Treasurer Wayne Swan has chosen the eve of his second budget to turn the tables on the federal opposition, partly blaming them for the huge deficits that will be announced on Tuesday.
Mr Swan stuck to the theme of the global recession hitting domestic economic growth and revenue in his latest round of pre-budget interviews.
He said everybody would have to do their bit and the government would have to pull in its horns and rein in expenditure.
“It is the case that the previous government, at the top of the mining boom, did spend relatively freely,” Mr Swan told Sky News.
“We know that because (former treasurer Peter) Costello said that himself in Mr Howard’s biography.”
Opposition finance spokeswoman Helen Coonan said Labor was “really scraping the bottom of the barrel” trying to blame the previous government for its deficit and debt.
Senator Coonan said the Howard government left Australia with zero public debt, a substantial surplus – about $22 billion – lower taxes, record low unemployment, and higher real wages.
“The fact that there has been an upheaval in the world and pressure on revenue doesn’t explain why Labor has now spent $100 billion since the last budget and are now going to ask Australians to pay off this debt and deficit for as far as the eye can see,” she told ABC Radio.
Mr Swan said the opposition just doesn’t understand that the deficit was not a consequence of government spending.
“They would claim that they wouldn’t be running these deficits and the borrowing to go with them, they would have to massively slash existing government services or massively increase government taxes to make up for this lost revenue caused by the global recession,” he told the Fairfax Radio Network.
“They, like the current government, would have to borrow, because the consequence of not doing that would be a savage attack on services or dramatic increases in taxes, which would make the recession deeper and longer.”
Access Economics economist Chris Richardson blames parties of “both stripes” for handing back the fiscal dividend of the boom times, limiting the ability to defend Australia from recession.
“The federal budget will be mired deeply in deficit after the GFC (global financial crisis) is long gone,” Mr Richardson said.
He said the task in repairing the budget was both “massive and mean” and would require Australia’s politicians to have real courage.
He said the government would need to save $25 to $30 billion a year, the equivalent of abolishing the Department of Defence.
Mr Swan agreed that there would be tough choices for everybody in the budget.
He said the government was committed to increasing pensions, but this means there will have to be long term savings.
“So the opposition on the one hand can’t be out there saying they’ll support a pension increase and then knock back the savings that make that pension increase sustainable for the long term,” he said.
“They can’t have it both ways.”