Australia’s Hockey to Pitch Spending Cuts in Response to Budget

Australia needs to spend less, save more and support small businesses to get back into surplus, opposition treasury spokesman Joe Hockey may say in his response today to Prime Minister Kevin Rudd’s budget.

Hockey makes his address to the National Press Club at 12:30 p.m. in Canberra after Treasurer Wayne Swan announced the budget on May 11. Hockey will reveal the Liberal-National coalition’s plans to support small businesses, the Australian newspaper reported today without saying where it got the information.

“Rudd promised to be an economic conservative and he has been spending without restraint,” Liberal lawmaker Paul Fletcher told Sky News today.

Swan projected a return to surplus three years ahead of forecast in 2012-13 as a result of a recovering economy and a revenue boost from a new 40 percent tax on resource company profits. The budget, described by Hockey as a “shameless con,” also retained a 2 percent cap on spending growth until the surplus reaches 1 percent of gross domestic product.

“Every worker deserves maximum security when it comes to their jobs,” Rudd told Australian Broadcasting Corp. radio today. “That’s why the Australian government intervened in the global financial crisis with a massive investment in stimulus to keep the wheels of the economy turning.”

The Liberal-National coalition, tied with Rudd’s Labor party in the polls in the lead-up to an election that must be held by April, says the A$42 billion ($36 million) stimulus package handed out in 2009 pushed the central bank to a world-beating round of interest rate rises, adding about A$300 a month to the cost of an average A$300,000 mortgage. The government says it staved off recession.

Cuts Planned

The coalition has pledged to cut jobs for government bureaucrats, scrap a planned A$43 billion high-speed fiber Internet network and won’t introduce a resources tax if elected.

Swan expects to raise A$12 billion in the first two years of the resource tax scheduled to take effect from 2012, a move that has been criticized by miners such as BHP Billiton Ltd., the largest mining company, and Rio Tinto Group.

The tax plan is “insane,” opposition leader Tony Abbott told a petroleum conference in Brisbane today. Rudd’s government failed to hold any “serious consultation” with the industry about its plan, he said.

Labor and the coalition are tied at 50-50 after a drop in Rudd’s approval rating, according to a Newspoll telephone survey of 1,159 people taken between May 14 and 16 and published in the Australian newspaper on May 16. Rudd would lose an election called now, according to a Herald/Nielsen poll on May 10.

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