Budget to bring 'pain with a purpose': Abbott

Tony Abbott
Tony Abbott
Tony Abbott says his government's first budget will bring "pain with a purpose".

The government is bracing for a voter backlash over tonight's budget, which will include a GP co-payment, a temporary budget repair levy on high income earners, a future rise in the pension age to 70, the reintroduction of indexation on fuel excise and big cuts to the public service.

The prime minister concedes some of the measures will be unpopular with voters, but he believes they are necessary.

"Yes, there's got to be short-term pain, but it's pain with a purpose," he told Macquarie Radio.

"This is a problem-solving budget because we do have a very serious problem of debt and deficit, stretching as far as the eye can see.

"But it's also a nation-building budget."

Mr Abbott will seek to calm backbench nerves about the budget at a coalition party room meeting on Tuesday morning.

He will explain to them that the budget will take the focus from short-term consumption to long-term investment.

That investment will include the Commonwealth's biggest ever spending on infrastructure, Mr Abbott said. But he also confirmed new roads will in part be funded through the increase to the fuel excise.

The government is restoring the indexation of the excise after it was frozen by the Howard government in 2001.

The Australian Greens have confirmed they support the move, ensuring it will get through the Senate.

But they argue the government's new levy on high-income earners should be permanent, not temporary.

Mr Abbott explicitly confirmed the deficit levy for the first time on Tuesday.

He said he will pay about $6500.

"We're all in this together," he said.

Many in the coalition are particularly concerned by the deficit levy and fuel excise changes, given Mr Abbott's promise not to raise taxes.

The government will use the budget to claim it has reduced taxes by $5.7 billion in the 2014/15 financial year through the planned scrapping of the carbon and mining taxes - although legislation for both remains stuck in the Senate, where the government lacks a majority.

Labor's finance spokesman Tony Burke says Treasurer Joe Hockey has a herculean sales job on his hands.

"He's going to have to sell the budget by making excuses for telling lies," Mr Burke told ABC radio.

Labor backbencher Jim Chalmers said the budget was an "ambush" on middle Australia.

"Tonight, Tony Abbott and Joe Hockey will reach deep into the pockets of every Australian. The budget will be a bonfire of broken promises and twisted priorities."

The government has promised to return the budget to a sustainable surplus of one per cent of GDP over the next decade.

Economists are forecasting a deficit of around $30 billion in 2014/15, slightly smaller than the $33.9 billion predicted in Mr Hockey's mid-year budget review last December.

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