Australian government warns of tough budget

A retail worker holds up an outlet store promotion in downtown Sydney on March 6, 2014. The Australian budget later this month will involve "tough decisions" to put the economy back on track, a senior minister said on Sunday, May 4, 2014, as a p
A retail worker holds up an outlet store promotion in downtown Sydney on March 6, 2014. The Australian budget later this month will involve "tough decisions" to put the economy back on track, a senior minister said on Sunday, May 4, 2014, as a poll revealed a voter backlash against any new tax to cut debt. -- FILE PHOTO: REUTERS

SYDNEY (AFP) - The Australian budget later this month will involve "tough decisions" to put the economy back on track, a senior minister said on Sunday as a poll revealed a voter backlash against any new tax to cut debt.

Australia has enjoyed more than 20 years of annual growth, sidestepping the worst of the global financial crisis due to a mining boom fuelled by Asian demand.

But the government elected in September has said it is facing a deficit of A$47 billion (S$54.6 billion) this fiscal year due to the previous Labor administration, and that the debt will only mount in coming years.

House Leader Christopher Pyne refused to comment on whether a new tax reportedly under consideration to plug the deficit - on workers earning more than A$80,000 a year - would be unveiled as part of the budget on May 13.

"I think they (Australians) fully understand we have to make the tough decisions necessary... to get the economy back on track again," he told the Australian Broadcasting Corporation.

"They know it won't be easy and it is important that everyone shares in that burden of repairing the damage Labor did to the economy and to the budget."

A Galaxy Poll in The Sunday Telegraph found 72 percent of voters felt that introducing the levy would amount to a broken promise by Prime Minister Tony Abbott, who before the election had pledged no new taxes.

The poll of the 1,391 voters also found support for Mr Abbott's coalition had dropped significantly since the election, from 53.5 to 48 percent, meaning it would lose an election to Labor if a poll were held now.

Mr Pyne dismissed the poll, saying the government had been elected to fix the budget and Australians understood this was a priority.

"There's no easy way out from the debt and deficit disaster left for us by the Labor government," he said.

"We don't want to end up in the situation that Europe and the United States are in - and we don't have to as long as we have a government that is prepared to take responsibility and make the decisions now that will set up the economy and our society in the years ahead."

In a statement, Mr Abbott said the nation must live within its means and try to reduce debt.

"Beyond a certain point, you don't control debt; debt controls you," he said.

Opposition Labor leader Bill Shorten said his party would oppose any deficit levy.

"Increasing taxes on working class and middle class Australians is a terrible mistake, and people will not forgive Mr Abbott for breaking this very big promise," he said.