The Australian government is now facing the downside of the high valued Australian dollar-lower tax revenues.

The Australian currency's appreciation against the US dollar will also mean lower export earnings for local industries, which will also entail declines in their tax remittances to government.

"The biggest factor in the mid-year update will be the negative impact the high Australian dollar is having on revenues," Treasurer Wayne Swan said in an emailed statement today. "The higher dollar means our exporters bring home less income and that flows through to reduced company and resource taxes."

Swan added that the government's new fiscal revenues and other economic forecasts would be officially released to the public on Nov. 9 in its mid-year report.

Achieving parity against the US dollar also has its implications and as investors bet the nation will increase interest rates to slow inflation, it has also offset gains in prices for Australia's export commodities, including iron ore and coal, which are negotiated in the U.S. currency, Swan said today.

Prime Minister Julia Gillard also acknowledged this in an interview with Channel Nine today without being more specific. The total tax take may fall by as much as A$10 billion ($10.2 billion), reports from Bloomberg and the Australian newspaper indicated on Nov. 6, without saying where it got the information.

Budget surplus

To achieve Prime Minister Gillard's target of a balanced budget resulting to a surplus will mean spending cuts of about $10 billion.

This year's Mid-Year Economic and Fiscal Outlook will consist primarily by a series of spending cuts and program deferrals, designed to ensure the budget returns to surplus in 2012-13. Ms Gillard announced her re-commitment saying the budget would be "back in the black, back in surplus, in 2012-13 as promised."

The budget forecast in May of a paper-thin 2012-13 surplus was predicated on a dollar worth US90¢. It has since climbed above $US1.01.

The Reserve Bank issued its own updated forecasts on Friday, assuming the dollar would remain at about $US1 for three years.

The economic growth forecast of 3.25 percent this financial year has already been upgraded by the Reserve Bank to 3.5 percent. The forecast jobs growth of 2.25 percent has been surpassed by annualised growth of 3.8 percent.

High export prices also pushed Australia's balance of trade surplus by 20 percent topping the forecast of 14.25 percent.