Australia hit with tough-love Budget

Wayne Swan. Photo / Getty Images

Treasurer Wayne Swan last night hit Australia with a tough-love Budget that blended a welfare crackdown and big spending cuts with aid for low-income families, and more spending on health and education.

Swan also pushed employment and promised better times ahead, predicting the mining boom would drive a new prosperity that he promised would be more evenly spread across the nation's present "patchwork" economy.

And while toughening dole rules for the long-term unemployed and teenage mothers, among other welfare measures, he promised to ease rising cost-of-living pressures that are expected to soon include further interest rate rises.

With a series of carrot-and-stick measures, the Budget aimed at spreading the nation's wealth more equitably, aiming at higher productivity, more jobs, and better schools, hospitals and health care.

"We believe in extending the benefits of work to every capable Australian - single parents and jobless families, young Australians, the very long-term unemployed, the disabled and older workers whose experience we need and value," Swan said.

"In a growing economy like ours we cannot justify having the fourth highest proportion of jobless families in the developed world.

"A wealthy country like ours has no excuse to leave people out of work."

As in New Zealand, Australia's bottom line has been hammered by the aftermath of the global financial crisis, natural disasters - the real cost of which Swan said had been "understated" - and the Japanese tsunami.

Budget figures showed Australia's floods and Cyclone Yasi had cost the federal Government A$6.6 billion, slashed production by A$9 billion and, with other foreign blows, cut economic growth by 0.75 per cent.

The measures contained in the Budget will be politically vital for the Government, which has faced a steady and debilitating slide in popularity and now trails an Opposition that has been hammering Prime Minister Julia Gillard's proposed carbon tax and its management of asylum seekers arriving by boat from Indonesia.

The Opposition has attacked the Budget forecasts because they do not include the impact of the carbon tax planned for introduction next July.

Gillard wants the Budget to broaden debate to swing focus to a far wider swathe of Government policies, and to harden her credentials as an economic manager.

The Budget focused heavily on welfare, productivity and employment, helping to frame political debate.

Under new rules announced by Swan, people who have been out of work for more than two years will have to do more to earn their dole.

The the present two days a week work experience requirement will increase from six to 11 months a year.

Work experience includes work-for-the dole schemes, part-time work, and training or volunteer work related to qualifications.

Teenage mothers will have to return to school and finish Year 12 when their child reaches 12 months - or agree to do other study or work training - to continue receiving welfare payments.

The scheme will be trialled in 10 of Australia's most disadvantaged communities.

Swan has also tightened eligibility rules for disability pensions, and introduced measures to clamp down on cheating.

But in a bid to push more workers into jobs, people on disability pensions will be able to work up to 30 hours a week before benefits cut out, and A$200 million has been allocated to boost support for disabled students.

Payments will be made to families with children studying or completing work-related training, and income testing for single parents with school-age children has been eased to help them gain part-time work.

In other measures, low-income families will gain tax relief and higher rent assistance, and pensioners will be given digital TV set-top boxes so they can use existing sets when the analogue system shuts down in two years.

But Swan's key message was what he called the Australian promise: "If you work hard, you won't be left behind."

www.budget.gov.au