May 12, 2009, 11:54 GMT
Sydney - A big-spending government coupled with collapsing tax revenue has driven up unemployment and pushed Australia's finances deeply into debt, Treasurer Wayne Swan said Tuesday when unveiling the annual budget.
'This budget is forged in the fire of the most challenging global economic conditions since the Great Depression,' Swan told parliament. 'Global recession has been unleashed on Australia with a brutal, uncompromising force.'
But the nation's chief financial officer predicted the resource-based economy would bounce back quickly with growth to power above its long-term average within three years.
Opposition Liberal Party treasury spokesman Joe Hockey said 'heroic assumptions' were needed to see a return to growth in 2013.
'It's casino economics to assume that this budget will get back into surplus anytime in the foreseeable future,' Hockey said. 'The 2009-10 budget delivers a dismal trifecta - record spending, a record deficit and a further severe increase in the jobless rate to 8.5 per cent.'
Next fiscal year the public debt will climb to 57 billion Australian dollars (43 billion US dollars) and the value of goods and services produced will shrink by 0.5 per cent.
Swan said 210 billion Australian dollars in lost revenue from lower company and income tax receipts would keep the budget in deficit until at least 2015.
'It will take time and it will take discipline,' Swan said about his plans for eventually bringing public finances back into the black. 'It will take hard choices - doing more with less.'
Prime Minister Kevin Rudd's Labor government, which took office in December 2007, stung the well-off to help redistribute wealth to pensioners and the less well-off.
Tax breaks for rich people paying into private pension funds were removed, as was their subsidy for taking out private health insurance.
Swan announced extra spending of 400 million Australian dollars to beef up border security to stem the flow of asylum-seekers arriving by sea.
To help bring the budget back into the black, the age that people can receive the old age pension will rise to 67 from 65 by 2023 - the first increase in 100 years.
'We have to put in place an essential reform to face this demographic time-bomb,' Swan said. 'I'm sure these changes will be very unpopular, but we need a sustainable pension and retirement-income system.'
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