BUSINESS groups hope the mid-year budget update will be a wake-up call to the Abbott government to deal with the challenges it now faces.
The mid-year economic and fiscal outlook (MYEFO) released on Tuesday forecasts the 2013/14 budget deficit ballooning to $47 billion, rather than the $30.1 billion predicted in August, and there will be further deficits over the next 10 years if no action is taken.
Business Council of Australia chief executive Jennifer Westacott said the government faces a decade of committed reform to put the budget on a more sustainable footing.
"MYEFO shows Australia faces a decade of deficits if the federal government does not begin to correct the excessive spending that has left the fiscal position weaker than it should be and exposed to future global economic volatility," she said in a statement.
She said a disciplined 2014/15 budget that included structural measures to contain government expenditures over time needs to be matched by greater efforts to boost economic growth and productive capacity to greatly assist the budget repair job.
"The ongoing weakness of revenues also highlights the critical role that tax reform will need to play both in shoring up the strength of the revenue base and increasing efficiency to drive economic growth," she said.
Welfare groups believe the government must align social and economic goals.
UnitingCare Australia national director Lin Hatfield Dodds says the political debate has become locked into rhetoric about debt and deficit, rather than having "smart, evidence-based" debates about effective public policy and improving the quality of life of all Australians.
"Current policy debt is thin, impoverishing us all," she said in a statement.
"Achieving a better balance will require collecting more tax, and could be achieved by winding back inefficient and unfair tax concessions."
Australian Chamber of Commerce and Industry chief executive Peter Anderson said MYEFO showed there were no pain-free options to build a stronger economy over the next decade.
"This budget deterioration makes the work of the Commission of Audit a national priority, especially if it undertakes a root and branch review of government spending, duplication of services and idle or underperforming assets."
He said that with industrialised governments mired in debt and deficit, only private sector growth and prosperity can retain living standards so reform that gives private sector incentive to invest and grow is needed.
Ratings agency Moody's said the projections were worse than they expected in terms of the fiscal and debt positions.
"However, as Moody's have always said, the Australian government has very low debt levels as a starting point, and the larger deficit in the current fiscal year, while leading to a rise in debt, is not likely to change Moody's thinking about the Aaa rating of Australia," it said in a statement.
Accountancy group CPA Australia said the government should lead a community conversation about the country's future.
Unhelpful and distracting rhetoric about debt and deficit should end, chief executive Alex Malley said.
"The announcement by the treasurer today is sobering but it shouldn't be a trigger for wholesale cuts or a knee-jerk reaction that places the importance of a return to surplus above all else," he said.
The Distilled Spirit Industry Council of Australia suggested the government could take another look at alcohol taxes to raise more revenue.
It estimated moving to a single volumetric tax system for all types of alcohol could net $1.8 billion a year for federal coffers.
The Community and Public Sector Union criticised the lack of detail on public servant job cuts, saying the MYEFO statement would only heighten fears among bureaucrats.
