Prime Minister Kevin Rudd says Australia\’s debt will be the lowest of any major world economy for the next decade, as Treasurer Wayne Swan refused to confirm reports the deficit will last six years.
Mr Rudd told reporters in Sydney today he welcomed a debate on debt and deficit, following revelations the federal budget deficit for next financial year will be around $70 billion.
It was “a debate being had in every advanced economy in the world in response to a global economic recession – the worst we have had in three quarters of a century”, he said.
“Australia\’s net debt will be the lowest of any major advanced economy in the world for the next decade.
“It is responsible for us to have embraced such a (deficit) strategy to deal with the challenges presented to us and other economies with the global recession and to do so within that responsible framework.”
Treasurer Wayne Swan meanwhile would not confirm reports the federal budget will be in deficit for six years.
Newspaper reports are suggesting the budget will be in the red until at least the 2015/16 financial year.
“I\’m not prepared to confirm that. That\’s speculation in the papers this morning,” Mr Swan told ABC Radio.
It “did not matter” if the government took a political hit from running budget deficits for longer, he said.
“Whether that makes us unpopular or gives us a political hit is the last thing on my mind.”
The government would have “sustainable levels” of debt and make savings in the future, but Mr Swan declined to say how much the government was prepared to borrow.
“I\’m not going to speculate about levels of debt.”
The government was determined to return the budget to surplus as global economic growth returned.
“The irresponsible thing to do would be to savagely cut government services or to dramatically increase taxation.”
When asked if higher income earners would have to make sacrifices to pay for a pension increase and maternity leave, Mr Swan said: “I think everybody is going to have to do their bit”.
\’Temporary deficit\’ ridiculed
Opposition frontbencher Christopher Pyne said the Rudd government\’s use of the term “temporary” for budget deficits is a euphemism for failure.
Treasurer Wayne Swan has conceded the government will run temporary deficits, but he has declined to say for how many years the budget will be in the red.
“They\’re calling it temporary, which is a euphemism for failure,” Mr Pyne told Sky News.
“They will never deliver a surplus budget. They will leave Australians with hundreds of billions of dollars of debt – at least 226 probably rising to 326.”
Mr Swan has said projected government revenue has fallen short by $200 billion since the last budget in May 2008, an excuse rejected by Mr Pyne because the government had handed out $23 billion in cash bonuses.
“They can try and blame the revenues, but the reality is revenues have nothing to do with last year\’s handling of the budget,” he said.
Veterans\’ Affairs Minister Alan Griffin countered by saying falling revenue was a product of the global financial crisis, which could not be controlled by any government.
“It\’s a tough situation,” he said.
“Overwhelmingly, it\’s an issue of collapsing revenues. Overwhelming it\’s an issue of a global financial crisis beyond the control of any government.”