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Pensioners and new mums to win amid budget slash and burn

By Kate Hannon, National Political Editor
11 May 2009 6:35 PM

CANBERRA, May 11 AAP - Single age pensioners and new parents will be among the few winners in a budget expected to inflict pain on Australians across the board.

Prime Minister Kevin Rudd and Treasurer Wayne Swan spent budget eve blaming the Howard government's decade of "unsustainable" spending as partly to blame for the horror budget to be unveiled on Tuesday night.

Mr Rudd said the previous government's spending and the global financial crisis meant the government needed to continue investing in short-, medium- and long-term infrastructure building to support jobs.

"All to support jobs, apprenticeships and training opportunities while building and investing in the nation-building infrastructure we need for tomorrow," Mr Rudd said.

"That's our strategy. We think it's the right strategy for Australia."

Mr Rudd said that without the nearly $90 billion spent by the government stimulating the economy since October, Australia's forecast jobless rate would be 10 per cent instead of the expected 8.5 per cent.

The government is expected to unveil all manner of nasties in the form of cuts to welfare, health and other programs in a bid to wind back spending in the face of a massive drop in government revenue expected to reach $200 billion.

But it is also expected to increase spending on job training, large scale infrastructure projects, and research and development.

Opposition Leader Malcolm Turnbull rejected Labor's attempt to blame the former Howard government for the state of the nation's finances, saying the coalition retired $96 billion of "Labor debt" after it won office in 1996.

"The Howard government used those years of strong economic growth wisely and prudently, and that is why Mr Rudd was dealt the best hand of economic cards any prime minister could ever ask for," Mr Turnbull said.

The government on Sunday confirmed it will introduce a parental leave scheme giving primary carers 18 weeks of pay at the minimum wage provided they earn less than $150,000 a year.

It has also pledged to stick by its promise to raise the pension but the increase is expected to be confined to a $30-a-week rise for single age pensioners who receive $569.80 a fortnight.

It is in the area of so called middle-class welfare built up by the previous government where Labor is expected to slash benefits to households with incomes above $150,000 as a rule of thumb.

The reining in of costs could also mean the spread of benefits available under the seniors concession card, once confined to those on the age pension, could be wound back by means testing self-funded retirees.

Already one big ticket item which is widely known and which has not been denied by the government is the plan to means-test the 30 per cent private health insurance rebate.

Those earning $74,000 a year and families with combined incomes of $150,000 would find the rebate tapered down the higher their earnings.

It is also mooted there will be a cut of around 7,000 to the skilled migrant intake, a trimming of the Medicare safety net with means testing, and cuts to superannuation salary sacrificing and government super co-contributions.

While the bulk of the Medicare safety net goes on obstetrics and gynaecology services, a cut to subsidies would reflect the government's stated desire to crack down on rorting by high-charging specialists.

On the positive side, the government has confirmed a decision to add cancer treatment drugs Avastin for bowel cancer and Herceptin for breast cancer, to the subsidy list in the Pharmaceutical Benefits Scheme.

The budget is also likely to unveil a $25 billion list of large infrastructure projects as part of the promised third stimulus package, following the nearly $90 billion already spent on stimulus since October.

Mr Turnbull warned the government must set out a "coherent" plan for economic recovery and the creation of jobs.

He again accused the government of having plans for "spending like Paris Hilton one minute and then cutting back on essential services the next".

"Now that he faces a bit of rough weather, he wants to blame it all on John Howard. Really, tomorrow night Mr Swan's got to get his story straight. That's the big challenge for him," Mr Turnbull said.