Fed: Budget slips further into red as expenses rise

00-00-0000
Fed: Budget slips further into red as expenses rise

By Jim Hanna, Economics Correspondent

CANBERRA, Feb 15 AAP - The federal Budget slipped further into deficit at the halfwaymark of the financial year as revenues fell and expenses surged, official figures showedtoday.

The measure most widely used to indicate the Budget position, the underlying cash balance,dropped to a deficit of $6.16 billion for the six months to December 31, 2001, FinanceMinister Nick Minchin said in a statement.

The deficit for the five months to November was $4.38 billion.

Senator Minchin's statement indicates the government still expected to achieve a surplusof $502 million by June 30 this year, although this does not (not) take into account around$485 million in new spending unveiled this week.

The government's net operating result - the difference between its revenue and itsexpenses - was a deficit of $3.973 billion to December 31, 2001.

"Revenues weak, expenses high," was how Access Economics director Chris Richardsondescribed the December Budget snapshot.

"It does point to a broader picture of continuing weakening of the federal Budget position,"

Mr Richardson told AAP.

But with a healthy economy delivering good tax revenue in the current half of the year,another Budget surplus should be expected, he said.

Meanwhile record low interest rates sparked little, if any growth in borrowing duringDecember, official figures showed today.

Housing finance for owner occupation climbed 2.2 per cent to a record $8.1 billionin December, the Australian Bureau of Statistics (ABS) said.

But personal finance fell 3.4 per cent to $4.72 billion, commercial lending dippedhalf a per cent to $17.6 billion, and lease finance dropped 18.8 per cent to $546 million,the ABS said.

The falls were registered despite the Reserve Bank cutting interest rates to a recordlow 4.25 per cent in December.

Mr Richardson said the lending figures were consistent with retailers' reports of adisappointing Christmas trade but were nothing to worry about going forward as other economicindicators were improving.

In the business world, BHP Billiton chief executive Paul Anderson hosed down expectationsof an imminent world economic recovery.

Speaking after unveiling a record half-year profit of $US1.2 billion ($A2.33 billion),Mr Anderson warned of premature optimism about the economic climate ahead.

"We've gone through such a tough time in the last six months or so, I think everybody'sjust excited about the fact that it looks like the worst might be over, sort of like waitingfor summer to come," he said.

"It's been so long that when it finally starts to show, people get very excited aboutit, and I just think that perhaps the market in general is a little ahead of itself."

AAP jph/lm/cd/sb o

KEYWORD: ECONOMY NIGHTLEAD