The Labor-led government has unveiled its updated federal budget plan that now carries a downward revised surplus target of $1.1 billion but with more spending cuts that drew scathing criticisms from business leaders and the Coalition.
One of the glaring benefits that would come out of the budget revisions is the creation of more space for the Reserve Bank of Australia (RBA) to efficiently perform its function of safeguarding the health of the domestic economy and spur growth, Treasurer Wayne Swan said on Tuesday.
Speaking to reporters today in Sydney, Mr Swan said that the Parliament needs to back the budget adjustments being pushed by the Treasury because it will provide ample flexibility for the RBA board to hand down rate cuts in the months and quarters ahead.
Analysts said the central bank will likely push down the country's benchmark borrowing rate to 3.00 per cent, which is shearing off another 25 basis points in the November meeting of the RBA board.
Earlier this month, the RBA provided more breathing room for Aussies when it set the country's official interest rate to 3.25 per cent and with the upcoming inflation data possibly within the guidelines of policy makers, the move, analysts said, should be replicated by the first Tuesday of November.
Such intervention from the RBA is needed, Mr Swan insisted, adding "It's important for the surplus. It's important for the future of interest rates."
Apart from adopting lower spending plans for government services and welfare payments, the budget review also comes with painful tax programs that for the most part would expedite the collection of corporate tax dues to cover for the dwindling tax receipts of the government.
The goal, Mr Swan said, is to support the national coffers with a forecasted infusion of at least $8 billion in additional revenues, mostly to be sourced from the business community.
For Woolworths top man Grant O'Brien, the Gillard Government appears focused on squeezing too much from businesses to address the deficiencies on its budget plan, a tactic that will only inspire counter-growth trend, Mr O'Brien added.
"If you're shackling businesses then you're tying the hands of the very things that are going to lead to the growth," the Woolworths chief was reported by the Australian Associated Press (AAP) as saying.
Also, the review by Mr Swan, according to Opposition Leader Tony Abbott, is hard to accept at the moment as he pointed to measures - the downgrade of baby bonus and the slashing of insurance rebate - that will hurt many Australian households.
In an interview with Seven Network today, Mr Abbott declared that "we don't like them," but he stopped short of categorically saying that the Coalition will not support the alterations now included in the federal budget map.
"We'll make a decision on what our attitude to these will be when the relevant legislation comes before the parliament," Mr Abbott said.
His shadow treasurer, Joe Hockey, said the budget review by Mr Swan proved that the federal management of the economy is in shambles, inevitably spawning a scenario that is non-conducive for business growth.
What we have is a 'fiscal mess', Mr Hockey told reporters in Melbourne, adding he cannot help but doubt his counterpart's ability to deliver the surplus, which he noted has been reduced from the original target of $1.5 billion.
Notwithstanding the worries raised on the reviewed budget, Prime Minister Julia Gillard told ABC that the concerns were not valid and the Coalition will end supporting the budget bill to legislate the amendments presented by Mr Swan.
Pointing to previous budget debates, the opposition, Ms Gillard said, came "into the parliament and backed the government's legislation."
There's no reason it would be different this time around, the prime minister added.
To contact the editor, e-mail: