Figures reveal debt problem: Access

The latest economic forecast - despite its positive outlook on unemployment and growth - shows Australia has a serious debt problem, a key forecaster says.

It's time for the government - and the opposition - to detail exactly how it expects to bring the budget back into balance, Access Economics economist Chris Richardson said.

"The essential message out of today's numbers I think is right - that we have a budget problem," he told Sky News on Monday.

"The economy might be recovering, but the budget only recovers so far and we still need to save some money on it to make it sustainable."

The government raised its growth forecasts, slashed unemployment estimates and said it expected the economy to grow 1.5 per cent in 2009/10 rather than contracting 0.5 per cent, according to its mid-year economic and fiscal outlook released on Monday.

The figures suggest Australia's economy will be back on a growth trend ahead of the next federal election, Mr Richardson says.

"Which would imply that both sides of politics should start the rollout for the Australian electorate their expectation of how they'll bring the budget back into balance," he said.

He has called for fiscal caution, but believes the government will be unlikely to wind back its spending in the months preceding the next election.