Aussie budget deficit ballooning: report

A meaningful fall in Australia's public debt is not expected until the middle of next decade, likely putting pressure on global ratings agencies who are growing impatient on Australia's static fiscal repair.

Leading Australian budget forecaster Deloitte Access Economics on Tuesday said sluggish Australian wages growth, a stronger Australian dollar and increased monetary flows to Australia's states will see Australia's budget deficit balloon larger than forecasted four-months ago.

Deloitte estimates the 2015/16-budget deficit - to be released May 3 - will come in at 47.1 billion Australian dollars (36.34 billion U.S. dollars) larger than the mid-year fiscal estimate four months ago, while the following year will increase to 38.9 billion Australian dollars (30.02 billion U.S. dollars), 4.9 billion Australian dollars (3.78 billion U.S. dollars) worse than officially forecasted.

The total Australian budget deficit over four years will hit 129 billion Australian dollars (99.53 billion U.S. dollars), 21 billion Australian dollars (16.20 billion U.S. dollars) larger than forecasted in the mid-year review.

"At some stage politicians of all sides need to be more honest about the need for spending cuts and tax increases," Deloitte partner Chris Richardson said on Tuesday.

"We have an economy that's still not doing the budget any favours, and broadly speaking, it shouldn't be expected to do the budget any favours, budget repair is wholly and solely down to Canberra."

Australian politicians have all but ruled out tax increases in the upcoming and politically charged budget, instead saying there will be fiscal restraint and spending curbs, putting at risk the nation's coveted AAA credit rating.

"Given previous difficulties in reducing welfare benefits, actual spending cuts may be modest," Marie Dirion, a senior vice president at global ratings agency Moody's Investor Services said in highly public note mid-April.

"Without (revenue raising) measures, limited spending are unlikely to meaningfully advance the government's aim of balanced finances by the fiscal year ending June 2021 and government debt will likely climb, a credit negative for Australia,"

Richardson said the nation's leaders need to speak frankly with voters at the upcoming national election, likely July 2, about the state of Australia's fiscal spending rather than the "pixies, elves and fairies outlook" the voters heard in 2013.

"Treasury and Finance can stick their heads in the sand again, thereby ensuring the electorate does the same," Richardson said.

"Or ... they can tell it like it really is to all Australians ahead of the election, rather than solely to the new government after the election."

Speaking to local media on Tuesday, Australian treasurer Scott Morrison said he would not "penalise Australians for doing better in this economy", insisting the central government would not spend more than it saves in the upcoming budget despite being impacted by sluggish global growth.

Morrison delivers his first budget on May 3. Endit