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Contention over role of China, resources in Federal Budget

Contention over role of China, resources in Federal Budget article image
Treasurer Wayne Swan's "no frills" Federal Budget has been criticised by the Opposition as "a $26 billion blowout". Opposition finance spokesperson Andrew Robb indicated they were "very concerned about the level of spending" and horrified that "there doesn't appear to be any sort of plan if we get another whack from the rest of the world". Economist Chris Richardson from Access Economics agreed and said the government was relying heavily on the strength of trade with China. "The economy's dependent on China, but the budget is even more so," he said. "China's buying up big time, sending coal and iron ore prices through the roof and revenue's strengthening off the back of that." Richardson said he was concerned at imbalances in the Chinese economy that he believed would lead us into our next downturn: "The next recession has a 'made in China' tag on it." Opposition treasury spokesperson Joe Hockey added: "They are assuming that we're going to have the best terms of trade in 60 years. They are assuming there's going to be record levels of investment in the mining industry." However, Prime Minister Kevin Rudd denied this was the case and said his team had done their homework. "They've analysed carefully China's predominant growth potential, they've looked at where commodity prices go, not just for China, but remember we're talking about Japan, Korea and other countries as well." He also noted the predictions were conservative compared with market analysts. "If you look at where they're pitching commodity prices in the future, it's quite low against what the market analysts are saying."

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