Australia might have unpopular budget

MELBOURNE: Australian Treasurer Wayne Swan warned the nation faced a "hard" and "unpopular" budget this month as the government attempts to deal with the global recession in a responsible manner.

Swan refused to guarantee the May 12 budget would keep tax cuts for high earners due to take effect in July that were a major campaign commitment for the centre-left Labor government when it was elected in late 2007.

"There are hard choices and there will be decisions that will be taken which won't be popular," Swan told ABC television when asked about the tax cuts.

"But the government will take the unpopular decisions in the interests of ... supporting jobs, stimulating our economy now (and) putting in place the long term investments for the future so we can maximise opportunities when the world economy recovers," he said.

The government would also ensure its spending commitments -- which include more than 50 billion dollars (35 billion US) in economic stimulus -- were fiscally sustainable in the long term, he added.

Swan predicted a surplus of 21.7 billion dollars in 2008-09 when he delivered his last budget but said in February that the global financial crisis had punched a 115 billion dollar hold in government revenue.

He said Sunday that the revenue shortfall was now "substantially worse" but would not confirm reports it had reached 200 billion dollars.

The treasurer said the financial crisis was forcing Australia into temporary deficit but he planned to return the budget to surplus in the medium term once the economy improved.

The government is widely tipped to unveil new economic stimulus measures in the budget centred around major infrastructure projects.

It will also revise its economic growth forecasts down and unemployment expectations up to reflect the impact of the financial crisis, which Prime Minister Kevin Rudd conceded last month had plunged Australia into recession.