Aust budget aims to repay debt quickly

Wayne Swan. Photo / Mark Mitchell

CANBERRA - The Australian Government last night revealed an economic blueprint aimed at reining in Australia's record debt without alienating voters in an election year.

The Budget for the fiscal year beginning July 1 was the Government's third and last before Prime Minister Kevin Rudd seeks a second three-year term in power with elections due late this year.

The Budget's chief architect, Treasurer Wayne Swan, said the financial measures for the nation's A$1.2 trillion ($1.5 trillion) economy that he outlined to Parliament were responsible rather than tailored for political gain.

"What we have to do is dedicate this Budget to getting back to surplus as quickly as possible," Swan said outside Parliament yesterday.

"What I will be saying to Australians tonight is let's turn the success of [riding out] the global recession into enduring gains for all Australians," Swan said.

Swan's first annual Budget released in 2008 continued the previous government's decade-old run of forecast surpluses.

However, government coffers soon dipped into the red with the global economic crisis and new government spending measures and handouts aimed at shielding Australian jobs from the downturn.

The Australian economy narrowly avoided recession, and the jobless rate stands at a better-than-predicted 5.3 per cent, making the Australian economy among the most resilient in the developed world to the downturn.

The Age newspaper reported the Budget forecasts a return to surplus in the 2012-13 fiscal year, three years ahead of the last forecast a year ago.

The Government this month announced plans to cash-in on booming profits in the mining industry fed by Chinese and Indian industrial demand for minerals and energy.

A 40 per cent Resource Super Profits Tax would be introduced in July 2012 and raise an anticipated A$9 billion in additional revenue a year from big mining companies.

The Government plans to use this extra revenue to offset company tax cuts from 30 to 28 per cent which in turn would help pay for bigger pension funds for Australia's workforce.

Swan said the Budget would include major health reforms while containing overall growth in Budget spending to 2 per cent.

Labor has been riding high in opinion polls since its election in 2007. But recent polls show the conservative opposition has made up ground since Rudd shelved plans to curb Australia's greenhouse gas emissions by making major polluters pay for the amount of carbon dioxide that they produce.

The Government will need opposition support to pass its Budget measures through the Senate where Labor holds a minority of seats.

But the main opposition Liberal Party has said it won't support the new mining tax because it would drive mining investment overseas.

The Treasurer yesterday praised the Rudd Government's economic management during the global downturn.

"What we did together during the global recession was produce the strongest growing advanced economy," Swan said. "We've got an unemployment rate of 5.3 per cent - the envy of the world."

- AP