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Daily Archives: April 23rd, 2009

Thursday, 23 April 2009

Fresh approaches to national skills training are urgently needed in order to meet the challenges of the economic downturn and to position Australia for a return to growth and prosperity, according to a consortium of peak industry, trade union and youth advocacy bodies.

A report released today by the National Skills Policy Collaboration (NSPC) – comprising the Australian Industry Group, Australian Council of Trade Unions, Group Training Australia, Australian Education Union and Dusseldorp Skills Forum – recommends a new wave of training reform to take advantage of opportunities beyond the current economic crisis.

The report Investing Wisely sets out a framework to elevate skills development and to entrench a culture of learning across the workforce.

Heather Ridout, Chief Executive, Australian Industry Group said the importance of skills cannot be taken for granted.

“Despite rising unemployment, we cannot afford to take our foot off the pedal in addressing the skills gap in Australia. As soon as labour market conditions improve skill shortages will re-emerge with a vengeance, especially given our ageing workforce. It will bring with it all the familiar pressures on our ability to have the skills we need to sustain investment and growth. Indeed, we need to avoid the mistakes of past downturns where training was seriously neglected and businesses need to be positioned to emerge with the skilled workers they need to take advantage of the recovery,” Mrs Ridout said.

Sharan Burrow, President of the ACTU said: “Increased productivity flowing from enhanced skills and training will be vital if we are to emerge from the economic slowdown with a more skilled workforce that is able to compete globally.

“There is always a risk that in the current economic climate, the focus on skills will take a backseat to other more immediate concerns. That would be a big mistake,” Ms Burrow said.

The report stresses that skills development needs to keep pace with the demands of the new economy, and that there must be a focus on quality, not just quantity.

The consortium says improvement is needed in four key areas:

Accurate information about skill needs, and mechanisms that shape public policy and funding decisions;

A prevailing industry culture that values investment in skills development and makes the most of the skills at its disposal;

A focus on people and the skills and opportunities they need to participate in society and the economy; and

Government funding which supports the development and use of the right skills.

“The shortcomings identified are not new and they will not be fixed merely by more funding or more training places,” Jim Barron, Chief Executive Officer, Group Training Australia said. “Action is required to maximise the value of investments in skills, and achieve a more strategic use of public funds”.

AEU President Angelo Gavrielatos said: “The report highlights the need to place a well resourced public TAFE system at the heart of any strategy to increase participation and equity in Australian workplaces and society.”

The report makes five key recommendations:

Work closely with industries and employers. A significant funding investment should be made in encouraging industries and enterprises to pursue high-skill strategies;

Develop a culture of learning across all levels of the workforce. Key personnel should be developed and supported to engage workers across all sectors in learning. Managers should play a critical role in this process;

Make public funding mechanisms more flexible and responsive to demand. This does not necessarily mean responding to the demands of individuals and individual firms; rather, responding to broader industry and social objectives;

Ensure sufficient investment is made in the public training system. A legacy of government funding cuts must be reversed; and

Ensure sufficient investment is made in the development of essential skills. There is a good case for maximising the public and employer contribution, and minimising the individual contribution, to this end.

Media contacts
Australian Industry Group, Tony Melville: (02) 6233 0700
Australian Council of Trade Unions, Mark Phillips: (03) 8676 7266 or 0422 009 011
Group Training Australia, Bob Bowden: (02) 9241 2811 or 0412 753 298
Australian Education Union, Angelo Gavrielatos: 0488 012 045

More information
Download a copy of Investing Wisely here. http://www.actu.asn.au/Images/Dynamic/attachments/6505/investing_wisely_report_final.pdf
Download File:

By Megan Byrne
The Sydney Morning Herald

Jobs in the sustainable economy are booming and there are plenty of ways to plant yourself in the middle of it.

We walk through it every day and yet many of us barely give it a moment’s thought. It is the air we breathe, the water we drink, the ground we stand on and the weather at our backs. It is our environment and it determines our very livelihood – but not just physically. An increasing number of Australians are forging environment-focused – or “green-collar” – careers for themselves, boosting their financial subsistence and job satisfaction while playing a part in securing our planet’s future.

While some people feel that the green revolution is recent – a response to the effects of droughts, floods and fires, and films such as An Inconvenient Truth – Mark Lister, the group manager of corporate affairs at sustainable business solutions organisation Szencorp, says his company has promoted environmentally sustainable business and economic practices since 1983.

“There are several cost-saving and productivity benefits of changing the way we do things so they reduce the impact on the environment,” he says. “We work on the theory that sustainable practices can’t be adjunct to business. They should be a fundamental part of the business model. Leaders are now recognising that the model we have can’t continue.”

The profile of sustainability has taken off in the past two or three years, Lister says. Australia’s ratification of the Kyoto Protocol in 2007 boosted green practices and businesses in Australia, and in February,

US President Barack Obama said his $US787billion ($1.08trillion) economic stimulus package was “laying the groundwork for a new, green energy economy that can create countless well-paying jobs”.

The Australian Conservation Foundation and the Australian Council of Trade Unions agree that the rapidly growing green economy has the potential to expand employment opportunities but say there is a significant skills shortage. However, the wide range of courses and training programs available means that anyone – regardless of age, profession or experience – can take advantage of the booming green economy.

Completing an environmental degree can provide the necessary skills for a green career. Monash University graduate Genevieve Ackland began a job as a carbon research assistant at Greening Australia just months after completing honours in environmental science. Ackland, whose honours project investigated carbon stocks in South-East Asian tropical forests, says she wouldn’t have got the job without honours.

“Completing my thesis gave me the experience I needed for this job,” she says. “I thought I’d end up in environmental consulting – I didn’t even know there were jobs in this area, or that you could earn a good living working for a not-for-profit organisation.” She says she finds her work – which involves data collection and modelling from various forests and plantations around the country – extremely fulfilling.

“My job substantiates my work and financial requirements but it also meets my own personal conservation goals working for an organisation that has made a difference and has got clients interested in investing in the future has boosted my morale.”

But you don’t need a degree for green-collar careers – there is room for apprentices and trainees. WPC Group brings together employers and people interested in jobs in renewable energy, energy and water efficiency and water management, through its Greenskills apprenticeship and traineeship program. Its chief executive, Nick Wyman, says green has gone mainstream.

“We’ve received a lot of interest from employers and prospective employees and have set up panels of employers in Victoria and NSW who are getting people into jobs within the green economy,” Wyman says. “We have everything from building and construction companies that are retrofitting office buildings to large multinational corporates with in-house sustainability programs.”

Wyman says the demographic applying for the program is quite different from what was originally expected. “When you think of apprentices, you think of 17- to 24-year-olds. But we’ve been overrun with people from all different backgrounds and age groups looking for an opportunity, like people in their 30s looking for a career change,” he says.

Even tradies are making their presence felt in the green economy. The Master Plumbers and Mechanical Services Association of Australia has been running a green plumbers’ program since 2001, teaching them about solar hot-water systems, water-efficient technology and natural wastewater treatment systems.

More than 10,000 plumbers worldwide have now completed the program. One of them, Tim Dickinson, says more people are asking whether plumbers are green.

“There’s real opportunities when you can promote yourself as being environmentally aware,” Dickinson says. “I get a lot of satisfaction from advising my clients on sustainable options that meet their needs.”

It is clear that jobs in the green economy are sustainable for both the environment and the employees – making a difference. And the awareness of it leaves people with a deep satisfaction that boosts morale and work ethic. Perhaps communing with nature is not such a hippie notion after all.

Links

szencorp.net
greeningaustralia.org.au
wpcgroup.org.au
greenplumbers.com.au

Published: 18 April 2009

http://content.mycareer.com.au/advice-research/career/the-new-green-jobs-saving-the-planet.aspx

Caitlin O’Toole
NEWS.com.au
April 23, 2009 07:40am

THE office is an artificial environment, where we toil away in a “creepy” corporate culture and wear a mask of false cheerfulness – all the while secretly wondering “is this all there is?”

So says author Alain de Botton, who shadowed everyone from accountants to biscuit-factory workers in a bid to understand what makes the modern economy really tick: the world of work.

“A lot of company cultures are a little bit creepy, because they are trying to suggest that the company is like your friend or like your home,” says Mr de Botton.

It’s creepy because it’s quite obviously not true, he says.

“A lot of these firms, in a downturn, having spoken about love and friendship and all that, don’t lose much sleep about getting rid of 20 per cent of the workforce,” he points out.

“And that really fries your head, to be told ‘we love you, we love you’ and then to be got rid of.”

Office life exists on a level of “shallow cheerfulness”, and talking about a crisis of meaning or any other deep feeling is strictly frowned on.

Although it may be perfectly natural to sit at your desk, staring at the sunshine and wondering if you’re wasting your life, talking about an existential crisis at work is a big no-no.

“Office life goes on under a cheerful patter, you’re not supposed to have heavy problems, you’re just supposed to say hi,” he says.

“In a way that’s what makes the office nice, it’s like an escape from heaviness.”

The problem comes when work triggers strong feelings, which you have to mask with chirpiness.

“You fall in love with colleagues, you hate them, you envy them, you feel unbelievably furious. And what are you supposed to do because all you’ve got at hand are tools of cheerfulness, of mateyness, and that’s really difficult.”

In real life, if you’re angry you can yell, if you’re upset you can burst into tears, but at the office you must appear normal all times.

“In a relationship, if you feel something’s wrong with your partner, you can shout and them for an hour, you can weep like a child, do all these things which seem very immature and crazy, but they are the stuff of relationships.

“But at the office you’re supposed to be this sort of ‘normal person’ and we’re not normal, any of us, and that’s the problem of offices.”

So if you’re sitting in your cubicle wondering if this is all there is in life, you’re not alone, says Mr de Botton, who calls us ‘hopeful creatures’ who can’t help but look for deeper meaning as we toil away.

“I think unfortunately for all of us, we do search for meaning,” says Mr de Botton.

“We’ve all got too much imagination, it’s like saying ‘Can you stay in an unhappy marriage and not notice?’ Well actually, most of us are going to start noticing and worrying.”

So what to do if you hate your job or feel like you’re wasting your life?

“I think take those feelings very seriously,” says Mr de Botton, who says having a crisis of meaning is completely normal.

“On a Sunday afternoon, the light is dimming; a lot of us feel ‘well where am I really headed?’ But then we try to quash that thought, we put on the TV or go jogging or something.

“My advice would be stick with that thought, allow yourself to have a crisis, take the crisis as seriously as it deserves to be, because it is a major part of life.”

http://www.news.com.au/business/story/0,27753,25373517-5012426,00.html

23 April 2009 8:27am

Employers have cut millions from their discretionary spending over the past year, but risk blowing away all the savings by failing to control their contingent workforce, says talent management expert Gareth Flynn.

He says it’s surprising how many large Australian companies leave the engagement of temps and contractors up to their individual business units.

This exposes them to cost blow-outs, duplication of resources and potential compliance problems with employment law.

As well, it means the company has no real control over the process, with no overall reporting system, performance management or visibility of future requirements, he says.

Flynn, whose company TalentQuest consults with major employers on their recruitment and talent management processes, argues the recession is encouraging employers everywhere to cut back on their permanent staff, and in many cases these same companies are increasing the amount of temps and contractors they hire.

He suggests all employers should review the management of their contingent workforce and develop a company-wide framework.

This should be done with involvement from both the HR and procurement teams, Flynn says, and the framework should be developed around 10 questions and considerations:

Is the sourcing and engagement of contingent workers centralised in one department or function? Is there an established framework in place?

Do you have a recruitment technology platform that allows you to track the hiring activity, tenure and performance of your contingent workers?

Do you have rigorous supply chain agreements in place providing your business with consistent service and fee levels?

Do you have published and well-understood policies and processes in place for the engagement and management of contingent workers?

Do you know exactly how many contingent workers you currently use? What was your spend on contingent workers last year?

Do you have a direct sourcing strategy for contingent workers, or are you reliant on third party agencies?

Are the same compliance and background checking protocols and policies in place for contingent workers as they are for permanent workers?

How long has each of your contingent workers worked for your organisation? Are you exposed to any implied employment risk?

Do you have a process for ‘recycling’ contingent workers across business units as projects finish? Is there a process for assessing experienced contingent workers instead of hiring permanent staff? Do you have visibility of their skills and capability?

How engaged are your contingent workers? Who manages their wellbeing and professional development?

Flynn says that if necessary, an external team can be engaged to audit current processes and suggest improvements. This allows employers to quickly prioritise any areas that need quick action.

He argues that the development of a comprehensive contingent workforce management framework will lead to short- and long-term cost savings as well as improved productivity and workforce engagement.

http://www.hrdaily.com.au/nl06_news_selected.php?act=2&nav=1&selkey=1134

Ben Schneiders
April 22, 2009

UNIONS have been rebuffed on their concerted “Buy Australia” push, with federal Industry Minister Kim Carr warning against implementing new rules that would require governments to favour local suppliers.

Senator Carr said yesterday that while it was an idea that appealed to many Australians, a move to favour local suppliers could provoke “damaging retaliation” from the nation’s trading partners.

His comments, made during a speech in Melbourne, came after the release of an Australian Workers Union steel plan last week that backed temporary conditions on government spending to favour local steel, while in March the ACTU executive endorsed a push for government spending to favour local suppliers.

ACTU secretary Jeff Lawrence said in response to Senator Carr’s speech that the Federal Government needed to do more to protect local jobs and foster Australian industry through its spending and policies.

“It is not protectionist to aim to maximise local jobs and strengthen Australian industries so that they meet the needs of the domestic market, as well as position Australian companies for export markets,” he said.

Senator Carr said the Australian Government “already procures a great deal from local industry” and he said stimulus packages directed to infrastructure, housing and construction, would provide a boost to local industry and suppliers.

“My personal view is that we should all buy Australian whenever we can, that’s why I wear Australian-made suits and drive an Australian-made car,” he said. “I think every Australian household and business should do the same, but as a government we can’t make it compulsory. But that doesn’t mean we should just do nothing.”

Under the AWU’s steel plan, the union said some of its proposed measures, such as production bounties, should only last the length of the financial crisis.

AWU national secretary Paul Howes said he was pleased the minister had not dismissed the union’s plan out of hand.

Mr Howes described the debate around procurement as difficult for the Government. “It’s very hard for the Government to not be perceived as protectionist,” he said.

Senator Carr said there was an obligation on state and local governments to better target spending and said international obligations were not as restrictive as commonly thought, with World Trade Organisation rules allowing support for small to medium business.

He said Commonwealth guidelines factored in the cost of operating, maintaining and upgrading assets over time, often giving local suppliers an advantage.

■ Mitre 10 told staff yesterday around 40 jobs would be cut, with around 25 set to go from its Hallam office, taking to about 80 the number of jobs it has shed this year. AXA Asia Pacific is also to axe as many as 120 staff, with many likely to go from its Melbourne head office.

■ Federal Opposition workplace relations spokesman Michael Keenan said yesterday the Coalition was unlikely to rewrite Australia’s industrial relations laws if elected.

http://www.theage.com.au/national/minister-rejects-buy-australia-push-20090421-ae3m.html?page=-1

A proposed Australian Bill of She’ll be Rights, mate

Catherine Deveny
April 21, 2009

1. THE RIGHT TO REDEFINITION
ANY sportsman who has displayed the behaviour of a thug, an alcoholic, a violent sociopath or a rapist has the right to be described as a “rough diamond”, “loveable rogue” or “knockabout character” with a “heart of gold”.

2. THE RIGHT TO FISH FOR COMPLIMENTS FROM FOREIGN VISITORS
CITIZENS have the right to ask foreigners: “How do you like Australia?” If the foreigner does not respond enthusiastically that “Australia is the greatest place in the world”, the foreigner is immediately to be deported and forced to wear a Ken Done “I Love Australia” T-shirt for the rest of their lives.

3. PROHIBITION TO EXCLUDE YOURSELF FROM A SHOUT
WHEN draining a few cans at a local establishment, no person is to undermine the liberty of his compatriots by refusing to participate in the shout — excuses of being a poof, having to get up early or being violently allergic to alcohol notwithstanding.

4. THE RIGHT TO CRINGE, CULTURALLY SPEAKING
a) WHEN watching a feature film from “overseas”, the appearance of any person with an Australian accent is to be heralded with the excited ejaculation: “That guy’s Australian. Did you hear that?”

b) Citizens must take every opportunity to remind fellow citizens that “we invented the Hills Hoist, the VCR and the wine cask”. “We” means all of us. It is prohibited to acknowledge the name of the individual responsible. When one wins, we all win. When one of us fails, they are unAustralian.

c) A citizen is honoured with the title “Our” when people from overseas acknowledge they exist; eg, “Our Hugh”, “Our Nic”, “Our Cate”, “Our Kylie” and “Our Mary, Princess Of Denmark”.

5. THE RIGHT TO BEAR JINGOS
THE flying of the Australian flag outside a person’s home or the wearing of an Australian flag to a sporting event is an unassailable right of the Australian citizen. It confirms their jingoism and reinforces their belief that Australia is better than Anywhere Else and, by extension, they are better than Anyone Else for living Here.

6. THE RESPONSIBILITY TO AUSTRALIANISE
CITIZENS are required to act “more Australian than Steve Irwin” when conversing with recently arrived visitors from “overseas”. Citizens are required to punctuate sentences with “bonza”, “sheila”, “crikey”, “strewth” and “cobber”, and to draw the visitors’ attention to our extreme weather and dangerous animals. It is imperative for citizens to imply that foreigners are weak and would be unable to live here because they “couldn’t hack it”. It is compulsory for citizens to extract an admission of defeat or inadequacy from the foreigner.

7. LADIES, BRING A PLATE 8. RIGHT FOR THE SURVIVAL OF OUR LANGUAGE
USE of the terms “Pull my finger”, “I’ve had a gutful”, “What are you looking at?”, “I shagged your sister”, “Come here and say that”, “You. Me. Car park. Now”, “While you’re down there”, “Have a stab”, and “Cracked the shits” is enshrined in this charter. So too the universal recognition that someone you call “a bastard” you are fond of but someone you call “a bit of a bastard” you are not.

9. RIGHT TO DENIAL
CITIZENS have the right to refuse to acknowledge the existence of Tall Poppy Syndrome by playing the Underdog Card. Identifying as an underdog comforts the citizen who is not successful enough to be a tall poppy, while conveying the impression they never wanted to be one anyway, because tall poppies are wankers and deserve to be cut down. Even though they don’t exist.

10. RIGHT TO MAKE JOKES ABOUT NEW ZEALANDERS
ALL citizens have the right to refer to Kiwis as “sheep shaggers”, categorically refusing to acknowledge that’s what the rest of the world calls us.

11. RIGHT TO CRACK OPEN A CAN OF ‘WHO GIVES A RATS?’
FEDERATION? Constitution? Words to the national anthem? Stuffed if I know.

12. UNIVERSAL AGREEMENT THAT OVER THE FENCE IS OUT

13. RIGHT TO CLAIM THE NORMAL HUMAN RESPONSE TO TRAGEDY AS ‘UNIQUELY AUSTRALIAN’
WHEN a national tragedy occurs, citizens must vicariously experience the event via media saturation of Trauma Porn. Citizens must comment on acts of compassion and assistance as “uniquely Australian” and “an intrinsic part of the Australian character”. Any suggestion this is a normal reaction and a universal response of the human spirit is prohibited.

14. RIGHT TO DEFEND OUR SLAGS, SCRAGS AND SCRUBBERS
CITIZENS are to be outraged when migrants call our women “sluts”. All citizens are obliged to uphold our women’s honour by strenuously asserting that we have the best sluts in the world, which is why they call this place the Lucky Country.

http://www.watoday.com.au/opinion/a-proposed-australian-bill-of-shell-be-rights-mate-20090421-ae2p.html?page=-1

Matt O’Sullivan
April 22, 2009

DELTA AIR LINES has challenged Qantas’s dominance of the Australia-United States route after describing its foray into the market as a “disaster” for the incumbent airline.

Qantas stands to lose more than 200 passengers a day – over half the seats on a standard jumbo jet – when Delta begins daily flights between Sydney and Los Angeles in early July.

Even before Delta launches services, the trans-Pacific route has been transformed in a matter of months from being one of Qantas’s most profitable international legs to become loss-making, largely because of a dramatic drop in demand for business and first class travel.

Delta’s network planning chief, Glen Hauenstein, said its flights in July would be “relatively full” because more than 30 per cent of seats were already booked.

He said there was demand to fly the route because under previous arrangements Qantas picked up more than 200 passengers a day through an interlining agreement with Delta and Northwest Airlines. The two US carriers merged last year.

“So the demand is there and … if you’re the incumbent carrier this is a disaster – if you’re the non-incumbent carrier, this is an opportunity,” he said during Delta’s first-quarter earnings briefing.

“And the question is long run, as being the world’s largest carrier and having the extensive route network that we have, do we want to have outlet to Australia? The answer is clearly yes.”

Delta’s Boeing 777s will increase passenger seats on the route every week by almost a quarter, or 4900, to 25,000, just as the aviation industry suffers its worst downturn of the jet age.

Air fares on the route have fallen about 57 per cent since September, according to Macquarie Equities, due to both a dramatic slump in demand and Virgin Blue’s long-haul carrier, V Australia, joining Qantas and United Airlines on the trans-Pacific in February.

However, Delta’s decision this week to charge $US50 ($71) to check in a second bag on international flights from July 1 could face a passenger backlash.

United has revealed in its latest earnings briefing that it is already suffering on the route. Of its Pacific network, Australia and China suffered the biggest declines in revenue in the first quarter.

United also reinforced the extent of the slowdown by revealing that its total premium traffic fell 30 per cent in the quarter.

The biggest threat to Qantas on the route is Delta’s ability to attract US customers because of its extensive US domestic network. The route has historically provided about 10 per cent of Qantas’s total passenger revenue.

Qantas management suggested last week that none of the carriers will make money flying between Australia and the US in the current environment. Qantas said premium travel on the trans-Pacific and London-Australia routes had fallen about 20 per cent.

V Australia began thrice-weekly services from Brisbane to LA this month, two months after it launched daily flights from Sydney to the US. It will launch three return services a week from Melbourne in September.

April 22, 2009 – 1:09PM

China’s need for uranium could be worth billions to Australia following an announcement it will start building five extra power plants this year.

This comes on top of 24 already under construction and 11 that are in operation.

Australia offers the most obvious solution to a shortage of uranium to fulfil its nuclear power ambitions, according to a Chinese analyst.

“There are not enough uranium resources in China to support the aggressive nuclear power development plan for the next 20 to 30 years,” Professor Liu Deshun, of China’s Institute of Nuclear and Energy Technology told Fairfax Media.

“Australia has the uranium resources that could be exported and in China we have the demand.”

The fast-tracking of China’s nuclear power plans stems from mounting concerns about climate change, energy security and the more immediate task of kick-starting the economy.

Minister for Resources Martin Ferguson told Fairfax he welcomed China’s move to fast-track nuclear power.

“It is this government’s policy to encourage the further development of the Australian uranium industry,” he said.

The move could prove a windfall for WA, following the Liberal government’s ending of a ban on uranium mining in the state shortly after their win in the September state election.

AAP
http://business.watoday.com.au/business/china-looks-to-australia-to-supply-uranium-20090422-af0m.html

Jacob Saulwick
April 23, 2009

THE Organisation for Economic Co-operation and Development has warned the Government about making it easier for retirees and unemployed to gain early access to their superannuation due to the financial crisis.

Superannuation and pension funds across the world dropped more than 20 per cent in 2008, shedding about $7.7 trillion.

With unemployment increasing, and retirement incomes shrinking, governments internationally are facing calls for greater flexibility to help people draw on their savings.

But the OECD said such measures could harm the integrity of national systems, and make it more likely that governments will have to top up private savings.

“Policies allowing temporary or early access to private pension savings (as have been introduced, for example, in Australia, Iceland, Spain and are being considered in Turkey, or have been marginally extended, as in Australia) for those in dire financial difficulties (eg. the unemployed) could endanger the future adequacy of retirement income,” the OECD said.

The Government has made provisions for some investors in funds that have blocked the withdrawal of money to apply to the corporate regulator for temporary relief.

Under the scheme, investors can claim up to $20,000, as well as half the balance of their investments in the frozen funds.

The measures were in response to the widespread freezing of non-bank investment funds following the guarantee on bank deposits. Some 250,000 investors still face restricted access to about $24 billion worth of savings locked within the funds.

The OECD’s report, Private Pensions And Policy Responses To The Financial And Economic Crisis, says governments need to boost confidence in private pension systems despite the stark losses.

http://business.brisbanetimes.com.au/business/hold-tight-on-super-warning-20090422-afeh.html

April 23, 2009 – 9:13AM
Chancellor of the Exchequer Alistair Darling raised taxes on British motorists, smokers and the rich to contain an unprecedented budget deficit as he forecast the worst recession since World War II.

The Treasury will borrow 269 billion pounds ($556 billion) more than estimated in November. It will raise taxes by 3.2 billion pounds on people earning above 100,000 pounds a year and 6 billion pounds through duties for alcohol, tobacco and gasoline, Darling said in his annual budget.

The moves left Prime Minister Gordon Brown’s government little room to stimulate the economy before the next election, which must be held by the middle of 2010. Darling’s expectation that growth will resume by the end of this year is too optimistic and suggests taxes will rise again, said Andrew Smith, chief economist at the accounting firm KPMG.

“Even though Darling insists that the end of the recession is in sight, we are still looking at eye-watering budget deficits,” Smith said. “Plans for repairing the public finances are long on ambition but short on detail. Significant additional tax hikes will ultimately be necessary.”

Gilts and the pound fell as the Debt Management Office said it will sell a record 220 billion pounds in bonds this year, 50% more than last year’s record. The pound lost 2 cents against the US dollar, trading at $1.4490.

Recession forecast

The Treasury expects the economy to shrink 3.5% this year and to rebound in 2010. Moments after he spoke, the International Monetary Fund forecast a contraction of 4.1% this year, with the recession continuing in 2010.

Deficits will total 703 billion pounds during five fiscal years through April 2014 compared with 434 billion pounds forecast in November. This year’s shortfall of 12.4% of gross domestic product would be the biggest peacetime deficit in more than a century, according to Citigroup Inc.

Darling said the Labour government is aiming to help businesses and people on low incomes to weather the recession while taking more from those who can afford to pay. He plans to cut the deficit in half in five years.

“It is fair that those who have gained the most should contribute more,” Darling told lawmakers in Parliament. “We are determined to support a fairer society.”

Taxes rising

Fuel duties will rise quicker than inflation for the next four years, starting with an increase of 2 pence a liter in September. Alcohol and tobacco levies will rise 2% from today.

People earning more than 150,000 pounds a year will pay 50% of their income in tax and lose tax breaks for pension contributions. The new rate is five points higher than suggested in November and will come in a year earlier. It unravels the decision in Margaret Thatcher’s Conservative budget in 1988, eliminating all tax rates over 40%.

“It’s a scorched earth policy,” said Doug McWilliams, head of the Centre for Economics & Business Research, a London- based consultant. He predicted “a huge amount of damage to the City of London, the straw that breaks the camel’s back.”

The UK’s financial services industry, which employs about 1 million, may lose 140,000 jobs, and about 25,000 of the richest taxpayers may flee the country, CEBR estimated. The Confederation of British Industry said businesses are concerned that taxes will rise to fund the deficit.

Business concerns

“The key question for this budget was whether it set out a credible and rigorous path for restoring the public finances to health,” said Richard Lambert, a former Bank of England policy maker now leading the CBI. “It does not.”

The budget paves the way for a squeeze on public spending after the election, putting pressure on the nation’s main opposition party to say how it would cut spending without eating into frontline services.

Current spending is forecast to grow an annual 0.7% more than inflation in the three years from April 2011 instead of the 1.2% forecast in November. Net investment will fall to 1.25% of gross domestic product by 2013-14 rather than 1.8%. Conservative leader David Cameron said the budget shows Labour has lost its ability to manage the economy.

Conservative view

“As of today, any claim they have made to economic competence is dead, over, finished,” Cameron told lawmakers in response to the chancellor’s statement. “This prime minister has certainly got himself into the history books. He has written an entire chapter in red ink.”

The government plans to help fund capital investment by raising 16 billion pounds from the sale of property and other assets in the three years from 2011-12. It also plans to save 15 billion pounds through efficiency and cost-cutting measures and another 1.2 billion pounds by curbing tax avoidance.

“The painful tax announcements have been deferred to the other side of the election,” said Peter Spencer, chief economic adviser to Ernst & Young’s Item Club, which makes forecasts for business based on the Treasury’s economic model.

For the first time, the government has conceded that it may not recover all of the money it has pledged to support the banking industry. The budget makes a provision for potential losses of between 20 billion pounds and 50 billion pounds, or as much as 3.5% of GDP.

Bank bailouts

The government has spent about 40 billion pounds buying stakes in Royal Bank of Scotland and Lloyds Banking Group and pledged hundreds of billions of pounds in guarantees and deposit protection.

“The provisional estimate is a caution judgment, made for fiscal policy purposes,” the budget document says. “It is not an estimate of the scheme-by-scheme losses over time as it is impossible to set out accurate overall costs for certain at this point.”

In all, the budget measures will give away 5.16 billion pounds this year and 100 million pounds in the fiscal year ending in April 2011. In fiscal 2012, the budget will raise 5.23 billion pounds more for the Treasury. The measures are have a broadly neutral impact on the public finances over three years.

The Trades Union Congress, which represents 6.5 million workers, praised the budget, saying it will make a “better balanced economy.” Derek Simpson of the Unite union said it will “position Labour as the party for jobs and social justice” in the minds of voters.

Record deficit

Economists said the Treasury’s deficit is so large, the biggest in the Group of 20 nations and above the shortfall expected this year in the US, that the government couldn’t act to stimulate the economy.

“When it is most needed, fiscal policy will not be able to act,” said Michael Saunders, chief western European economist at Citigroup. “This is a major policy failure.”

Darling today vowed more support for the jobless and home owners. The government will spend an additional 1.7 billion pounds for job creation and provide a 2,000-pound discount on new cars when they are traded in for ones that are more than 10 years old, he said.

He also promised to extend support to mortgage holders who have lost their jobs, to prolong a lower rate of stamp duty on home purchases and to keep guarantees for mortgage-backed securities.

“We will continue to do everything we can to help people into work and help people into jobs,” Brown told lawmakers in Parliament earlier today.

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