Labor's budget 'not tough enough'

13 May 2009, 6:40 am   -   Source: SBS/AAP
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Treasurer Wayne Swan has defended the budget after economists and the Liberals slammed it for for sinking the nation deeper into debt.

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Treasurer Swan has defended the budget against suggestions forecasts produced by Treasury were too optimistic, after economists and the Liberals slammed it for for sinking the nation deeper into debt.

The budget forecasts a record $58 billion deficit in 2009/10 and the bottom line will remain in the red until 2015/16. It predicts spending cuts of $22.6 billion over the next four years.

Deficits 'as far as the eye can see'

Access Economics economist Chris Richardson anticipates deficits as far as the eye can see unless there are spending cuts of $25 billion to $30 billion a year.

"I worry that the tough decisions that were announced in the budget were actually not tough, and if you were to spell out the actual decisions to get us back to surplus instead of simply promising that they will hold growth in spending to a certain percentage level, you would have to see a lot more pain than the government has told us so far," he told SBS.

"It was also going to be a difficult thing for the government to explain why it had to spend more in the short term and less in the long term to repair the budget. Now, to some extent, it has done the first bit, the easy bit.

"The hard bit is the spending less, the return to surplus and that's the bit that is missing, Mr Richardson told SBS.

Treasury has forecast that economic growth will finish flat this financial year, but then contract by 0.5 per cent in 2009/10 as the recession takes hold.

Growth would then remain below trend at 2.25 per cent in 2010/11, and then accelerate over the next two years to 4.5 per cent.

Budget forecasts 'entirely credible'

 Mr Swan defended the forecasts against suggestions they were optimistic, saying the economic growth projections contained in the budget were "realistic".

"For the Treasury to put in place those projections the way in which they have, I think is credible. I think it's realistic and I think based on my experiences internationally, entirely realistic," Mr Swan told ABC TV.

Mr Swan said the government had charted a course back to surplus. "We have done that with conservative projections in this budget and it is entirely credible," he said.

Budget figures rubbery: Hockey

But opposition treasury spokesman Joe Hockey said the budget contained "rubbery" figures and clearly showed the government had lost control of the nation's finances.

"The budget relies on rubbery figures projecting what would be an unprecedented future economic boom to show a path back to surplus," Mr Hockey said in a statement.

"Having blown all the proceeds of the last mining boom, Labor is betting the house on another upswing that hasn't even begun yet."

Budget 'not green enough'

The Australian Greens said the budget was not green enough, echoing sentiments by other environmental groups. Greens leader Bob Brown said more money was being poured into coal.

"There is no green new deal here," Senator Brown said. Greenpeace blasted $2 billion in extra funding for cleaning up coal, saying it is a waste of money which should go to renewable energy.

Steve Campbell, head of campaigns with Greenpeace Australia Pacific, said money for Carbon Capture and Storage (CCS) was a sop to the coal industry.

"Carbon Capture and Storage is a bridge to nowhere," he said.

Climate groups welcome clean energy boost

But John Connor, chief executive of the Climate Institute, welcomed the budget boost for clean energy technology, particularly solar power.

"This can not only capture the power of the sun, but capture the power of Australian innovation," he said.

Mr Connor was more cautious about the CCS funding boost, saying it was the right time to invest to see if the technology could work.

"We can't let it hang around like a bad smell," he said in reference to the heated debate about whether CCS will work.

Mixed reaction from business

The government was walking an economic tightrope as part of a "risky high-wire act", Australian Chamber of Commerce and Industry chief executive Peter Anderson said.

But Australian Industry Group chief executive officer Heather Ridout said the budget was supportive of the economy during tough times.

A sustainable budget: unions

Unions described it as a sustainable budget. ACTU president Sharan Burrow said that social and economic infrastructure unveiled in the budget would set Australia up for the future.

"It (also) brings back a bit of equity and compassion into the heart of the nation."

Budget 'plunging nation into bebt'

Independent senator Nick Xenophon is concerned the budget plunges the country too far into debt.

"This is a Harvey Norman budget, it's buy now, pay later," he said. Senator Xenophon, who holds a crucial balance of power seat, would not say if he would block any of the budget, saying it needed to be looked at in detail.

'A budget of broken dreams' for families

Family First senator Steve Fielding says the Rudd government has delivered a budget of "broken dreams".

"This budget of broken dreams is a budget that sends a loud and clear message to Australians that they are better off not having a dream for themselves or their families," he said.

Senator Fielding says the budget destroys the simple dreams of ordinary Australians like owning a home, having a family, a secure retirement and a fair go for small business.

"This budget of broken dreams is a budget that sends a loud and clear message to Australians that they are better off not having a dream for themselves or their families," he said.

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