Budget to break promises, Swan admits

Treasurer Wayne Swan has admitted the government will break election promises in
Tuesday's federal budget.
He cites unprecedented revenue write-downs of about $200 billion and the global
recession as the reasons why the government will go back on its word to voters.
"That does mean hard decisions and it may mean that there will be changes to
previously announced policies and we accept full responsibility for that," Mr Swan
told reporters in Canberra on Saturday.
"Changes to policy is something that has been brought about by the global recession."
Mr Swan denied changing policies was a softer way of saying broken promises.
Mr Swan said the budget would create space to provide economic stimulus now and into
the future.
"We need to find the room in the budget to support pensioners," he said.
It is understood Prime Minister Kevin Rudd will break his promise before the last
election not to touch the 30 per cent private health insurance rebate as part of the
government's assault on middle-class welfare.
In a budget measure leaked this week, singles earning more than $74,000 and couples
on over $150,000 a year will lose their rebate on a sliding scale.
And in a double blow, those who opt out of private health insurance will be hit with
a higher Medicare levy surcharge.
There is speculation the government will spend more than $25 billion in key road,
rail and port projects aimed at dragging the country out of recession.
The projects are tipped to include a $7.2 billion north-south inland rail freight
corridor from Melbourne to Brisbane and $6.6 billion to complete the upgrade to the
Pacific Highway between Sydney and Brisbane.
Opposition Leader Malcolm Turnbull said if the leak was correct, the infrastructure
spend was welcome.
"It's been almost impossible to understand why the government has been spending so
much money on cash splashes and not putting money into infrastructure such as roads,
rail and ports," he told reporters in Sydney.
"We all know that if the government hadn't spent so much money so recklessly,
particularly on the cash splashes, they would have a lot more flexibility in this
budget."
He said the treasurer was breaking election commitments.
"Mr Swan is breaking promises and what I think is remarkable is Mr Rudd hasn't had
the courage to go out himself and say that," Mr Turnbull said.
Superannuation payments are also expected to be on the chopping block on Tuesday,
with the government tipped to reduce the contribution it gives low and middle income
earners.
The current 150 per cent matching contribution up to a maximum of $1,500 for
eligible people will reportedly be scaled back to 100 per cent.
The government is also predicted to slash the nation's skilled migration intake for
the second time in the past two months, despite figures released this week showing
the unemployment rate fell from 5.7 per cent to 5.4 per cent, or 27,000 jobs, in
April.
The general skilled migration intake for the next financial year is expected to be
reduced by about 7,000 people to 108,000.
"There's no doubt that given the global outlook, the sensible thing to do in this
environment is to calibrate and to change your migration policy," Mr Swan said.
It follows a move in March to cut 18,500 places, meaning a total reduction of
25,000, or 20 per cent.
The 2009/10 budget is expected to show another downgrade to economic growth
forecasts and even more dire unemployment predictions, with media reports on
Saturday night saying the budget will include a forecast that the unemployment rate
will hit 8.5 per cent by mid next year.