2008 Federal Budget Assessment 12:19am 14.05.08

The first Labor budget, delivered by Treasurer Wayne Swan, needs to be assessed on its ability to improve the performance of the Australian Federation, says Kevin MacDonald, CEO of NSW Business Chamber.

“The Budget has delivered a $21 billion surplus, reined in expenditure growth, introduces new endowments for infrastructure, health and education and takes a swing at breaking the back of inflation,” says MacDonald. 

“There are inflationary pressures in the Australian economy and the Government’s commitment to reining in expenditure is a welcome improvement over the final Costello budgets. However, it should be noted that the new Government did limit its options through its decision to embrace the Howard/Costello tax cuts of October 2007.

“The Prime Minister’s decision to keep his election commitments in their entirety is admirable. However, only time will tell if the Reserve Bank takes back tonight’s tax cuts through further increases in official interest rates. If it does, then the Prime Minister’s commitment of ‘keeping the faith’ will only have been met on paper and not in reality.”

MacDonald adds that Australia’s current economy is the most challenging it’s been in a decade. “These are choppy economic waters—the benefits of the resources are being tempered by volatile equity and international markets, continued drought, a higher than normal currency and rising interest rates.”