Rise in cost of living could be first impact of budget

RISES in the cost of living for thousands of Australians could be the earliest concrete result families will feel from the Abbott government's first budget when it is released on Tuesday night.

This budget, widely seen as the most significant re-write of Commonwealth finances since Peter Costello's first budget in 1996, will make major changes across the gamut of government services and programs.

While Treasurer Joe Hockey has promised the pain will be shared across the income spectrum, including a deficit tax on higher-income earners, the role of government is also set to be stripped back.

Already essentially confirmed by the government is a likely $7 co-payment for GP services, tightening of eligibility for pensions and welfare, a retirement age increase and stricter rules on claims to the dole for young Australians.

Other expected cuts include more than 70 government agencies, from the Royal Australian Mint to the National Preventative Health Agency to be sold, abolished, or merged with other government departments.

All the cuts, Mr Hockey has pledged, will be part of an overall strategy to return the budget to surplus as soon as possible, but with no specific target yet released.

Mr Hockey and Mr Abbott have long pitched their strategy to release funding for roads, including a promised $6.7 billion for the Bruce Hwy over a decade, to help boost the economy.

To that end, the biggest spending expected in the budget is a likely $80 billion program for roads, rail and ports, backed in part by an "asset recycling" program with the states to sell off public assets.

That program will see the billions spent on roads also partly funded by the first rise in petrol excise since 2001, cuts to ethanol subsidies of $150 million, with about $8 billion expected to be spent in the next six years.

But the most feared parts of the budget, including putting a hold on the minimum wage and raft of cuts of more extensive cuts to pensions, will not be known until Tuesday night.

Outlined in the Commission of Audit report released two weeks ago, those changes have already sparked considerable concern, with the government's response likely to be seen as an indicator of Mr Hockey's determination to fix the government's balance sheet.

The audit's proposal for the budget to also outline spending and revenue for the next 10 years, if acted on, could provide unprecedented transparency on the government's future plans.

But Mr Hockey, keen to keep his cards close to his chest, has repeatedly said all will be revealed in the budget when released at 7.30pm on Tuesday.Confirmed budget measures:

Cuts to more than 70 government agencies, thousands of public service jobs to go

Spending programs across environment, agriculture, industry and transport to be pared back

Deficit tax on Australia's wealthiest

Disability pensions, welfare, unemployment benefits to face stricter rules

Petrol prices to be indexed twice each year, of about 1c a litre for four years

Aged pension to be available for those over 70 only, after 2035

Infrastructure spend to total $80 billion, half of which comes from the Commonwealth


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