The Economy

Date: 08/06/2010

The Federal Budget - more realistic than last year's, but is it now too optimistic about the global economy and the resources boom?

The 2010 Federal Budget promises a return to surplus in 3 years, 3 years earlier than predicted last year. But respected economist Professor Neville Norman of Melbourne University says that's mainly because the Rudd Government 2009 Budget forecasts were excessively gloomy and underestimated the demand impact of its own stimulus packages.  He says there's now a danger that revenue estimates will be too optimistic, based as they are on a continuation of the resources boom and a solution to the European debt crisis. He also says it's time now to end the stimulus packages - they've done their job. He forcasts further interest rate rises later in the year, and warns business to be on the lookout for inflationary pressure from wage increases and supply costs.