The budget will remain in deficit long after the global financial crisis ends because governments effectively squandered the ''milk and honey'' years of the commodity boom, a new report says.
Access Economics' budget monitor, Deficits as far as the eye can see, predicts Treasurer Wayne Swan's budget tomorrow will show a $59 billion underlying cash deficit for 2009-10 and a $61.2 billion fiscal deficit, taking into account an expected $9 billion of infrastructure spending and $3.9billion for a pension increase. At 5 per cent of gross domestic product, that would make it a bigger deficit than during either the 1990s recession or the Whitlam years.
Access's Chris Richardson rejected Government expectations the budget would be back in surplus by 2015-16, saying it would remain in deficit ''until we have politicians with courage'' because it would not be sustainable until ''middle Australia feels plenty of pain in its hip pocket''.
''People underestimate the extent to which both sides of politics went to the last election with unaffordable promises off the back of boom-time revenues,'' he said.
For more, pick up a copy of today's Canberra Times.
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