Aussie surplus depends on China - economist

If the Chinese economy remains strong, the Australian budget could be back in surplus by 2013-14, but no sooner, an independent economic forecaster says.

Treasurer Wayne Swan will present his third Budget, for 2010-11, tomorrow.

The Government is projecting that the Budget will return to surplus in 2015-16.

"If China stays strong, then by 2013-14 we will be back in surplus," Access Economics economist Chris Richardson told Network Ten.

"More than anything else, it comes down to what happens in China. These days the Budget has a 'Made in China' stamp."

But he said 2013-14 would be the earliest a surplus could be returned.

The Budget had taken a bigger hit than most people realised and revenue would not be revised up as quickly as they might have expected.

"A year ago it looked like sackcloth and ashes and a very big recession around the world and a recession here," he said.

He said the Government took out a lot of insurance because of that, and as it turned out "too much insurance".

The cost of the stimulus meant there would still be a big deficit for 2009-10, and although 2010-11 would be smaller, by A$12 billion, it would still amount to A$35 billion.

Richardson doubts that the Government will bring down a Budget that will take the pressure off interest rates.

"It's an election year. I don't think the cuts will be as big as necessary," he said.

He expects the Reserve Bank of Australia to raise the cash rate three more times this year, taking it to 5.25 per cent from today's 4.5 per cent.

- AAP