Australia awaits Swan's 'tough but fair' budget

The first budget from Australia's centre-left Labor government will be tough but fair, Treasurer Wayne Swan said Tuesday, shortly before he was due to present the plan to parliament.

The voters who swept Prime Minister Kevin Rudd's Labor Party to power in November are hurting from a series of interest rate rises that have made the cost of borrowing in Australia among the highest in the industrialised world.

Yet Swan must deliver a budget that honour's the government's election pledge of 31 billion dollars (29.1 billion US) in tax cuts, a move economists say could fuel inflation and spark further rate rises.

In addition, opposing forces are buffeting Australia's economy, with the China-driven resource boom stimulating growth and providing the government with windfall revenue while the global credit crunch weighs on economic activity.

"There are not going to be any rabbits out of the hat tonight," Swan told reporters ahead of the budget presentation due at 7:30 pm (0930 GMT).

"We are going to keep all of our promises, deliver for working families and invest in the future. I think this budget will be tough, but it will be fair. This will be a budget for the next decade, not the next election."

Opposition Liberal Party leader Brendan Nelson has already criticised the government's reported decision to cut some government assistance to high-income earners, such as a 5,000-dollar "baby bonus" for each new child.

"I don't think anybody is suggesting that multi-millionaires are deserving or need to get some of these benefits," Nelson told ABC Radio.

"(But) we are very concerned that the cost of administering some of these means tests is actually in excess of any money that is going to be saved.

"What Swan and Rudd are trying to do is appeal to the politics of envy and resentment."

Rudd will be keen, however, to live up to the "economic conservative" tag he gave himself during the election by pruning billions of dollars from government spending.

Swan is expected to announce a huge surplus of between 17 billion and 22 billion dollars.

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