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Abbott flags cuts to spending growth

Tony Abbott says the government will repair the budget while honouring an election promise to maintain health and education spending. Nine News.

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Prime Minister Tony Abbott has drawn parallels with the early days of the Howard government as he reassured nervous Coalition MPs following a significant dip in the government's standing in the polls.

Mr Abbott told the Coalition party room on Tuesday his government faced an even more difficult budget repair job than that which had confronted the Howard government after it had been elected in 1996.

Prime Minister Tony Abbott

Prime Minister Tony Abbott. Photo: Andrew Meares

But the former government had stuck to its guns and implemented economically dry policies that had doubled Australians' wealth.

“We thought [in the 1980s], do we really think this economic rationalism stuff is going to work? But mirabile dictu, it did,” he said.

Mr Abbott predicted significant public anxiety about what cuts and savings may be unveiled in the May budget but pledged the government would keep its commitments even as it took tough decisions.

The Abbott government took a significant hit in Tuesday's Newspoll, which saw Labor extend its lead in the two-party-preferred vote over the government by three points to 54-46 per cent.

Labor also enjoyed a four point boost in its primary vote, from 35 percentage points to 39 percentage points, while the Coalition saw two points shaved off its primary vote, which fell from 41 to 39 percentage points.

Mr Abbott said Coalition governments typically had a more difficult first budget the Labor governments because they invariably had to undertake a fiscal repair job.

Australians knew this but were nevertheless anxious, he said.

The Prime Minister also told colleagues that the government had faced a difficult situation as iconic Australian businesses - such as SPC Ardmona and Qantas - had sought support from the government as an "ATM of last resort".

But reflecting on the government's decision to knock back assistance requests, "It takes courage to say no, but once you say yes there is a queue a mile long".

Labor leader Bill Shorten told the Labor caucus meeting the opposition's message about protecting jobs and Medicare were starting to cut through with voters.

He said Mr Abbott had not made the transition from opposition leader to prime minister.

But Mr Shorten played down the bump in Labor's standing in the polls, pointing out there would be between 87 and 90 Newspolls between now and the next election and urging colleagues to stay focused.

"Polls are like trying to use the second hand to tell the time," he said.

Mr Abbott's speech followed another he made on Monday night in which he flagged future reductions in the rate of spending growth in health and education.

In a speech to the Australia-Canada Economic Leadership Forum, the Prime Minister backed his Treasurer, Joe Hockey, in preparing Australians for a tough budget and for inevitable curtailing of government programs.

''We will keep our pre-election commitments to maintain health spending and school spending but we must reduce the rate of spending growth in the longer term,'' Mr Abbott said.

The Prime Minister's warning about health and education spending follows media appearances last week by Health Minister Peter Dutton, and Mr Hockey, in which they suggested that the current rate of government spending was unsustainable.

With Jonathan Swan

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