$58b in red, `building` budget will hurt

Australians face working longer and harder as the labour force shrinks, while the
Rudd government pins its hopes of economic recovery on the biggest nation building
program since the Snowy Hydro Scheme.
But families will feel immediate pain in Labor's second budget delivered on Tuesday
night because of moves to tighten access to so-called middle-class welfare which
blossomed under the previous government.
Pensioners are the budget's biggest winners and will receive a long-awaited weekly
increase of $32.49 for singles, while couples will get a $10.14 a week increase.
But in order to pay for the rise, baby boomers born after 1952 will feel the pain
first with the decision to raise the pension age by two years to 67, a move
Treasurer Wayne Swan acknowledges will be "very unpopular".
The qualifying age will increase in six monthly increments between 2017 and 2023 as
the government attempts to lighten the burden of the "demographic time bomb" of a
growing pension bill and a shrinking workforce.
"I know it will bring some pain and angst to many," Mr Swan told reporters.
"I don't take this decision lightly, it won't be popular, in fact, it'll be very
unpopular.
"The thing that dominates the outlook for Australia as we look forward is the ageing
of our population."
Mr Swan says the change, which includes allowing pensioners to earn more before
losing their pension payments would lead to a "stronger and fairer" pension system.
But he says the budget's main focus will be on job support and creation and "nation
building for recovery" as the government plots a course for a return to surplus in
six years' time from a record $57.6 billion deficit in 2009/10 - a massive
turnaround from a $22.7 billion surplus in last year's budget.
Faced with a $210 billion fall in revenue due to the collapse in the mining boom and
the global financial crisis, Mr Swan said the government was faced with a choice to
either push up taxes and go "slashing and burning" in areas like health or embark on
a course of "responsible borrowing".
As part of that borrowing, more than $22 billion will be spent on major road and
rail projects from central Queensland to metropolitan Perth to provide the "nation
building in every corner" that Mr Swan promises we'll tell our kids and
grandchildren about.
Mr Swan described the infrastructure spending as the "third phase" following the
October $10.4 billion and February $42 billion economic stimulus packages designed
to cushion the economy from the global financial crisis.
Unveiling his second budget on Tuesday night, Mr Swan revealed little that was new
from the measures leaked comprehensively in the past fortnight.
"Tonight we stand with the Australian people to say we refuse to be overwhelmed by
the brutal force of this global recession," Mr Swan said in his budget speech.
The government will spend $1.5 billion on its jobs and training compact aimed at
forcing young jobless to remain in school or training rather than on the dole queue.
Mr Swan said unemployment is expected to reach 8.5 per cent, or about one million
Australians in 2011 - an election year - but cautioned that without the stimulus
spending since October, the forecast would be closer to 10 per cent.
New parents will gain from another long-awaited scheme - the 18 weeks of
government-paid parental leave for those earning less than $150,000 from the start
of 2011, costing $731 million over five years.
But Mr Swan warned that everyone, particularly those who have benefited in the past
decade of growth, will have to suffer some pain and do their bit to haul Australia
out of its first recession since the early 1990s.
This includes a decision to means test access to the 30 per cent private health
insurance rebate with the level tapering down for singles earning more than $74,000
and combined family incomes of $150,000 a year.