A higher than expected deficit figure revealed in Australia's budget on Tuesday has raised concerns that the country could follow the same path as the highly indebted euro zone, said one expert.
Australian Treasurer Wayne Swan reported a A$19.4 billion (US$19.18 billion) deficit for the current fiscal year ending on June 30 and A$18 billion for the following fiscal year, and said he would not be able to balance the budget for another two years. The figure was above expectations of around A$17 billion for this financial year, and $10 billion for the next fiscal year, according to a Reuters poll.
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According to John Daley, CEO of the Australian think tank the Grattan Institute, Australia's economy is facing a "very real danger" of following down the same path as Europe and words like austerity have come into the vocabulary of economic commentators.
"Even some of the rhetoric that we've started to hear in Australia is around 'mindless austerity.' The biggest lesson that Australia can learn is the one thing we never want to be in is the position that Europe is now in and making the decisions that Europe is now making."