The Howard government serenaded disillusioned voters tonight, with a big spending budget designed to win back support ahead of an election, while maintaining fiscal discipline.
However, it deferred its timetable for the sale of its 50.1 percent stake in the nation's largest telco for at least two more years, but promised AU$163 million to improve telcommunications services to the bush.
Handing down his sixth budget, Treasurer Peter Costello committed AU$2.6 billion to health, welfare and its crucial elderly voters, produced a larger-than-expected surplus of AU$1.5 billion for 2001/02 (July/June) and painted a bright future for the economy after the current downturn.
The centrepiece of the widely leaked budget was a four-year welfare package costing AU$1.7 billion, which uses carrot-and-stick measures to get the unemployed off benefits and back into the workforce, coupled with previously announced tax cuts worth AU$5 billion.
Costello said the budget - his government's fifth consecutive surplus - was the result of five years of fiscal discipline and good economic management.
"I'd say to people, stick with the authors, stick with the authors. The benefits are now starting to come about," Costello told a news conference, exhorting voters to back the government's economic credentials.
He declined to comment on whether the budget measures were designed to set up the government for a snap election with Prime Minister John Howard consistently saying the election will not be held until the end of the year.
The budget was viewed as the five-year-old Liberal/National government's key opportunity to shake off its image as "mean, tricky and out-of-touch" - as described in a leaked internal memo - and woo back voters who have deserted in droves.
Voter backlash over tax reforms, high petrol prices and free-market reforms has hammered the coalition in the polls since January, with analysts starting to sound the death knell for the government.
But an opinion poll published on the morning of the budget suggested the obituaries had been written too early, with speculation that the budget would be full of goodies for key constituents boosting voter support.
Surprise poll
The Newspoll survey in The Australian newspaper showed a surprise reversal in the government's ill fortunes with the coalition neck-and-neck with opposition Labor with 40 percent support versus 41 percent - a one percentage point gap against 10 points just two weeks ago.
"The important thing is to stick with the people who have the economic management credentials on the board and that will be a very big part of the picture for the next election," said Costello who is widely tipped to succeed Prime Minister John Howard as Liberal leader after the next election.
The budget held few surprises with most of the spending initiatives from the AU$159 billion budget well telegraphed but it left room for the government to announce some further spending ahead of the election.
These new measures included tax-breaks and one-off payments for pensioners and self-funded retirees - two groups whose votes will be crucial in the coming election - to calm anger about the introduction last July of a 10 percent Goods and Services Tax.
In a raft of other electorally popular spending commitments, the government pledged AU$900 million to improve health services over the next four years, a AU$5 billion revamp for defence over four years, AU$1 billion for the environment over five years, and a string of measures to assist Aboriginal communities and rural and regional Australia.
The government announced a one-off payment of AU$25,000 for prisoners of war held by the Japanese during World War Two, in line with similar payments in Canada, Britain, New Zealand and the Isle of Man.
