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CANBERRA, March 31 (Reuters) - Australia may slash welfare payments, including pensions for the rich and popular childcare subsidies, to contain government borrowing in the face of huge stimulus spending and weak tax revenue, a report said on Tuesday.
The federal government's finances are plunging into the red after six years of budget surpluses, weighed down by about A$53 billion (S$54.8 billion) in stimulus measures and falling tax revenues as the economy slams into reverse.
The centre-left government is targeting child-care and health-care subsidies, pension-savings concessions for the wealthy and a A$5,000 (S$5,170) bonus payment for having a baby, the Australian Financial Review said in an unsourced report.
Treasurer Wayne Swan this month said the budget for the year to end-June 2010, to be unveiled on May 12, would support demand in the economy and complement stimulus spending.
The government has said the extra spending and worsening global conditions will push its budget into a deficit equal to 1.9 percent of GDP in 2008/09 and 2.9 percent in 2009/10.
Senior ministers are now considering politically sensitive budget cuts to so-called "middle-class welfare" to keep real
spending growth at 2 percent a year and return the budget to surplus, the Review said.
Prime Minister Kevin Rudd's government, which faces re-election late next year, expects the coming recession to be
deep, with the economy to contract by at least 1.0 percent in 2010, newspaper reports said this week.
Australia's unemployment rate jumped to 5.2 percent in February from 4.8 percent the month before. The government expects unemployment to reach 7 percent by mid-2010.
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