Crossbench unhappy with cuts made to serve surplus

THE fate of Wayne Swan's surplus will rest with Tony Abbott.

Wayne Swan

THE fate of Wayne Swan's surplus will rest with Tony Abbott after the Greens and key independents Andrew Wilkie and Rob Oakeshott questioned the need to return to surplus this year and attacked the proposed cuts to higher education, research and training.

The Opposition Leader said of the cuts yesterday that "we don't like them", but the Coalition would make a decision once the relevant legislation came to parliament.

The key crossbenchers warned that cuts to education, training and research funding were not in the national interest.

But the Treasurer, in a direct warning to his opposition counterpart Joe Hockey and the independents, said the savings were needed to produce interest rate relief and provide the maximum room for the Reserve Bank of Australia to further cut official interest rates.

"I find it very strange that Mr Hockey would be out there opposing savings measures, because it's very important for interest rate relief and very important for future growth of our economy that we have a good, strong fiscal policy," Mr Swan said.

A day after the release of the mid-year economic and fiscal outlook, the government was forced to defend its company tax changes -- forcing big corporations to pay monthly rather than quarterly -- against accusations it was simply an accounting trick that would cause an $8.3bn cash-flow crunch to business.

The opposition released an analysis suggesting the real state of the federal budget for 2012-13 would actually be a $14bn deficit, if it took into account $8bn in funds shuffled to different financial years; off-budget spending of $4.7bn on the National Broadband Network; special dividends from Medibank Private and the RBA; and accounting changes to the treatment of the Future Fund.

Julia Gillard said the MYEFO was the "right economic statement for the Australian economy" and predicted eventual opposition support for the savings measures.

"Our experience in the past has been, even though they've been negative until they were blue in the face, then they've come into the parliament and they've backed the government's legislation."

Tasmanian independent Andrew Wilkie said he was unimpressed by the government's fascination with a budget surplus.

"It's obviously politically motivated and not in the public interest, especially given the global and national economic situation," he said. "While I will take time to examine all of the detail, I can say already that the decisions to cut research and trade training funding are ill-considered.

"And the decision to hit all people paying for private health insurance is a particularly galling attack on the poor."

Greens MP Adam Bandt said Labor's surplus was built on the back of cuts to payments to single parents and research cuts.

"For our economy to survive and thrive once the mining boom is over, we are going to be reliant on research and development in science and maths in this country," he said. "The half-a-billion-dollar cut we've seen to university research funding is not only unjustified, it's a false economy and its going to cost jobs."

NSW independent Rob Oakeshott said he could not understand why the government was cutting in education, where its agenda was one of its political strong suits.

Mr Oakeshott, who has opposed higher education cuts, said he had spoken to Greens leader Christine Milne about the proposed research cuts and they were also "on the same page there".