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New budget hurdle for Australia By James Grubel AUSTRALIAN Prime Minister Kevin Rudd is facing the biggest challenge of his short time in power with a hostile Upper House of parliament set to block budget revenue measures worth A$6 billion ($5.2 billion) The threat puts at risk Rudd’s plans to raise taxes on pre-mixed ‘alcopop’ drinks and luxury imported cars, and impose a A$2.5 billion tax on exempt gas condensate produced at Australia’s offshore North West Shelf oil and gas fields. Conservative rivals yesterday said they would oppose the budget laws in the Senate, forcing Rudd to negotiate with a disparate group of two independents and five Greens holding the balance of power. “The government knows my phone number. My door’s open to them, I’ll keep talking to the government,” newly-elected independent Senator Nick Xenophon told reporters yesterday. The conservatives, who held a one-seat senate majority until July 1, want to vote down the tax increases worth A$6.2 billion over four years, saying the measures would push up prices with inflation already at 16 year highs. They say the tax rises were not flagged during last year’s election campaign, and would represent only about A$1.5 billion a year in lost revenue, or 0.5 per cent of government income. Rudd said the Senate was undermining the government’s economic management by trimming the budget surplus, forecast at A$21.7 billion in 2008/09 and more than A$79 billion over four years. Australia has run surplus budgets for 11 of the past 12 years. The former conservative government used the surpluses to pay off A$96 billion of foreign debt and to set up an investment fund to cover ongoing public service pension liabilities. The opposition parties and independents will finalise their position on the condensate tax in September. — Reuters |
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