Aust treasurer rides on wave of hope

By Greg Ansley

CANBERRA - For Australian treasurer Peter Costello, these are the golden days. On the eve of a budget that will confirm the nation as among the most robust and dynamic in the world, two new indicators were dumped on his desk this morning.

The first was the ANZ Bank's April job advertisement survey, reporting a 1.6 per cent rise that took the number of advertised vacancies to yet another post-recession high.

The second was the latest National Australia Bank monthly business survey, showing continued strength in business conditions and confidence, albeit with expectations of slower economic growth in 1999-2000 and some concern for employment.

The Reserve Bank also expects extended buoyancy, forecasting low-inflation growth of more than 4 per cent in the year to the end of December. But there are some clouds: the ballooning trade deficit, concerns that inflation may become more difficult to contain, and general expectations that growth will slow to between 2.5 per cent and 3 per cent next financial year.

Mr Costello's budget strategy has also been crimped by obstruction in the senate, which is fighting the Government's plans to introduce a GST and to sell the state-owned telecommunications group Telstra.

The Government has been working hard to negotiate a workable compromise with the Tasmanian Independent, Senator Brian Harradine, and fellow-Independent Senator Mal Colston, whose vote is doubly in doubt because of terminal cancer.

After being denied a place last year, both senators will be admitted to today's budget lock-up, allowing them to examine its details in advance of the treasurer's speech to the House. But with tax reform still in doubt, the budget Mr Costello will announce tonight will be in limbo, paying attention to housekeeping, election promises, a continued surplus and debt reduction rather than sweeping new initiatives.

New spending is expected to be relatively modest, with most commentators tipping a level of about $A5 billion over four years.

Mr Costello has himself been dampening down expectations.

Although stronger-than-expected economic performance and reduced welfare costs through lower unemployment will mean a larger surplus than the $A3.3 billion forecast in last year's budget, Mr Costello has warned against "overestimations

. Most private analysts have predicted a surplus of about $A5 billion.

The treasurer has also given a clear indication that the theme will be responsibility rather than excitement. "We're going to lay out a debt strategy in the budget, how we can retire Commonwealth debt, how we can make the Commonwealth Government debt-free, he said.

"We can make sure that we spend on priorities of the Government, priorities like education, priorities like families, to make sure that families get the benefit of good economic policy."

Employment will be a key focus, with policies aimed at bringing down the jobless rate from 7.5 per cent to an eventual 5 per cent, with specific measures likely to include an extension of the work-for-the-dole scheme and more money for rural and regional apprenticeship programmes.

Prime Minister John Howard has also called this an "education budget", with expected increases in funding for literacy, numeracy and tertiary research, and a significant boost for aboriginal education and health.

Health is tipped to win a $A400 million lift for medical research and additional funding for aged care, drug programmes and rural medicine. Other areas likely to benefit include tourism, transport and the environment.