PRIME Minister Julia Gillard has given a firm pledge to bring down a budget surplus in 2012-13, and played down rising job losses in manufacturing and office work as ''growing pains'' as Australia's economy moves to a higher level.
In a speech to the Australia-Israel Chamber of Commerce in Melbourne, she defended the higher dollar as recognition by global investors of Australia's economic strength and long-term prospects.
''Our success is driving the dollar,'' she said. ''In turn, the dollar is driving change, and in doing so it's making our economy leaner and stronger, forcing us to move more of our effort - more money, more equipment, more people - into the parts of our economy where we can create the greatest value.
''What is certain is our dollar is likely to remain relatively high for years to come.''
Ms Gillard also announced a new deal for vocational education students, allowing them to defer paying their fees until after graduation, in the same way as university students now do.
The government will also offer subsidised training places worth up to $7800 to students enrolling in entry-level courses in health, business, hospitality, construction, transport and other areas with skills shortages.
She gave an unequivocal commitment that the 2012-13 budget will be in surplus - implying further spending cuts and/or tax rises to offset deteriorating economic prospects.
The International Monetary Fund last month cut its forecast for Australia's growth in 2012 to 3 per cent, well below the 4 per cent the Reserve Bank forecast in November. By December 2012, this would fall to 2.5 per cent.
That would jeopardise Treasury's forecast of a thin $3.5 billion surplus in 2012-13, which assumes ongoing growth of 3.25 per cent. Chris Richardson of Deloitte Access Economics has urged the government to drop its surplus pledge and give priority to economic growth.
Ms Gillard rejected the advice. ''We will hand down a budget surplus in May,'' she said.
