Big budget deficits for years: Swan

Australians should brace for big budget deficits lasting several years, federal
Treasurer Wayne Swan has warned.
Mr Swan conceded on Tuesday that the impact of the recession means the budget will
remain in the red for longer than initially expected.
Media reports, citing government sources, suggest the budget could be in deficit for
six years, and that the 2009/10 deficit will be close to $70 billion, double what
was forecast by the government in February.
The opposition expects the government will also be forced to borrow even more money,
possibly up to $300 billion, which will delay economic recovery.
The treasurer will hand down his 2009/10 budget next Tuesday.
Mr Swan reiterated the shortfall in revenue will be greater than the $115 billion
over the next four years forecast in February because of the global recession.
"The impact of this sharper downturn on government revenue certainly means a
temporary deficit for a longer period of time because of this very sharp contraction
in demand."
He said the government had put in place a medium-term fiscal strategy in its Updated
Economic and Fiscal Outlook in February.
"We are absolutely determined to return the budget back to surplus over time, once
growth returns to trend," he said.
"(But) that depends on the length of the global recession."
Opposition Leader Malcolm Turnbull said the government was in "a state of confusion".
"That undermines confidence and of course it provides all Australians with a very
deep concern that our ability to recover from this downturn ... is going to be
hindered and held back by an unsustainable level of Labor debt," he told reporters.
Opposition treasury spokesman Joe Hockey said a Rudd government would never return
the budget to surplus.
He expects the government will have to ask for more funds and stretch its debt limit
to $300 billion, beyond the $200 billion that has already been legislated.
Mr Hockey said the government had already committed $80 billion in extra spending
since the last budget, not including $43 billion for its broadband plan, $28 billion
for "Ruddbank" and $26 billion for infrastructure.
"The Rudd government's response to this crisis appears to consist of throwing all
fiscal restraint to the wind and spending taxpayers' money from generations yet to
be born," he told the John Curtin Institute of Public Policy in Perth.
"The prime minister will have to admit his profligacy and ask the legislature for
more funds. We expect Mr Rudd will stretch the debt to $300 billion."
He said weak business confidence was having an impact on jobs, and was still feeling
the pain from last year's "war on inflation", Labor's confused 2008/09 budget
strategy, the Reserve Bank's "ill-considered" interest rate increases and the prime
minister's panic declaration that "it will be bad, really bad".
"In all likelihood, incumbent governments who make mistakes with their policy
direction will be ousted from office," he said.
He said governments that promised to create and protect jobs, and then failed to do
so, risked credibility problems.
"Governments who massively expand community expectations and fail to fulfil them are
frequently punished at the ballot box.
"It is the deep sense of betrayal that hurts the most in voters' minds."