July 15 (Reuters) – Australian Prime Minister Julia Gillard sought to sell her Labor government’s economic credentials on Thursday, warning that the conservative opposition’s policies could risk a robust economy.
In her first major economic speech since becoming prime minister on June 24, Gillard set out her platform for re-election at polls expected within months, centering on job creation.
“I believe a strong economy is the foundation of everything else that as prime minister I want for this great country of ours,” Gillard told the National Press Club in Canberra.
“As prime minister I will make my economic judgments based on what gives Australians the best opportunity for access to work.”
The government, on course for a narrow election victory according to opinion polls, tweaked its economic forecasts on Wednesday, predicting robust commodity prices due to Chinese demand will ensure the budget returns to surplus in 2012/13, far ahead of most other rich nations.
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It also forecast unemployment would fall to 5 percent in 2010-11 and 4.75 pct in 2011-12.
Gillard said the economy had emerged from the global financial crisis stronger than many other developed nations due in part due to the government’s A$52 billion ($46 billion) stimulus package in 2009.
“I say to the Australian people, now is not the time to take risks with the Australian economy,” said Gillard, Australia’s first female prime minister who appears far more at ease dealing with the media than her predecessor Kevin Rudd.
“It is a time for prudent and careful economic management, not a time to take risks with a Liberal Party that got it wrong on the global financial crisis, that opposed (stimulus) action to support Australian jobs and that would have allowed hundreds of thousands of jobs to be destroyed.”
Gillard said a new mining tax, which is forecast to raise A$10.5 billion in revenue from 2012, would fund a cut in corporate tax and a rise in pensions but would be dumped by conservative leader Tony Abbott if he was elected.
“Remarkably, my opponent would deny Australians these benefits because he is refusing to accept the tax that our biggest mining companies have agreed to pay,” she said.
PM SELLS ECONOMIC CONSERVATISM
Economic management is traditionally a major issue in Australian elections. And while Australia’s healthy economy, in its 17th year of growth, should be a winning ticket for the government, voters still believe the opposition has the edge in economic management, according to opinion polls this week.
The opposition, which ruled for 12 years before Labor was elected in 2007, is also committed to achieving a budget surplus, and has said it would put downward pressure on interest rates, cut debt and cap spending.
But it differs from the government over its opposition to a new mining tax and a planned carbon price to fight climate change.
Despite her left-wing background, Gillard has sold herself as an economic conservative, dismissing concerns her government would be an old-style, big-spending Labor administration.
Gillard said growth in spending would be capped at 2 percent a year once the economy was growing above trend.
She also said Australia could not rely solely on its resource sector for future economic prosperity, warning doing so could create a two-speed economy of haves and have nots.
“Australia today is a great beneficiary of the economic growth in China and the demand for our mineral resources in our region. But if anyone thinks that gives us a free ticket to easy prosperity, they are mistaken,” she said.
She said a re-elected Labor government would push for micro-economic reforms to ensure Australia remained a competitive and modern economy, but also provided social dividends.
“The microeconomic challenges of the future are not a simplistic choice between the market and the state,” said Gillard.
“Simply applying the extreme free-market medicine of liberalisation and privatisation without thought or care is not a solution. Maintaining an instinctive hostility towards the public sector and all it provides is equally wrong.” ($1 = 1.131 Australian Dollar) (Editing by Ed Davies and Sugita Katyal)