By Dow Jones Business News, March 17, 2013, 02:52:00 AM EDT
By Rhiannon Hoyle
SYDNEY--Australia is facing a significant hit to government revenues as weaker commodity prices and a high domestic
currency take their toll, Treasurer Wayne Swan said Sunday, describing it as one of the country's biggest economic
The nation's terms of trade--the price it receives for exports compared to the price it pays for imports--has been
under pressure over the past 12 months as the value of the commodities it exports, like iron ore and coal, have fallen.
The strength of the Australian currency, which trades near historical highs above parity with the U.S. greenback, has
meanwhile continued to create hurdles for exporters.
"While Australia's economy walks tall in the world with solid growth...we are not without our challenges when it comes
to securing our future," Mr. Swan said in a weekly economic note. He said the persistently high currency "has
contributed to subdued price pressures and weaker profitability across the economy, which means that nominal gross
domestic product--the value of the goods and services we produce--has grown more slowly than real GDP for three straight
quarters." This is unprecedented since records began, he added.
A monthly report released by the government Friday showed revenue was about 6 billion Australian dollars (US$6.2
billion) lower in the first seven months of the fiscal year than had previously been forecast. Mr. Swan said this had
largely been the result of lower corporate profits.
"One of the big challenges we face is a massive hit to government revenues," Mr. Swan said in the note. He said the
global economic outlook also remains "highly uncertain."
Mr. Swan meanwhile said Australia would push for international action on tax reform, in a bid to tackle so-called "
profit-shifting," where multinational companies shift their cash to different jurisdictions in a bid to avoid high tax
The issue will be a key focus when Australia hosts the Group of 20 meeting of finance ministers and central bankers in
Brisbane next year, he said.
Write to Rhiannon Hoyle at email@example.com
(END) Dow Jones Newswires
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