Thousands of Canberra-based public servants will lose their jobs to help get the economy back in the black, under a federal budget that pushes a new round of middle-class welfare initiatives.
In the biggest attack on the federal bureaucracy since the late 1990s, when John Howard came to power and put the ACT into recession, more than 4200 fulltime jobs will go in the coming financial year alone, with few government agencies being spared the axe.
About 1500 of the initial job losses will be directly from the ACT.
The territory government is also reeling after learning the federal budget will deliver $34.5 million less than expected in the GST carve-up.
Treasurer Wayne Swan handed down his fifth budget last night, forecasting four years of budget surpluses and significant cuts to public service staffing levels and spending.
A $1.5 billion surplus for 2012-13, with projected increases in subsequent years, and $33.6 billion in savings across the budget comes off the back of a $44.4 billion deficit - which is almost double what was predicted this time last year.
Revenue from the new mining tax will now give up to $600 a year more for families with children, extra money to students and jobseekers, and help businesses to offset tax losses.
But Canberra will be forced to pay for many of the other savings to be found in the budget, through massive job losses and slashed operating costs - prompting warnings from ACT business leaders of falling property prices.
The official number for 2012-13 is a deficit of 3073 government jobs, but when the forecast uniformed Defence personnel increases are factored in, the total public service staff losses reaches 4227.
In 2013-14 another $164 million will be saved from the government's workforce wages bill, indicating total job losses will possibly exceed 12,000 by the end of the 2014-15 financial year.
Public service jobs will disappear across the nation, but Canberra will take the brunt of the pain with about a third of public sector employees located in the capital.
Agencies hit the hardest will be the Australian Taxation Office, the Department of Human Services, and the Department of Education, Employment and Workplace Relations.
Community and Public Sector Union national secretary Nadine Flood said the ''enormous cut'' would damage essential public services.
''The Government needs to be honest and acknowledge that these cuts mean it will provide fewer services. These are real people doing real jobs, serving every community around Australia,'' Ms Flood said.
She said the union would now focus on protecting jobs by pushing agencies to find savings from other areas of spending, and on ensuring they respected workers' rights. But Mr Swan said he expected there would be no mass redundancies and that the reductions would be achieved mostly through natural attrition.
He described the budget, his second under the leadership of Prime Minister Julia Gillard, as a ''Labor budget to its bootstraps''.
He said it was all about delivering a fair go and funding a new cost of living relief for Australian families while also helping businesses to invest and compete.
And by bringing it back into surplus, the budget proved that Australia's economy was resilient.
''Not even a sovereign debt crisis in Europe or unprecedented natural disasters here at home could deny Australia this substantial achievement,'' Mr Swan said.
''The deficit years of the global recession are behind us. The surplus years are here.''
A new $3.6 billion Spreading the Benefits of the Boom package will divert proceeds from the incoming Minerals Resource Rent Tax to increase Family Tax Benefit A payments and also ease pressure on business.
The new package comes at the expense of previously intended cuts to company taxes, for which the Government was unable to find parliamentary support.
The anticipated 1 percentage point cut to the company tax rate has been put on the backburner to fund the budget's biggest selling point.
The central feature of the new package is $1.8 billion in extra support for families, which will give up to $300 more a year to families with one child and up to $600 more to families with two or more children.
The package will also invest $1.1 billion to create a new Supplementary Allowance for income support recipients for the unemployed, students and parents with young children. Eligible singles will get an extra $210 a year, while couples will get $350.
Part of the MRRT revenue will also be directed to a $714 million loss carry-back scheme to encourage businesses to invest and innovate by offsetting a current year tax loss of up to $1 million against tax paid in previous years.
The Coalition has indicated it will oppose at least one budget measure, the recently announced Schoolkids Bonus cash payments to parents of school children.
The government plans to handout in June $410 per child in primary school and $820 per child in high school.
But shadow treasurer Joe Hockey said the move was a bribe and a ''sugar hit'' that had nothing to do with education. ''We are not going to support the cash handout to people before the end of the financial year. It is a cash bribe for the carbon tax.''
The Schoolkids Bonus will cost $2.1 billion and replace the existing Education Tax Refund. Mr Swan said Labor's management of the economy stood it apart from the rest of the developed world.
''Ours is a country where people who work hard should get fairly rewarded, where there's an optimism that comes with economic and social mobility,'' he said.