Australia set to abandon election promise on budget surplus
Sydney (AFP) - Australian Prime Minister Tony Abbott looks set to abandon an election promise to return the budget to surplus within four years, warning Monday of "blowout after blowout" in spending.
The conservative government is due to deliver its first economic forecasts since winning office in September polls on Tuesday, and they are expected to show a deteriorating fiscal picture.
During the campaign Abbott vowed to bring the budget back into the black at least as fast as Labor had pledged -- by 2016/17 -- but Abbott sidestepped questions about the deadline on Monday.
"We will get back to surplus as quickly as we can. That's why it's so important that we boost economic growth, that's why it's so important that we get taxes down, we get regulation down, we get productivity up," he said.
"If we do those things we get growth up, and the best way to get the budget back into surplus is to restore economic growth."
Abbott said there had been "no substantial new spending" from his government but the budget picture had worsened due to "blowout after blowout in the spending of the old government".
In its August pre-election budget update, the then-Labor government said Australia's deficit had ballooned to Aus$30 billion (US$27 million) as the decade-long Asia-led mining investment boom unwinds and the economy transitions to new drivers of growth.
Media reports said Abbott's Treasurer Joe Hockey was poised to unveil a blowout in the deficit to Aus$50 billion in his mid-year economic and fiscal outlook (MYEFO) on Tuesday.
The Australian economy expanded a modest 0.6 percent in the three months to September and 2.3 percent on-year -- short of analysts' expectations and well below long-term year-on-year averages of 3.25 percent.
The new Liberal-National government has sought to blame Labor for the spiralling deficit, accusing it of "unparalleled" fiscal profligacy despite the avoidance of recession during the global financial crisis.
Labor finance spokesman Chris Bowen said the new government's spending had contributed Aus$9 billion to the black hole, including its military border patrol operation to tackle people-smuggling.
"Mr Hockey denied in parliament last week that the impact of his decisions would top $9 billion this financial year," he said. "We'll see if he was telling the truth when he said that when the MYEFO is released."
