Australia spends its way to bigger budget deficits

Red ink: Wagons with iron ore enter Rio Tinto’s railway yard near Karratha in Western Australia. Expected tax revenues from companies have also been downgraded as subdued demand in China weighs on commodity prices, including iron ore. — Reuters

SYDNEY: Australia’s government yesterday trimmed its likely budget deficit for the current financial year, but flagged bigger shortfalls ahead due to “unavoidable spending” on health, cost-of-living relief and veterans’ care.

Facing a tough election next year, the centre-left Labour government said the economy had slowed under the weight of high interest rates and elevated inflation, but insisted public spending would help ensure a soft landing.