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Fed: Work harder and longer to pay off nation's debt: Swan

By Kate Hannon, National Political Editor
12 May 2009 7:32 PM

CANBERRA, May 12 AAP - Australians face working longer and harder as the labour force shrinks, while the Rudd government pins its hopes of economic recovery on the biggest nation building program since the Snowy Hydro Scheme.

But families will feel immediate pain in Labor's second budget delivered on Tuesday night because of moves to tighten access to so-called middle-class welfare which blossomed under the previous government.

Pensioners are the budget's biggest winners and will receive a long-awaited weekly increase of $32.49 for singles, while couples will get a $10.14 a week increase.

But in order to pay for the rise, baby boomers born after 1952 will feel the pain first with the decision to raise the pension age by two years to 67, a move Treasurer Wayne Swan acknowledges will be "very unpopular".

The qualifying age will increase in six monthly increments between 2017 and 2023 as the government attempts to lighten the burden of the "demographic timebomb" of a growing pension bill and a shrinking workforce.

"I know it will bring some pain and angst to many," Mr Swan told reporters.

"I don't take this decision lightly, it won't be popular, in fact, it'll be very unpopular.

"The thing that dominates the outlook for Australia as we look forward is the ageing of our population."

Mr Swan says the change, which includes allowing pensioners to earn more before losing their pension payments would lead to a "stronger and fairer" pension system.

But he says the budget's main focus will be on job support and creation and "nation building for recovery" as the government plots a course for a return to surplus in six years' time from a record $57.6 billion deficit in 2009/10 - a massive turnaround from a $22.7 billion surplus in last year's budget.

Faced with a $210 billion fall in revenue due to the collapse in the mining boom and the global financial crisis, Mr Swan said the government was faced with a choice to either push up taxes and go "slashing and burning" in areas like health or embark on a course of "responsible borrowing".

As part of that borrowing, more than $22 billion will be spent on major road and rail projects from central Queensland to metropolitan Perth to provide the "nation building in every corner" that Mr Swan promises we'll tell our kids and grandchildren about.

Mr Swan described the infrastructure spending as the "third phase" following the October $10.4 billion and February $42 billion economic stimulus packages designed to cushion the economy from the global financial crisis.

Unveiling his second budget on Tuesday night, Mr Swan revealed little that was new from the measures leaked comprehensively in the past fortnight.

"Tonight we stand with the Australian people to say we refuse to be overwhelmed by the brutal force of this global recession," Mr Swan said in his budget speech.

The government will spend $1.5 billion on its jobs and training compact aimed at forcing young jobless to remain in school or training rather than on the dole queue.

Mr Swan said unemployment is expected to reach 8.5 per cent, or about one million Australians in 2011 - an election year - but cautioned that without the stimulus spending since October, the forecast would be closer to 10 per cent.

New parents will gain from another long-awaited scheme - the 18 weeks of government-paid parental leave for those earning less than $150,000 from the start of 2011, costing $731 million over five years.

But Mr Swan warned that everyone, particularly those who have benefited in the past decade of growth, will have to suffer some pain and do their bit to haul Australia out of its first recession since the early 1990s.

This includes a decision to means test access to the 30 per cent private health insurance rebate with the level tapering down for singles earning more than $74,000 and combined family incomes of $150,000 a year.

AAP keh/kms/mo/jlw