Gillards's big-spending budget in trouble

Collapsing revenue from lower company profits has blown a $12 billion hole in the federal budget this financial year, Prime Minister Julia Gillard will reveal on Monday.

What she will categorise as a "significant fiscal gap" has forced a Hobson's choice on the government as it crafts the budget to be delivered on May 14: either trim or delay expensive recurrent programs, including the $14 billion disability insurance scheme and the $6 billion school education reforms or, hand down an even larger deficit in place of what only months ago was confidently forecast to be a small surplus.

Faced with a near unnavigable pre-election scenario, Ms Gillard will choose the latter path, explaining that big social spending represents "wise investments that will make us a stronger and smarter nation". She will use a significant economic speech in Canberra to frame the problem, setting out the scale of the shortfall according to the latest Treasury forecasts.

Her address as part of the Per Capita Reform Agenda Series will outline the sharp revenue decline resulting from the contraction of so-called "nominal gross domestic product", where companies are continuing to produce goods and services and are maintaining sales but are doing so at lower prices and thus for lower profits.

Declaring the challenge for Australia to respond to "the huge reductions in revenue growth over the next four years", Ms Gillard wants to prepare voters for the bad news, while laying the political groundwork for a new era of deficits extending beyond the out years of the budget.

As recently as October 2012, Treasurer Wayne Swan was sticking to his surplus promise, forecasting a tiny but politically significant surplus of $1.1 billion.

In a budget preview on April 18, ANZ economists examined a range of scenarios and tipped a probable deficit of $16.6 billion this year, as part of an overall plan to reach a

$2.2 billion surplus by 2015-16. The bank said this would allow Australia to maintain its AAA credit rating and increase net debt only slightly to peak at 10.5 per cent of GDP over the coming five years.

Ms Gillard will blame the deficits on the long-term revenue writedown from lower company profits.

"Those things add up to business making less profit than planned (and) that puts pressures on our stable and resilient economy," she will say.

She will explain that the shift from higher to lower ratios of revenue appears to be structural, a feature of the persistently high dollar, a soft global environment and increasingly competitive international markets.

"That's the big challenge for the nation in this budget - and it defines the decisions the government's confronting as we put the budget together.

"The bottom line for the budget is this: the amount of tax revenue the government has collected so far this financial year is already $7.5 billion less than was forecast last October.

"Treasury now estimates that this reduction will increase to around $12 billion by the end of the financial year." Economists have warned of a horror deficit next month with some suggesting it could be $19 billion.

But with the pre-budget period notorious for disinformation as governments try to make things seem worse than they are so as to get positive critiques on the night, some voters may see Ms Gillard's warnings in this vein.

The economy has stormed back to centre stage as the election gets closer, with both sides eager to wind in expectations and neither prepared to predict when the national balance sheet will be back in the black. One argument Ms Gillard will put is that the problem is not one of spending but purely of how much money is flowing into Canberra.

"Put simply, spending is controlled," she will say, "but the amount of tax money coming to the government is growing much slower than expected. As we make those decisions, let me be crystal clear about what we will and won't do.

"We won't, during this time of reduced revenue, fail the future by not making the better school funding, and school improvement will not be jeopardised.

"Our nation cannot afford to leave children behind or to leave our nation's future economy limping behind the pack, unable to attract the high-wage, high-skill jobs of the future … DisabilityCare must not be jeopardised."

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Windsor calls for gay marriage referendum

Clever!  Referenda are almost always lost in Australia

Australians would vote in a referendum on gay marriage as soon as September under a radical proposal by independent MP Tony Windsor, supported by the Greens and other crossbenchers.

Mr Windsor will call on Prime Minister Julia Gillard to take the issue of same-sex marriage "out of the hands of politicians" and let the public decide on election day - September 14.

Fairfax Media has learnt the government is set to announce that a referendum on recognising local government in the constitution will be held on election day, at a cost of $80 million.

But Mr Windsor, whose deal to support the minority Labor government included the promise of a local-government referendum, will call for a second question, on marriage equality, to be included.

As New Zealand and France finalise same-sex marriage laws, Mr Windsor said the message he got from Australians was to "let us have our say and get it away from you idiots [politicians]".

"Polls on gay marriage say it's what the population wants. A way to resolve it is through a referendum," he said. "It's a bit like the gun debate in America - the politicians appear to be out of step with the people."

He said it was up to the public to force the issue. "You get a million people on Facebook and Twitter saying they want a referendum and it will catch fire. The politicians would have to listen," he said.

Mr Windsor, who voted against the most recent same-sex marriage bill, said a civil union ceremony he attended last year had been "possibly the most sincere and meaningful occasion" he had witnessed and, as a result, his opposition had softened.

"If it came down to my vote [in Parliament] I'd have to have a really hard think about it. But that ceremony had an impact on me. I'd probably vote for it," he said.

Greens leader Christine Milne said she was "certainly in favour" of a referendum. "I've been saying for some time that both Julia Gillard and Tony Abbott are on the wrong side of history with this."

Independent MP Rob Oakeshott said he favoured a plebiscite question attached to the local-government referendum, to allow politicians to "read the tea leaves".

"It would lower the temperature of the political debate and would provide some back-up support to any politician who takes this thing on in future," he said.

George Williams, a constitutional lawyer, said that in his view a referendum would be better than a plebiscite because any law change that stemmed from a plebiscite - which he described as a "giant opinion poll" - could still be open to a High Court challenge.

A referendum - which needs the support of a majority of people in a majority of states - could allow a line to be inserted in the constitution clarifying that a marriage can involve partners of the same sex.

Ms Gillard and Opposition Leader Tony Abbott are tied to positions against same-sex marriage.

Attorney-General Mark Dreyfus said the most appropriate way to consider such an amendment was through a conscience vote in Parliament since any change to allow same-sex marriage would occur by amending the Marriage Act, not the constitution.

Mr Abbott, whose sister Christine Forster is lesbian, has sought to shelve the matter as an election issue, promising Liberal MPs a conscience vote after September.

Political experts say Mr Abbott will be desperate not to "muddy the waters" of an election he wants to fight purely on Labor's alleged failures.

Former Liberal minister Peter Reith chided Mr Abbott for giving his in-principle support for the local-government referendum, saying Mr Abbott's "one priority is to terminate the worst Labor administration in living memory".

In return for their support for the minority Labor government, the Greens and Mr Windsor extracted a promise for a referendum on local government. Local Government Minister Anthony Albanese has been trying to lock in the support of the states since taking over the portfolio from Simon Crean.

Recognition of local government has become a more pressing concern since a successful High Court challenge to the Commonwealth's school chaplaincy program raised fears that schemes such as the $3.5 billion Roads to Recovery program could be challenged.

An announcement on the local-government referendum is expected within days.

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Melbourne doctor's anti-abortion stance may be punished

A MELBOURNE doctor who refused to refer a couple for an abortion because they wanted only a boy has admitted he could face tough sanctions.

Dr Mark Hobart fears he could be punished for refusing to give the Melbourne couple a referral after discovering they were seeking an abortion because they didn't want to have a girl.

By refusing to provide a referral for a patient on moral grounds or refer the matter to another doctor, Dr Hobart admits he has broken the law and could face suspension, conditions on his ability to practice or even be deregistered.

But he was willing to risk punishment in pursuit of principles. He said he did not believe any doctor in Victoria would have helped a couple have an abortion just because they wanted a boy.

"I've got a conscientious objection to abortion, I've refused to refer in this case a woman for abortion and it appears that I have broken the rules," he said.  "But just because it's the law doesn't mean it's right."

The Sunday Herald Sun yesterday revealed the couple had asked Dr Hobart to refer them to an abortion clinic after discovering at 19 weeks they were having a girl when they wanted a boy.

Victoria's Abortion Law Reform Act 2008 specifies the obligations of registered health practitioners who have a "conscientious objection" to abortion.

Under the Act, if a woman requests a doctor to advise on a proposed abortion and the practitioner has a conscientious objection, he or she must refer the woman to a practitioner who does not conscientiously object.

"That is the letter of the law," he said. "It leaves me in limbo.   "It's never been tested ... it is a very complicated area."

Medical Practitioners Board spokeswoman Nicole Newton said doctors were bound by the law and a professional code of conduct.

"The board expects practitioners to practise lawfully and to provide safe care and to meet the standards set out in the board's code of conduct," she said.

Another doctor who was brought before the Medical Board in January for airing his views against abortion was cautioned and warned he could be deregistered if it happened again.

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I'm backing Tom!



Controversial bookmaker Tom Waterhouse has met with his lawyer to discuss a defamation action against John Singleton after his remarks about the fitness of More Joyous before and after the All Aged Stakes at Randwick on Saturday.

Waterhouse said he was disappointed after Singleton alleged he had advised friends of Singleton that More Joyous "had no chance” in the race, and at the complete breakdown of the relationship between his mother Gai and Singleton, a friendship that had spanned over 30 years.

"John has known mum for a long time and for him to say those things about her was extremely disappointing and upsetting,” Waterhouse said. "I don't know if an apology will be enough in this situation. I have spoken to my lawyers about it.”

Waterhouse said he did not know if he would have to front the stewards when the inquiry into the spat continues on Friday afternoon.

"I was consistent with what I said about the race in all my interviews leading up to the race, and never said or told anyone that More Joyous couldn't win. In fact, I backed the horse,” Waterhouse said. "I lost $300,000 on the race.”

On Sunday morning, rugby league immortal Andrew Johns addressed a Fairfax report that suggested Waterhouse had told him More Joyous couldn't win.

Speaking on Channel Nine's Wide World of Sports, Johns said that although he and Waterhouse had discussed horses on Friday night, Waterhouse had not told him More Joyous had a problem. Johns said he backed the champion mare himself.

In an interview on TVN, Waterhouse initially denied he had spoken to Johns about More Joyous but, when pushed by Bruce Clark, admitted they had discussed the race.

Singleton, who wore a microphone as part of a television promotion for the All-Aged Stakes, said in a number of interviews on Channel Seven and TVN that he had been informed by close friends that Tom Waterhouse was saying More Joyous couldn't win.

The drama of situation was played out on live television as Singleton and Waterhouse argued in front of jockey Nash Rawiller before the race when giving instructions.

Singleton's fury only grew when More Joyous put in one of the worst performances of her career, coming second to last in the All Aged Stakes, won by All Too Hard.

Singleton indicated it was the final straw and all his horses would be leaving the Waterhouse stable because "there were too many conflicts of interests”. His horses in the Waterhouse stable were picked up at dawn on Sunday and taken to his Strawberry Hill farm on the Central Coast.

Singleton repeated the claim when stewards opened an inquiry into the incident that was played out in front of nation-wide audience on television.

"I was told this morning by a friend of mine, a close friend, who is [an ex] group 1 jockey that he was with Tom Waterhouse, Gai's son and bookmaker, last night with close friends of mine that are internationally known figures," Singleton said in the stewards' room.

"Tom Waterhouse advised them last night that the horse had no chance. She had problems and that surprised me because I intended to have a six-figure sum bet on the horse because my advisers said it was a certainty."

Tom Waterhouse took to television for a series of interviews defending himself and his mother.

"No one works harder than mum and John knows that. It was unbelievable for him to say those things about her because he knows her so well,” Waterhouse said.

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