WAYNE Swan has promised help for the poor in a "very Labor" Budget tomorrow, but will also use the economic blueprint to demolish what he describes as John Howard's contentious system of middle-class welfare.
The Treasurer has also appealed to voters to accept that the global recession is so severe it has forced Labor to shift direction on key policies it took to the 2007 election campaign.
Two days before delivering his second Budget at a time of unprecedented global economic upheaval, Mr Swan yesterday told The Australian his efforts to deal with the recession-driven, $200 billion collapse in revenue had been complicated by a legacy of reckless spending by the previous government. In an apparent move to make Mr Howard a fall guy for a tough Budget, Mr Swan said the former prime minister had behaved "as if the mining boom was never going to end" in handing out payments across the community. "As a consequence of those unsustainable habits which developed at the top of the boom and, given the nature of the global recession and the unwinding of the mining boom, everybody will have to do their bit to put the budget on a more sustainable footing," Mr Swan said.
His comment provides the first glimpse of Labor's political strategy leading into the Budget session, with the Coalition already accusing it of breaking promises and threatening to fight it in the Senate. Opposition Treasury spokesman Joe Hockey said yesterday the Coalition would be looking at all these "so-called tough initiatives" and how much of the deficit they would pay off. "Ultimately someone will have to pay for all this," Mr Hockey said. "It has to be all Australians. They will end up paying higher taxes, higher interest rates, not just for one or two years, but perhaps a decade or more."
Access Economics is forecasting a $58.9 billion deficit for tomorrow's 2009-10 budget, allowing for an extra $9 billion of infrastructure spending and $3.9 billion for pension reform. In its Budget Monitor, it expects a $53.2 billion deficit in 2010-11.
For 2009-10, the deficit would represent 5.0 per cent of gross domestic product (GDP), trumping the deficits racked up during the early 1990s recession and the deficits of the Whitlam years, it says. Access economist Chris Richardson says the damage to the budget bottom line was done well before the past year. "The boom in the budget in recent years was brilliant. We then promptly spent most of it," Mr Richardson said. "The federal budget will be mired deeply in deficit after the GFC (global financial crisis) is long gone."
He said governments usually hold their policy fire to assist with fighting downturns, but in the past six years parties of "both stripes" had handed back the fiscal dividend of the good times, limiting the ability to defend Australia from recession. [This is an absolute lie. The Howard government used strong revenues to reduce the national debt to nil and also put aside large savings in a future fund -- which the Labour government promptly blew]
Comment from Australian Conservative
Let me make sure I understand this properly. Wayne Swan says all the trouble with the budget is because of John Howard’s legacy of middle-class welfare.
So he is evidently going to respond in tomorrow’s budget by announcing a delayed paid parental leave system which would be means tested above $150,000. So a working parent earning, say, $120,000, is going to be given nearly $10,000 every time they have a child. If that isn’t middle class welfare, then what is?
That the media, including The Australian, have not worked this out is another example of the media giving Kevin Rudd and co a great big helping hand to hoodwink the electorate.
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