/www.bloomberg.com/ Canberra, Sept. 30 (Bloomberg) -- Australia's budget deficit in the year ended June 30 totaled A$1.3 billion ($710 million), Finance Minister Nick Minchin said.
That was higher than the A$1.2 billion underlying cash deficit the government forecast in its May budget and is the first budget shortfall in five years. The government recorded a A$5.6 billion surplus in the year ended June 2001.
In May, the government forecast the budget would slip into deficit in fiscal 2002 as it boosted spending on the war against terrorism and fueled economic growth in Australia by giving cash handouts to first-home buyers.
``The government is reducing net debt and is fairly fiscally responsible,'' said Tony Pearson, global head of market economics at National Australia Bank Ltd. The government's budget position ``was really important when the quality of its economic management was in question, but that's less the case today.''
Australian bonds and the currency were little changed after the report. The Australian dollar traded at 54.37 U.S. cents at 10:45 a.m., Sydney time, from 54.39 U.S. cents before the report was released. The yield on the bond maturing May 2013 was unchanged at 5.30 percent at 10:45 a.m.
Government Debt
Net government debt fell by A$3.7 billion to A$35.6 billion in the year ended June 30, Minchin said. Net debt declined to 5 percent of gross domestic product, down from more than 19 percent of GDP when the government came to power in 1996.
The government's ``fiscal outlook, low level of net debt and strong economic growth confirm Australia's place as one of the best- performing economies of the Organization of Economic Cooperation and Development,'' Minchin said in a statement.
Minchin said the government has delivered cumulative surpluses of A$24 billion from 1997-98 to 2000-01, and the budget is forecast to return to surplus this fiscal year, ending June 30, 2003.
The government said the accrual fiscal budget deficit was A$3.7 billion in the year ended June 30, higher than the A$3 billion it forecast in May.
In May, the government said it would spend an extra A$1.5 billion in the next five years to boost security, improve screening at airports and pay armed guards aboard selected commercial flights.
The government also doubled a grant for first-home builders in March 2001 to A$14,000 to help boost housing construction and economic growth. That grant was reduced to A$7,000 from July 1 this year.