Unions Advise Aussie Government to be Prepared to Abandon Budget Surplus Promise

While Australia's Business Council favoured a return to fiscal surplus, unions advised the Labor government to be prepared to abandon its budget surplus promise in response to budget cuts announced on Tuesday by Treasurer Wayne Swan.

The budget cuts took into account the impact of the European debt crisis on global finance, although Mr Swan insisted that the government would keep its vow to bring the country's books back to balance according to the original amount, but with a smaller surplus than the original plan.

Australian Confederation of Trade Unions (ACTU) President Ged Kearney said that more than keeping its promise to achieve a budget surplus, the higher priority of the government should be to protect jobs during an expected period of uncertainty caused by the worsening European financial crisis.

Ms Kearney pointed out that urgent and appropriate action by the Australian government during the 2008 global financial crisis protected the country from recession and saved thousands of jobs from being axed.

"Should the economy perform worse than forecast, the government must do the same, even if it means delaying the planned return to surplus in 2012-13," Ms Kearney said in a statement.

In contrast to ACTU's stand, Business Council President Tony Shepherd said the return to budget surplus is the correct economic policy for the times.

"The unmistakable lesson from economic developments around the world is the fundamental importance of governments living within their means," Mr Shepherd said in a statement.

"A budget surplus will provide an important buffer to help ride out the inevitable volatility that lies ahead," Mr Shepherd stressed.

He said that a surplus will provide Australia the firepower to step in and stimulate the economy to keep the country strong if the global situation would deteriorate substantially.

"The impact that good public policy has on building confidence in the economy, both domestically and internationally, should not be underestimated," Mr Shepherd said.

However, he also agreed with ACTU that if the situation in Europe and globally deteriorates faster than expected government should have the capacity to reconsider its stand on the surplus.

Ms Kearney favoured the tighter eligibility for living-away-from-home allowance received by foreign workers based in Australia which she described as over generous. She pointed out that the tighter policy would save $700 million.

Mr Shepherd pushed for measures that would encourage private investment in key infrastructure, improve the competitiveness of Australia's tax system, reduction of the red tape burden on business and hike measures to increase labour mobility.