Australia to run into deficit: govt

27/11/2008 08:00:01

The Australian government and the opposition are continuing to argue over the merits of running the budget into deficit.

After avoiding the `D' word for weeks the Treasurer Wayne Swan now says it would be irresponsible not to go into deficit if the economy slows further.

But he can't say just how long the Government might have to stay in the red.

"I can't forecast the future of the world economy," he said.

The deputy opposition leader, Julie Bishop, says the government is panicked and should hold off on talk of deficits until its $AUS10.4 billion spending package kicks in.

She says the Reserve Bank also has a role to play.

"There is still plenty of room to move in monetary policy to bring interest rates down to stimulate the economy," she said.

Produced by Radio Australia and Australia Network