Australian Prime Minister Tony Abbott worked on Tuesday to sell his government’s first budget as one that will be painful but crucial for the nation’s future, as he braces for a voter backlash.
The conservative leader argues that there must be tough decisions or the budget will be in deficit for the next decade as the country confronts a slowing growth rate and unemployment near 6 per cent.
Australia’s budget deficit for the 2013/14 financial year is forecast to have ballooned to A$47 billion (HK$341 billion), with fiscal deficits projected through to 2016/17.
To counter this, Treasurer Joe Hockey is widely expected to hand down a harsh budget that includes a levy on high income earners, a future rise in the pension age to 70, a fee for visiting the doctor and big cuts to the public service.
Abbott admitted some of the measures will not be popular, but he said they were necessary.
“Yes, there’s got to be short-term pain, but it’s pain with a purpose,” he told Macquarie Radio ahead of the budget release Tuesday evening.
“This is a problem-solving budget because we do have a very serious problem of debt and deficit, stretching as far as the eye can see. But it’s also a nation-building budget.”
As well as cuts that will hit the pockets of every Australian, the budget is expected to see the country’s biggest ever spending on infrastructure, with new roads part-funded by an increase in the excise on petrol.
Recent opinion polls have shown Abbott’s honeymoon period since being elected in September is over, with widespread criticism of perceived broken promises after vowing there would be no new taxes under his watch.
The Labor party’s finance spokesman Tony Burke said Hockey had a Herculean sales job on his hands.
“He’s going to have to sell the budget by making excuses for telling lies,” he Burke said.
Hockey stressed the budget would ask Australians to contribute so the country could build for the future, while blaming Labor for leaving it with a budget “mess”.
“I would say to the Australian people, if you’re only looking in the budget for your own interests, then you may be disappointed, but if you’re looking for the national interests you will be cheered,” he said.
“This budget is about shaping the destiny of our nation.”
He denied the government had broken its pre-election promises.
“The most significant promise we made was to fix the budget, to build a strong economy and tonight we’re getting on with the job,” Hockey said.
Australia has enjoyed more than 20 years of annual growth fuelled by a mining boom, but government revenues have dropped dramatically in recent times, in part due to income tax cuts introduced in 2007. Meanwhile, expenditure on welfare and old-age pensions is growing.
The latest International Monetary Fund forecast has the Australian economy growing at 2.6 per cent this year, below expectations of 2.8 per cent.