Australia opposition plans to cut aid, public sector jobs

Reuters News
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Posted: Sep 05, 2013 3:05 AM
Australia opposition plans to cut aid, public sector jobs

SYDNEY (Reuters) - Australia's conservative opposition, widely expected to win Saturday's election, said on Thursday it plans to cut spending on foreign aid and axe public sector jobs to help pay for new roads, a parental leave scheme and the removal of a tax on carbon emissions.

Australia has enjoyed 22 years without a recession thanks largely to strong demand for its abundant mineral resources but a slowdown in demand from top consumer China has cooled growth, hit tax revenue and weakened support for Prime Minister Kevin Rudd's Labor Party in the lead-up to the vote.

Opposition treasury spokesman Joe Hockey outlined an extra A$9 billion ($8.3 billion) in savings, taking the total identified to A$42 billion over the next three years.

The cuts include A$4.5 billion from the foreign aid budget and reducing the number of public sector jobs by 12,000, mainly through natural attrition.

"It is unsustainable to continue massive projected growth in foreign aid funding whilst the Australian economy continues at below trend growth," Hockey told reporters. "Australia needs a stronger economy today so that it can be more generous in the future."

The aid cuts would torpedo a bipartisan commitment from Australia to increase its aid spending to 0.5 percent of GDP, angering aid agencies.

"This decision has wiped out a generation of youth idealism, and broken the hearts of Australians who dare to care about people beyond our borders," World Vision Australia chief executive Tim Costello said.

The Opposition Coalition, led by Tony Abbott, had earlier pledged to remove a tax on so-called super profits by iron ore and coal mining and to scrap a carbon emissions trading scheme.

Scrapping the mining tax, which has so far gathered almost no revenue, and cutting benefits associated with it, would actually save the budget almost A$15 billion, while the cost of abolishing the carbon trading scheme was put at A$6 billion.

A further A$1 billion in savings was identified from stopping the arrival of refugee seekers by boat, an issue on which both the government and opposition are taking a tougher stand.

Hockey said the budget bottom line would be improved by A$6 billion and government debt reduced by A$16 billion by the year ended June 2017 under its proposals.

Among its major spending priorities, the opposition earmarked A$9.8 billion for a scheme to pay new mothers half their annual salary for six months leave and more than A$11 billion on roads.

Opinion polls show Abbott's Liberal-National Party coalition will romp to a solid victory on Saturday, with the latest Newspoll giving the opposition 54 percent of the two-party vote compared with 46 percent for the ruling Labor Party.

($1 = A$1.1)

(Reporting by Lincoln Feast; Editing by Nick Macfie)