Australia budgets for growth and jobs

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The Independent Online
AUSTRALIA's Labor government yesterday forecast higher growth and employment and a reduced current account deficit in a budget that it claimed would accelerate the country's economic recovery by encouraging more business investment.

The focus of the budget was the question of how the government would pay for an ambitious job creation programme which Paul Keating, the Prime Minister, announced last week in a White Paper. It will cost Adollars 6.5bn ( pounds 3.1bn) over the next five years, and is aimed at bringing Australia's unemployment down from 10.3 per cent to 5 per cent by the end of the decade.

The White Paper went down badly with financial markets, which were concerned about how the government could fund it and still achieve its aim of bringing the deficit down to its target of 1 per cent of gross domestic product by 1996-97. The response last week in a selling spree of shares and bonds brought a terse rebuke from Mr Keating, who accused the financial markets of vanity and irrationality.

There was somewhat less hysteria last night when Ralph Willis presented his first budget since Mr Keating appointed him Treasurer last December. As well as the jobs programme, the budget contained Adollars 1bn worth of outlays on Aboriginal health, breast cancer prevention and research and mental health over the next five years. It also provided more spending for homeless people, students and veterans of the Vietnam war, who have long claimed that their rehabilitation needs have gone unrecognised.

In advance of Sydney staging the 2000 Olympic Games, the government will spend Adollars 135m on preparing Australia's athletes. To pay for its commitments, the government will raise no new taxes. Instead, it will rely on revenue from further sales of public assets, such as national airports, and from overall economic growth, which the budget forecast would reach 4.5 per cent next year.

The budget deficit will fall from Adollars 13.6bn this financial year to Adollars 11.7bn in 1994-95. Employment next year is expected to grow by 3 per cent, and inflation to stay at 2.25 per cent.

There was broad acceptance of the budget last night from financial markets, business and unions. The National Australia Bank said the budget's forecasts were 'pretty similar' to its own and that business investment was likely to increase because of rising confidence.

John Hewson, the Opposition leader, said the budget contained hidden tax increases and would worsen public debt and lead to higher interest rates.

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