8 May 2012

Not so rosy in Australia, says Key

11:40 pm on 8 May 2012

New Zealand Prime Minister John Key says the situation is not rosier in Australia, despite the Australian Treasurer saying his budget on Tuesday will set out the path to a modest surplus.

Wayne Swan handed down what he calls a "battlers' budget" on Tuesday night, trying to fulfil the Australian Labor Party's election pledge to turn a $A37 billion deficit into a $A1.5 billion surplus.

Mr Key says the Australian Reserve Bank cut its base rate by 50 basis points, which is an indication of the inherent weaknesses in the Australian economy.

"It's very much a two-speed economy in Australia. The mining sector's very strong, and obviously Western Australia and Queensland are big beneficiaries of that.

"But the rest of the sector's been very week - house prices have dropped 10 percent in the last six to 12 months ... unemployment is starting to tick up, they've got a weak manufacturing sector, a weak retail sector, a weak construction sector and tourism's very weak as well."

Finance Minister Bill English will deliver New Zealand's Budget on 24 May.