Swan at G20 as world economy uncertain

2 Nov 2012, 4:35 pm   -   Source: AAP

Treasurer Wayne Swan is joining his G20 counterparts in Mexico City with the global economic outlook still uncertain.

Treasurer Wayne Swan has left behind the political argy-bargy over the federal budget, jetting off to Mexico City for this weekend's G20 Finance Ministers' Meeting, where discussions will centre on the more troubling issues of Europe and the US.

After the two-day meeting, Mr Swan will travel to Washington for talks with US Federal Reserve chairman Ben Bernanke and International Monetary Fund managing director Christine Lagarde.

Mr Swan said these meetings would provide a valuable opportunity to get first-hand assessments of the world's most pressing economic challenges.

"The global economic outlook remains uncertain despite much-needed initiatives over recent months that have helped stabilise financial markets," he said in a statement on Friday.

The euro zone remained a key threat to the global outlook, with many countries in recession, unemployment at a record 11.6 per cent and debt at unsustainable levels, he said.

The looming "fiscal cliff" in the US, which will see a sudden unwinding of tax cuts and the ending of expenditure programs, also risked pushing the world's largest economy back into recession.

However, Mr Swan said Australia faced these challenges from a position of strength, not least because the budget was returning to surplus ahead of every other major advanced economy.

In Melbourne, Opposition Leader Tony Abbott resumed his week-long attack on the government's budget, telling a conference that Labor would never return an "honest" surplus.

He told the 2012 Economic and Social Outlook Conference he had warned his shadow ministers that some of the coalition's initiatives might have to be phased in or commenced later because the current structural budget position was "so poor".

But Finance Minister Penny Wong told the conference that without the government's structural changes to the budget since the 2008/09 financial crisis, the medium-term budget outlook would be in a much poorer position.

"Rather than net debt returning to zero in 2020/21, it would be over $250 billion in that year," Senator Wong said.

The changes included reforms to the family payments system and fringe benefits tax, means testing for aged care recipients, reforms to tax offsets and changes to the concessional contributions arrangements for superannuation.

"These have not been easy decisions, nor have they had bipartisan support, but they underline an important aspect of budgeting under our government," she said.

Mr Abbott used his speech to outline the opposition's plans for government, reiterating the proposed scrapping of the carbon and mining taxes.

While the two taxes are slated to raise $40 billion over the forward estimates, meaning serious savings would be crucial, axing the carbon tax alone would add $1 trillion extra to cumulative gross domestic product by 2050, he said.

An Abbott government would convene a new business advisory council three times a year, and would set up a working group to consult with business, state and local governments and the wider community about reforms to boost productivity.

It would also promise an annual $1 billion reduction in red tape.

Prime Minister Julia Gillard told reporters on the NSW Central Coast Mr Abbott had just "rehashed some tired old ideas", and that he would never get rid of the carbon tax.

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