Former RBA chief says surplus 'crazy'

Former Reserve Bank of Australia governor Bernie Fraser says the federal government's pursuit of a budget surplus is harming the national economy.

Prime Minister Julia Gillard says the government is intent on achieving a $1.1 billion surplus for 2012/13, following a series of deficits.

However, some economists, unions, welfare groups and senior Labor figures say the promise should be set aside for now in order to give the national economy a shot in the arm.

Mr Fraser said delivering a surplus this financial year is the wrong strategy.

"There are a lot of other crazy people out there trying to do the same thing - generate surpluses when their economies are falling over," he told ABC radio on Wednesday.

"But it is harming the economy."

A spokesman for Treasurer Wayne Swan said the government's budget policy was working.

"Running a disciplined budget policy has already given the Reserve Bank of Australia room to cut interest rates as we saw again this month," the spokesman told AAP.

"As we have said time and time again, the government will always do what is appropriate for the economy and for jobs."

Australian Greens deputy leader Adam Bandt said the surplus target was impacting on the poor.

"I hope that while the treasurer is lying on his towel on beach over summer he takes some time to reflect on how much Australians will be hurting as a result of unnecessary budget cuts simply to meet a political surplus," he told reporters in Melbourne.

Mr Bandt said pushing single parents onto a lower government payment, which starts from January 1, was one example of the damage caused by the "early political surplus".

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