Labor’s surplus risks recession: Milne

Greens leader Christine Milne says the federal government risks sending south-eastern Australia into recession if it pushes ahead with its plan to deliver a budget surplus in 2012/13.

Senator Milne on the weekend blamed Opposition Leader Tony Abbott for creating an environment where Labor felt locked into delivering a surplus in the May budget.

But on Monday her criticism was focused on the government.

“The problem we’ve got at the moment is that with weakening growth trends you’ve got a situation where we risk south-eastern Australia going into recession if we push too hard,” Senator Milne told ABC TV.

“Taking $40 billion out in one year is a huge amount, it’s a record, and it’s contrary to what most leading economists are saying and also Christine Lagarde from the IMF.”

Senator Milne said Labor should be looking to deliver a surplus “in the budget cycle”.

She said the Greens wanted to make sure there wasn’t a contraction in the economy that would make the jobs market “even weaker”.

The government should be looking to increase the Newstart allowance “which would actually put money into the economy at a time that it’s really necessary”.

Further, Labor should not be giving tax cuts to big business but should scrap the diesel fuel rebate going to miners, Senator Milne said.

“Let’s keep that money to spend on health and education.

“I think that’s what the community would like.”

Assistant Treasurer David Bradbury said on Monday that returning the budget to surplus was about tackling inflation, fighting cost-of-living pressures, giving the Reserve Bank room to cut interest rates and ultimately taking some pressure off the high Australian dollar.

“There is a big job ahead for the government in making the cuts that are necessary in order to return the budget to surplus,” Mr Bradbury said.

“We make no apologies for doing that.”

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