Economy not immune to US fiscal saga: Swan
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CANBERRA, Dec 28 AAP
December 28 2012, 1:16PM
Treasurer Wayne Swan has warned the relatively strong Australian economy is still vulnerable to international pressures as the US stands on the edge of the so-called fiscal cliff.
Mr Swan says the budget drama unfolding in the US, combined with Europe's economic woes, is having a "real impact" on the global economy.
Down the line this has hurt Australia's revenue base, a key factor which led the government last week to announce it was unlikely to deliver on its promised budget surplus.
As debate continued in the US, Mr Swan took to Twitter to laud Australia's "resilient" economy and highlight the absence of such financial crises back home.
"But even though unlike other countries we have low debt and very strong public finances, we're not immune from global developments," Mr Swan posted on his Twitter account on Friday.
"The impact of America's fiscal cliff saga combined with Europe's deep problems is having a real impact on the entire global economy.
"Of course, we're seeing the impact first-hand in Australia with the huge whack we've copped to our revenue base."
Politicians in Washington DC are still refusing to compromise over the fiscal cliff, which if left unresolved will result in billions of dollars in tax hikes and deep automatic spending cuts kicking in from January 1 - and a possible return to recession.
US President Barack Obama has returned to Washington and will meet meet congressional leaders at the White House on Friday in search of a compromise.
Last week, Mr Swan conceded the federal government was unlikely to deliver its promised budget surplus this financial year in the wake of a big drop in tax revenues.
Figures showed financial year-to-date company tax payments were much lower than expected, reflecting falling commodity prices and continued weakness in the global economy.
The budget had been hit by a "sledgehammer", he said, threatening Labor's $1.1 billion surplus.
In response to the US crisis, Mr Swan also said it was "lamentable" so much of the world's post-GFC economic recovery had been held hostage by the grassroots political Tea Party movement.
"The fact is, no matter what happens this week, huge damage has been done over the last 18 months thanks to the Tea Party's influence," he said.