Federal election looms with focus on economy
IT WAS a year of extremes for our economy, with public debate careening from the carbon tax to the almost revenue-less mining tax and an undeliverable surplus.
Against a backdrop of the world's major economies still shuddering from the global financial crisis, Australia stood as a shining light, with real growth - no matter the low point of comparison.
It was a year of suppressed consumer and business confidence; a slight, but weak, recovery in housing and retail spending and low interest rates, falling a full 1.25% to 3% during the year.
The Federal Government set its goalposts early, with the May Budget promising a $1.5 billion surplus, as well as numerous new, big reforms to help Australians, which the government said would be delivered despite the push for surplus.
But by October, the already wafer-thin surplus had shrunk to $1.1 billion, all while the government had added even more important, costly, reforms to its agenda.
On the Thursday afternoon before Christmas Treasurer Wayne Swan finally conceded the surplus was "unlikely", after three years of promises it was a certainty, putting the big reforms in jeopardy.
Spreading the benefits of the boom, which the government promised in May no longer looks feasible.
The bulk of the money promised for the reforms - like the National Disability Insurance Scheme, Denticare, mental health and the distant promise of school funding reforms - had already been pushed off the 2012-13 fiscal year on to the forward estimates and beyond the reach of the next federal election.
Before bills for the May budget were passed, the government had to desert a rise to the passenger movement charge, which could have brought in some $650 million in extra revenue, offset in part by a 28% hike to working holiday visas.
By July 1, the Opposition's attacks on the carbon tax reached fever pitch - based in no small part on various skewed figures it used in and out of parliament to bolster its anti-tax campaign.
And while the carbon tax would have a big impact on heavy industry, the effect on consumers' hip-pockets would be limited to about a 10% rise in power prices, as well as a downstream rise in general living expenses.
The biggest carbon emitters and households were also compensated to some extent for the cost imposts of the tax. Nearly six months after the introduction of the carbon tax, the effects on the wider economy appeared to be limited, despite the large impost on industries such as coal mining and aluminium refineries.
October marked the early release of the government's mid-year economic and fiscal outlook, timed to avoid having to include the non-existent first quarter tax receipts from the mining tax.
The MYEFO revealed Finance Minister Penny Wong had trimmed $16.4 billion from the Federal Budget, creating about $10.5 billion in savings despite the new spending announcements.
The largely toxic public debate over the Federal Government's budget framed a year of limited wider economic recovery for the country, while also reminding Australians of the nation's exposure to lingering global uncertainty.
But the focus on the economy - and the unlikely budget surplus - will only intensify as a federal election nears.