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Aussie government promises tough first budget

CANBERRA, Australia--Prime Minister Tony Abbott has promised to share the pain in his conservative government's first annual budget aimed at reducing national debt.

His government's financial blueprint for the next fiscal year beginning on July 1 to be revealed to Parliament on Tuesday also promises to be politically damaging after his coalition was elected in September on a pledge not to increase taxes.

Abbott confirmed on Sydney radio 2GB on Tuesday that a gasoline tax that was been frozen at 38.1 Australian cents (35.7 cents) per liter since 2001 will again increase with inflation.

But Abbott said the extra revenue raised will go toward extra spending on road building as part of an allocation of AU$11.5 billion for infrastructure.

"We're all in this together, and what I don't want ... is for a pensioner (retiree) to be able to look me in the eye and say: 'I'm bearing pain and you're not,' because it's got to be fair," Abbott said.

"Yes, there's got to be short-term pain, but it's pain with a purpose," he added.

Abbott also confirmed that a debt levy will be paid by higher income earners to retire national debt and that government subsidies for university education fees would be reduced.

Budget measures reported in the local media but yet to be confirmed by the government include charges for some free medical services, greater restrictions on welfare availability and the axing of thousands of public service jobs.

"If you are only looking in the budget for your own interest, then you may be disappointed," the budget's primary author, Treasurer Joe Hockey, said outside Parliament House on Tuesday.

"But if you are looking for the national interest, you'll be cheered," he added.

Opposition leader Bill Shorten labeled the budget "a mean agenda of broken promises and twisted priorities."

The government might struggle to get some of the measures approved by the Senate, where Abbott's coalition does not hold a majority of seats.

A mining boom fueled by Chinese industrial demand for iron ore and coal helped Australia avoid a recession during the global financial crisis. But the boom has passed and the economy is slowing along with the weakening resource sector.

The government's latest economic forecast in December showed Australia's deteriorating economic performance will translate into a deficit of AU$68.1 billion in the current fiscal year — about AU$16.8 billion worse than was forecast when the budget was announced in May last year.

In neighboring New Zealand, Prime Minister John Key said Monday that when his government's budget is released this week it will project a surplus in the upcoming fiscal year.

"There will be plenty of Australians who'll be looking across the Tasman (Sea) when they hear how large their deficit is on Tuesday night and see our surplus on Thursday and will say: 'That's an impressive result that we've achieved over here in New Zealand,'" Key said.

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