Fiscal red ink poses challenges for Canberra

AUSTRALIA'S leaders have made it eminently clear that the next Budget, due shortly, will signal the time for austerity, especially for those dependent on government largesse. Indeed, there is much consternation among some older supporters of Prime Minister Tony Abbott's coalition that they have elected politicians who would require them to work until they are 70 before becoming eligible for an old-age pension.

But Canberra argues that the financial outlook is dire: the latest forecast is for a budget deficit of A$34 billion (S$39.7 billion) next financial year, followed by deficits of A$24 billion and A$18 billion in the following years. Australians are being warned that only by getting back to surplus can the country stop borrowing - which this year alone means an int…