Federal Budget 2009
And that assumes that Treasury's economic growth projections are near the mark, and some $22 billion of savings are achieved.
"This budget is forged in the fire of the most challenging global economic conditions since the Great Depression," Treasurer Wayne Swan told parliament, handing down the Rudd government's second budget on Tuesday.
"To Australian people I say, this is not an easy budget for easy times."
There are positives in the budget papers.
Single age pensioners will get an extra $30 a week, another $22 billion will be spent on roads, ports and railways, and the enhanced home owners grant remains near enough intact for now.
But the budget numbering is dire.
As expected, the budget bottom line is forecast to sink further into the red in 2009/10 at a shade under $58 billion - larger than in the recessions of the 1980s and 1990s as a proportion of gross domestic product (GDP).
And it will stay around that level in 2010/11.
This financial year the deficit is expected to be just over $32 billion, $10 billion more than was estimated just a few months ago.
A huge $210 billion has been wiped off revenues over the next four years, up from the $115 billion shortfall predicted in the Updated Economic and Fiscal Outlook released in February.
"Global recession has been unleashed on Australia with a brutal, uncompromising force," Mr Swan said.
"Since September last year, almost all major economies have gone into recession, dragging ours into recession as well."
Economic growth is forecast to finish flat this financial year, but then contract by 0.5% in 2009/10 as the recession takes hold.
Still, according to the budget papers, without the government's stimulus packages, GDP would have contracted by a further 2.75%. Further out in 2010/11, GDP is forecast to remain below trend at 2.25% growth, and then accelerate over the next two years to 4.5%.
This may sound ambitious, but Treasury says these figures are conservative and compare with an average 4.8% growth rate in the aftermath of the 1980s recession and four per cent after the one in the 1990s.
Treasury explains in the budget papers that a period of below trend growth will result in "substantial spare capacity" becoming available, while the economy is assumed to grow above trend as the spare capacity is brought back into use.
The budget figuring also shows that last week's dip in the jobless rate to 5.4% from 5.7% is likely to be a one-off.
The unemployment rate is now expected to hit six per cent by June this year, and accelerate to 8.25% a year later - well above the previous estimate of 7%. It then extends even further to 8.5% in 2010/11, which translates into around one million people on the dole.
Again the budget papers say the jobless rate would have been closer to 10% without the stimulus packages.
The way back to a budget surplus looks set to be a long slow grind, and as "temporary" as the last run of deficits during the 1990s recession.
The deficit winds back marginally to $44.5 billion in 2011/12, then shrinks to a still hefty $28.2 billion in 2012/13, according to the forward projections.
The surplus doesn't return until 2015/16.
"It will take time, and it will take discipline," Mr Swan said.
"It will take hard choices, doing more with less."
Federal Budget 2009: At A Glance
• Deficit of $57.593 billion
• Unemployment to hit 8.25%
• Economic Growth to fall to -0.5% of GDP
• Inflation to average 1.75%
• First Home Owners Boost continued for six months
• Small Business and General Tax Break increased to 50% for order this calendar year
• Infrastructure spending to total $22b $8.5b for road, rail and port
• $4.5b on new clean energy initiative
• $5.3b on tertiary education, research and innovation
• $2.5b over five years to drive hospital and health workforce reform
• $3.2b from Health and Hospitals Fund to modernise hospitals and improve cancer facilities
• Private health insurance rebate reduced for higher income earners
• Medicare Levy Surcharge increased
• $731m over five years for paid parental leave scheme
• Pension age increased progressively to 67 years by 2023
• Single Pensioners to get extra $32.49 per week, couples to get extra $10.14 per week
• New $600 a year Carer Supplement for all Carer Payment recipients, plus allowance
• Extra $650m in funding for border protection
For more information visit the Federal Government's Budget website.
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