Australia's Tax Cuts, Spending Raise Prospect of Interest-Rate Increases

(Bloomberg) -- Australia's government will cut taxes and spend more on child care, pumping A$67.5 billion ($56 billion) into the economy and raising expectations the central bank may increase interest rates.

The government will raise income-tax thresholds, putting four of five Australians on a 30 percent rate at a cost of A$31.5 billion over the next four years. It will also spend more than A$30 billion on child-care subsidies, payments to senior citizens and new funding for education, defense and the environment, Treasurer Peter Costello said yesterday in Canberra.


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