WELFARE recipients will be sent to work and higher income earners will lose $5 billion in tax benefits and concessions in a budget that returns the coffers to surplus before the next federal election and prepares the economy for the new mining boom.
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The government has also honoured its promise to fund mental health with measures costing $2.2 billion over the next five years, of which $1.5 billion is new spending.
As well as toughening requirements to ''nudge'' people off welfare, the budget will also encourage people to get back to work.
Click the image to see photos from Budget night
At its centrepiece is spending of $3 billion over six years, of which about $2.2 billion is new. It includes programs to provide training and extra skills for the young, old and disabled and a $558 million workforce development fund that will provide 130,000 new training places.
There will be wage subsidies to encourage employers to hire the long-term unemployed and those with mild disabilities.
''This budget gets us back in the black, gets more people into better jobs and spreads the opportunities of the boom,'' the Treasurer, Wayne Swan said as he delivered his fourth budget.
''The core of this budget is the conviction that we don't have a single person to waste. We want to spread opportunity to every postcode.''
After promising a tough budget to ensure the return to a forecast surplus of $3.5 billion in 2012-13, Mr Swan unveiled $22 billion in savings over four years, of which about two-thirds was achieved by cutting spending.
The budget deficit blew out from a forecast $41.5 billion to $49.4 billion because of a hangover from the financial crisis that has ravaged revenues over this financial year and next by $16 billion more than was forecast at the end of last year.
The natural disasters at home also cost the budget $6 billion in revenue this financial year, but this was offset by the flood levy and associated budget cuts announced this year and incorporated into yesterday's document.
The forecast deficit for 2011-12 has blown out from $12.3 billion to $22.6 billion, due in part to less than expected tax revenue.
The year after, the economy is forecast to return to surplus in what would be the fastest three-year financial reversal in 44 years.
Savings measures include freezing for another two years the upper income thresholds for family payments such as family tax benefits and the baby bonus and freezing for three years the indexation of the annual family tax benefit supplements. These two measures will save $2 billion.
People will no longer be able to income-split with their children through trusts or other means to minimise tax on earnings, saving $740 million. Discounts for paying HECS up front will be halved, saving $480 million, and the dependent spouse tax offset will be phased out for women aged under 40 without children. This change will save $755 million and is designed to push these women into the workforce.
The government will again try to means-test the private health insurance rebate, saving $1.9 billion, and decrease the indexation rate of the $50,000 maximum annual contribution to superannuation for the over 50s.
Other savings include $950 million from fringe benefits tax changes for company cars, $2.7 billion in defence cuts and $1.1 billion in cuts to the public service.
The clampdown on welfare includes tougher eligibility requirements for those on the disability support pension aged under 35 who can work at least eight hours a week. The long-term unemployed will have to do 11 months' work experience instead of six to keep the dole. Single mothers will have to do more job training to keep their parenting payments, as will jobless families with children aged under six.
With the economy to hit full capacity as the mining boom gathers pace, Mr Swan said Australia needed as many people working as possible, and it would be ''obscene'' if people were left behind. ''A wealthy country like ours has no excuse to leave people out of work.'' He acknowledged that some of the budget measures were designed to give the unemployed '' a nudge''.
The disasters in Australia and overseas have wiped 0.75 of a percentage point off growth this financial year. It is now forecast to be 2.25 per cent. But the economy is expected to rebound quickly due to the boom, growing at an above-trend 4 per cent in 2011-12 and by 3.75 per cent the year after.
Net debt will still peak in 2011-12 and will rise to 7.2 per cent of gross domestic product, or $107 billion, up from 6.1 per cent of GDP forecast a year ago.
Read more: http://www.smh.com.au/business/federal-budget/swan-outlines-plan-for-working-nation-20110510-1ehkn.html#ixzz1M05TDE20
