Swan tips 'no frills' budget

Treasurer Wayne Swan says he'll hand down a steady budget on Tuesday night that
paves the way for essential long-term reform.
Mr Swan, who will deliver his third budget in Canberra, has described it as a no
frills affair, which will be in contrast to the rollercoaster rides other world
economies are enduring.
An economist at a leading US bank has warned that the treasurer must present an
"aura of fiscal responsibility" in his third budget to reinforce the government's
economic credibility.
The government has vowed to deliver a budget with spending capped at two per cent
while looking to make savings to offset new spending commitments in its effort to
bring the budget back to surplus.
"There are many countries around the world that are on a white-knuckle ride at the
moment," Mr Swan told reporters in Canberra in reference to the problems surrounding
Greece's debt crisis.
"What you will see here with this budget is a very steady budget which puts in place
essential reform for the future."
But opposition treasury spokesman Joe Hockey is predicting "unbelievable" budget
numbers with savings that are not really there.
The Rudd government will bank $12 billion from its planned super profits resource
tax even though it is supposed to be consulting with mining companies about how the
impost will be applied from 2012, he said.
"I fully expect tomorrow night we will see numbers in the budget that are not real,
a resources rent tax that will deliver unbelievable numbers, a budget that claims to
have savings, but the savings won't be there," he told reporters in Canberra.
Mr Swan said the government would be delivering the biggest reform since Medicare
with its health package, greater support for small business through a cut to company
tax, as well as major reform to superannuation, as earmarked in the Henry tax review
released last week.
It is also making $160 million worth of savings with new air travel arrangements for
politicians and public servants, while reportedly changing the way it pays GPs for
the use of nurses within their practice.
Tax cuts that were legislated three years ago will also be introduced from July 1.
But Mr Hockey said the treasurer can't say it will be a no frills budget while
saying it provides reforms for the future.
"Wayne Swan can't have it both ways," he said.
Economists expect economic growth forecasts will be jacked up in the budget to make
room for a renewed commodities boom, while jobless rate predictions will be slashed
to be more in line with reality of the current 5.3 per cent rate.
An AAP survey of economists found forecasts for the 2010/11 budget position centring
on a $35 billion deficit, almost $12 billion smaller than forecast in the Mid-Year
Economic and Fiscal Outlook.
JP Morgan chief economist Stephen Walters said it is critical that the government
announces an earlier than planned return to surplus.
"Doing so will reinforce the considerable economic management credibility the
government earned by appearing to steer Australia's economy through the global
recession with minimal damage," he said.
He said boosting public spending by too much could make the Reserve Bank of
Australia even more inclined to push the cash rate into "restrictive territory" with
further interest rate increases.
Mr Walters is predicting the budget will be returned to surplus by 2012/13, three
years earlier than forecast by the government.
This would also mean a lower peak in government debt.