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CANBERRA - Australians are bracing for a federal Budget tonight that will slash Government spending and slug the rich, but provide some balm for the nation's struggling mortgage belt.
Treasurer Wayne Swann, preparing to present Labor's first Budget in 13 years, has promised that, while tough, he will fulfil election pledges and ensure the lot of working families will be improved.
Among his headline measures will be the stripping of a range of tax concessions from the wealthy, higher taxes on luxury cars, reduced health costs for millions of Australians and more money for the public healthsystem, and higher funding for education and skills training.
Other moves will include further income-tax cuts and incentives to encourage greener and more energy-efficient homes.
And a national welfare debit card will be introduced to ensure benefits are used to buy food, clothing and other essentials, rather than spent on alcohol, tobacco or gambling.
Despite its expected austerity across most areas, Swann's first Budget is likely to meet the approval of a nation that, through opinion polls, has urged Labor to end the largesse the previous Coalition Government showered on voters, using the vast tax windfalls of Australia's long-running commodities boom.
Families have been hit hard byrising interest rates, and higher fuel and food costs. More may be in store.
The Reserve Bank has warned that inflation is expected to surge again because of even higher world fuel prices, even with an expected slump in economic growth and a likely rise in unemployment.
A Newspoll in the Australian yesterday said that while most Australians would welcome the tax cuts promised by Prime Minister Kevin Rudd during the election campaign, more than half would rather dump them if they encouraged inflation and led to another round of interest-rate rises.
And, overwhelmingly, they supported indications by Rudd and Swann that the rich will be targeted, especially in tax concessions designed to help struggling families.
The Newspoll said most Australians would back the introduction of means-testing childcare rebates and the baby bonus introduced by former Treasurer Peter Costello, and either means-testing or abolishing family tax benefits for wealthy households.
"If you are going to cut Government expenditure, it means also that you have got to look very carefully at welfare arrangements for the wealthiest," Rudd said.
"We have always said that, and we stick by that principle and I am surprised that anyone would actually actively argue against it. Why baby bonuses are necessary for millionaires frankly defies my imagination."
Swann has all but confirmed that the rich will be hit.
Forecast measures include the phased axing of as much as A$8 billion ($9.8 billion) in tax breaks and concessions, higher taxes on cars costing more than A$57,000, and the end of family tax benefits for single-income families with an annual income of more than A$250,000.
"There's no doubt that we want to see a tax system which is fair to everyone," Swann said. "Average people who go to work each day, pay their taxes, expect everybody else to do the same, and it's pretty fair to say when we look at some of the tax concessions that are around they do favour many individuals over others.
"You'll see in this Budget a real emphasis on fairness and efficiency in the system, and that will mean the largesse that has been handed out to a few at the expense of the many will be pulled back."
At the other end of the scale, Swann will deliver tax cuts, increase childcare rebates, and significantly raise the threshold at which people without private healthcare are required to pay a levy for the Medicare universal healthcare system.
He will also increase spending to provide respite for carers looking after the disabled or elderly.
Boosts to education spending will provide a computer for every student in their final four years of high school, ensure every 4-year-old gets 15 hours of free preschool learning, and start establishing trades training centres at high schools.
