In the lead up to this year's budget, there has been a lot of talk about debt and deficits given the need for the Rudd Government to stimulate the economy as a result of the global recession and a $210 billion decline in government revenue.

Both sides of politics agree that budgets should be in surplus over the course of the economic cycle. That is, in the good times governments should be economically prudent, saving money and using any spending to build the long term capacity of the national economy. That then allows them in the bad times to invest more to stimulate the economy to protect jobs and limit the impacts of any recession.

Nobody can argue with the fact that we are being impacted by the worst recession in the world since the great depression. All our major trading partners are in recession and the OECD expects output in its 30 member countries to contract by 4.3% in 2009. Australia is not immune from this global downturn although we are well placed to weather the storm. The Tropical North's economy is closely link to the global economy through our reliance on tourism and the construction industry so we are likely to be impacted more than others.

To protect the economy and jobs, the Rudd Government acted decisively and quickly last year and again earlier this year. That is what governments should do in these times and clearly the recent jobs figures and retail spending figures indicate that the stimulus is working. It is also important to remember that two thirds of the stimulus is in infrastructure that is only just starting to flow through into the economy, so there may be some light at the end of the tunnel but only time will tell.

The Opposition, who have opposed both our stimulus packages, however continue to try and undermine the government's efforts to support demand and jobs in the economy. More worrying though is their continued attempt to perpetuate a myth that the Rudd Government is running up irresponsible debt and that they somehow were fiscally conservative during the Howard years. In doing so, they are undermining confidence in the economy. The facts just don't support their argument.

In the last five years of the Howard-Costello Government, Federal spending grew by over 5% a year from $197 billion in 2002/03 to $253 billion in 2006/07. They weren't saving during the good times and sadly the spending that they did undertake was not in nation building infrastructure and skills development. This is despite more than 20 warnings by the Reserve Bank of Australia about infrastructure and skills constraints in the Australian economy that was putting upward pressure on interest rates over this time.

This period was a golden period for the Australian economy with commodity prices rising at unprecedented rates over this time. The index price paid for base metals such as copper, nickel and aluminium almost tripled from $95.70 to $231.70. The prices of other major commodities including gold, iron ore, crude oil and natural gas doubled. On the back of this commodity boom and a strong Australian economy revenue for the Federal Government grew from $205 billion in 2002/03 to $253 billion in 2006/07. So Howard and Costello falsely claim to be fiscal conservatives, spending like drunken sailors during the good times and failing to invest in infrastructure and skills to drive productivity in the economy.

The other major myth the Opposition tries to perpetuate is that the Howard-Costello Government were prudent and paid off Labor's debt. This just isn't true with the majority of the $90 billion debt retired through asset sales by the Federal Government. This includes $45 billion through the sale of Telstra and almost $60 billion when you take in the sale of airports and other Commonwealth assets like buildings and land. Everyone knows that if you sell your house you won't have a debt but you also won't have a place to live. The management of the sale of Telstra has left the country a broadband backwater which the Rudd Government is now having to fix.

This will be a difficult budget and the government will need make some tough choices and map out a plan to return the budget to surplus while continuing to stimulate the economy and protect jobs in the short term. This will be the most difficult budget a Federal Treasurer will have bought down in generations.

Knowing Wayne Swan and Kevin Rudd and how hard they would have worked on getting the balance right in the decisions that will be made by the government, I have confidence in the future.

Sadly ,during this time of a global recession I expect the Opposition to continue to play politics, undermining our stimulus measures and our plans to return the budget to surplus. It is in the Opposition's interest for the Australian economy not to recover so that they can blame Labor and have a better chance at the next election. This is their short term political strategy. The Rudd Government I can assure you is focused on an economic strategy to protect jobs and responsibly manage the budget over the economic cycle. I know the Australian people will support a government that acts in the national interest, not their own short term political interests.

Jim