and beyond.
''At a time when the economy is slowing and profitability is falling, this over-emphasis on squeezing more out of companies will detract from the business community's ability to get on with the job of reinvesting and creating employment opportunities.''
Australian Greens leader Christine Milne claims the government's forecast budget surplus has been built on the back of education cuts and not boosting help for the poor.
Senator Milne says the government's failed to deliver a $50 increase in the Newstart allowance and remains committed to cutting back single parent support.
She says Australia's lost being the clever country and the caring country and says the most vulnerable are being driven closer to poverty.
Senator Milne said the Greens will consider any legislation arising from MYEFO on its merits, but would not immediately commit to passing any of the changes.
- with AAP
Check back for updates on the MYEFO
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