Australia - OECD has questioned the Govt's spending plans including the NBN

[herald sun] A WIDE-ranging assessment of the economy has questioned the Gillard Government's plan to rein in spending, the proposed resources tax and the National Broadband Network.

In its Economic Survey of Australia released yesterday, the Organisation for Economic Co-operation and Development said the nation's prospects for growth remained bright.

The report argued that revenue from a resources tax should be parked in a fund to offset any future Budget shortfall.

While the tax was "justified", spending decisions should be disconnected from resource tax revenues, the report warned.

It also recommended broadening the scheme and eliminating state royalties, as suggested in the Henry Tax Review. The Government plans to use resource tax revenue to cut the corporate tax rate, assist infrastructure needs in the mining sector and boost superannuation for low-paid workers.

Referring to the Government's bid to cap spending growth at 2 per cent of gross domestic product, the report said spending limits were appropriate but might be tougher to enforce once the stimulus spending measures faded. It recommended cutting support programs, especially those for the agricultural and automotive industry.

Like the International Monetary Fund, the OECD believes the base of the GST should be broadened and the rate increased.

This would allow for income tax to be lowered.

It also said that while the NBN promised benefits, it might not be the most cost-effective strategy. AAP

OECD questions broadband scheme