A WAFER-THIN $1.5 billion surplus for 2012-13 will be the centrepiece of a budget that Treasurer Wayne Swan will say provides a buffer against uncertain global conditions and allows for interest rate cuts.
The surplus would be $2 billion in 2013-14 and would continue to grow over time, Mr Swan told cabinet in a briefing last night. He said this was also "a fair go budget" that would deliver some "really good Labor reforms" including funding for the proposed disability insurance scheme and the "schoolkids bonus".
But in caucus, the budget decision to move single mothers off the parenting payment and onto the lower dole when their youngest child turns eight has already come under fire, with left-wingers Doug Cameron and Stephen Jones criticising it.
Prime Minister Julia Gillard responded brusquely, telling Senator Cameron she had "answered that". Earlier, she said she would not answer questions that had been flagged in the media, a reference to a report quoting Senator Cameron saying he would raise the single parent issue in caucus.
Financial markets took an ominous turn on the eve of today's budget, with share prices battered as investors reacted with alarm to the results of elections in France and Greece, where voters overwhelmingly rejected politicians aligned with harsh economic austerity programs.
Australia's sharemarket fell more than 2 per cent, cutting billions from the value of local stocks.
A good reception for the budget is vital for Ms Gillard to try to get some traction. But with Speaker Peter Slipper standing aside while criminal and civil allegations against him are dealt with and the highly damaging report into Craig Thomson now on the crossbenches finally out yesterday, Labor is apprehensive about the budget being partly drowned out by these political controversies.
The government has reached its surplus through a combination of large-scale savings and shuffling spending between years.
Opposition Leader Tony Abbott said it would be based on "fiddled figures".
Mr Swan said: "It's overwhelmingly the case that the surplus is the right thing to do, with our economy expected to grow around trend and with low unemployment." The International Monetary Fund had endorsed that position.
The surplus had been hard to achieve, Mr Swan said, with write-downs of revenue of more than $15 billion since the mid-year budgetry review and about $150 billion since the global financial crisis. But the "substantial savings" were "responsible, targeted and have been made primarily with a view to protecting working families, the most vulnerable in the community, and frontline services".
Addressing her caucus, in which MPs are deeply worried about Labor's low vote and many are questioning her leadership, Ms Gillard said the government would conquer the political pressure it was under.