FED:Budget just as difficult as others:Swan

AAP General News (Australia)
04-15-2011
FED:Budget just as difficult as others:Swan

By Colin Brinsden, Economics Correspondent

CANBERRA, April 15 AAP - Treasurer Wayne Swan says next month's budget will be just
as difficult as the other three he has handled.

Mr Swan has repeatedly said that his fourth budget to be delivered on May 10 will be
"tough" and there's speculation it will include cuts to medical research and an overhaul
of the welfare system to encourage more people into work.

Australian Greens leader Bob Brown says his party will not block the federal budget
but will seek changes "at the margins" if it's unfair.

"The government is flagging publicly that it's got tough measures coming down the line,"

Senator Brown told reporters in Canberra on Friday.

"We will take those measures as they come ... if we can get a better outcome for the
Australian people through responsible action ... then we will work for that outcome."

Mr Swan is in Washington attending the G20 Finance Ministers' meeting of developed
and developing countries, which is giving him the opportunity to gauge the pulse of the
global economy ahead of the budget.

"The global economy is strengthening but it's very patchy and its uneven, and I think
its fair to say that there is uncertainty out there and the risk is to the down side,"

he told reporters in Washington.

He said instability in the Middle East and north Africa, and the events in Japan, will
have an impact on Australia.

"Those things all flow through but for Australia our long-term fundamentals are strong
despite the fact there is near-term uncertainty," the treasurer said.

Mr Swan took time out to launch a paper on Australia's response to the global financial
crisis, written by his former chief of staff Chris Barrett, now an Australian scholar
at the Woodrow Wilson International Centre for Scholars.

"Next month I will deliver my fourth budget and this one will be just as difficult
as those that have come before it," he said in his address.

He said the cost of rebuilding following the summer natural disasters and lower revenues
could affect the budget bottom line in the short-term.

"We will withstand the impacts of these natural disasters, just like we withstood the
GFC better than other developed countries," Mr Swan said.

"Australia is also situated in the fastest growing region in the global economy."

Meanwhile, growth is bringing problems for China's economy, with new data on Friday
showing inflation accelerating to uncomfortably high levels in the March quarter, despite
authorities there tightening monetary policy over the past six months.

China's annual inflation rate ballooned to 5.4 per cent in the March quarter, from
4.9 per cent in the previous three months, while economic growth eased only slightly to
9.7 per cent from 9.8 per cent previously.

Commonwealth Securities economist Savanth Sebastian said while parts of the Chinese
economy had responded to tighter monetary conditions, it will take time for the impact
to be seen.

"If China did pick up the pace of monetary tightening, that could actually serve to
keep Australia's Reserve Bank on the (interest rate) policy sidelines for longer," he
said.

"Clearly an exacerbated slowdown of the Chinese economy would be negative for our economy."

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