Big deficits loom:Tanner

As the Federal Treasurer, Wayne Swan, flies to Washington for more talks on the global economic crisis, Australians should steel themselves for big Federal deficits.

These will start with the Federal budget, which Mr Swan is to bring into Parliament on May 12.

His colleague, the Finance Minister, Lindsay Tanner, is frank about what needs to be done.

Mr Swan has already admitted that the crisis has put a “wrecking ball” through his budget calculations.

And the IMF revealed yesterday that it expects the global economic downturn to be even deeper and longer than it had previously forecast.

Mr Tanner was asked about these developments in a radio interview.  He was reminded, too, that government revenues now seem likely to collapse by even more than the $115 billion predicted in February.

His reply was blunt.

“It is pretty clear from these figures that we’ll see even bigger deficits as a result of that change,” Mr Tanner said.

But he refused to say how big the budget deficit might be.

Nor would he say when a recovery might start.

“It’s impossible to say how quickly we will be able to move into recovery,” Mr Tanner said.

“But we do have an extraordinary degree of economic stimulus moving through the system.”

He said these are flowing both from lower interest rates and the Federal government’s two stimulus packages.