The Australian government released its budget update ahead of the general elections. This is usually released after an election.

The latest figures released showed that the nation’s finances would be in surplus in 2012-13 despite billions of dollars of stimulus spending to avert recession.

Australian Prime Minister, Julia Gillard has abandoned initial plans to introduce a 40 per cent resource super profits tax on the profits of mining companies.

The unpopular tax, coupled with the escalating prices for energy and mineral exports will hurt Australia’s mining sector and increase the unemployment rate.

Gillard had reached a compromise deal with mining companies on a replacement tax and the tax would now be dropped to 30 per cent and apply to fewer companies.

However, critics fear that these concessions would decrease the size of government coffers and delay Australia’s return to surplus.

The original resource tax would generate AUD12 billion (*S$14.5) in the first two years of operation while the revised tax would generate AUD10.5 billion. The compromise means that Australia would have a smaller budget surplus of AUD1 billion as compared to AUD3.1 billion in 2012-13.

*Exchange rate correct as at 16 July 2010