Australia’s conservative government has unveiled a politically contentious federal budget packed with deregulation and tough spending cuts.
The 2014/15 budget, seen as a roadmap for returning to surplus within a decade, was released on Tuesday.
It presents Prime Minister Tony Abbott and Treasurer Joe Hockey’s blueprint for tackling what they call unsustainable deficits forecast at $27.9bn next year and totalling $56.3bn over the next four years.
But the proposals would signal perhaps the most radical reshaping of Australia’s social safety network in its modern history through broad structural reforms to the welfare, healthcare, higher education and pension systems.
And with 16,500 public sector employees set to lose their jobs, the rolling back of universal healthcare and deregulation of university fees, rises to the pension age and fresh income tax hikes, it could prove politically perilous, the Reuters news agency reported.
“We know that for some in the community, this budget will not be easy. But this budget is not about self interest. This budget is about the national interest,” Treasurer Hockey said in his budget speech.
“Doing nothing is not an option. The days of borrow and spend must come to an end.”
Australia has fared better than most developed nations in the past decade, having avoided the implosions of the finance and housing sectors seen in the United States and Europe, while Chinese demand for resources fuelled a boom in its terms of trade.
But having gone into the 2008 global financial crisis with virtually no debt, latest projections show Australian deficits continuing, with net debt set to rise to 14.6 percent of GDP by 2016/17, the highest in about 20 years.
Still, Australia’s debt pales in comparison to most developed nations, spurring criticism that many of the mooted measures are unnecessary and might damage the AAA-rated economy.
While Australia’s problems may be the envy of many of its rich-world peers, the government argues that 22 years of unbroken economic growth has been squandered on a bloated bureaucracy and tax breaks for the wealthy rather than investing in infrastructure now so badly needed in many regions.
The budget forecasts deficits to shrink to $2.6bn or indeed represent a radical shrinking of the deficit from almost $47bn in the current year.