Budget surplus raises doubts in Penrith

THIS week's federal budget failed to impress either speaker at Penrith's annual Budget Breakfast yesterday.

Westpac senior economist Matthew Hassan and the University of Western Sydney's applied finance director Tom Valentine were the guest speakers, as they have been at previous years' breakfasts.

"I think the way we can describe the budget is patchwork," Mr Hassan said.

"Looking at it from a political point of view, the government is keeping its bases covered, but trying for a figleaf of surplus."

He said the projected surplus of $1.5 billion was so small that it was really a balanced budget, but one vulnerable to economic shocks, particularly from overseas.

He also questioned whether, given some weakness in the Australian economy, now was the right time to aim for a budget surplus.

"But we want to have sound financial management and there is a need to show we're economically responsible," Mr Hassan said.

He said the Australian economy could soften in the year ahead, depending on consumer confidence and employment expectations.

But he said Australia was in a better position than most other countries and he expected the economy to start growing next year.

Professor Valentine was less measured in his criticism and called for a federal election to be held as soon as possible.

"I am incredulous that this government hasn't fallen," he said. "They are only kept in power by two unscrupulous men."

Professor Valentine was referring to independent MPs Tony Windsor and Rob Oakeshott, who he said should have followed their constituents' wishes and backed the Coalition.

He then endorsed calls for embattled Labor MP Craig Thomson to resign immediately, before talking about the budget's carbon tax compensation and education grants to families.

"Clearly, the aim of these giveaways is to hold on to as many Labor seats as possible," Professor Valentine said.

He said Australia was vulnerable to slowdowns in the Chinese and European economies and there was not much Australia could do about it.

Professor Valentine also called for policies to encourage Australian savings, stating that future benefits such as pensions would have to be paid for.

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