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CANBERRA - Big tax cuts are unlikely to be a feature of next year's election budget in Australia, with federal Treasurer Peter Costello saying the economy faces fresh inflationary pressures.
Finance Minister Nick Minchin also warned people today not to expect a repeat of this year's broad personal tax cuts.
The Australian government has denied those tax cuts, which came into effect on July 1, have added to price pressure in the economy.
Mr Costello hinted today that inflationary pressures from high oil prices, low unemployment and drought may curb the government's ability to deliver big tax cuts next year.
"There are a new set of problems which will take very careful economic management and considerable experience," he told ABC television.
"The new set of problems is price pressure coming from low unemployment, price pressure coming from oil increases, price pressure coming from the drought, managing simultaneously a rural recession and a strong mining sector.
"These are difficult problems."
Mr Minchin said it would be important for the government to maintain a strong budget surplus.
"We gave very substantial tax cuts in this year's budget, so I don't think people should anticipate any further big tax cuts in next year's budget," he told Sky News.
The Reserve Bank has imposed three interest rate rises this year to take the heat out of the economy.
Mr Costello again refused to take any responsibility for the latest rate hike, saying the Reserve Bank had made it clear the tax cuts had not influenced the bank's decisions on rates.
He said an extra 1.9 million people were in work after a decade of the Howard government, and that had increased their wage bargaining and put pressure on prices.
"A better way of looking at it is saying, well, after 10 years we're finally getting to where we've been aiming for," Mr Costello said.
"But as problems go, this is a better one to have than mass unemployment."
- AAP
