Frontline troops to avoid budget cuts: PM

3 May 2012, 5:51 pm   -   Source: AAP

Prime Minister Julia Gillard has promised operational frontline forces will still get "all the kit" they need despite budget cuts.

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The federal government has flagged defence spending cuts of about $4 billion in the budget, ending weeks of speculation about the department's contribution to the 2012/13 surplus.

However, Prime Minister Julia Gillard guaranteed that overseas defence operations would not be impacted and that frontline forces in Afghanistan, East Timor and the Solomon Islands would get "all the kit" they needed.

Defence Minister Stephen Smith said most savings invariably came from delays or deferrals of procurement projects rather than financial imperatives.

Mr Smith confirmed that the government was not reducing military numbers but would defer the delivery of 12 Joint Strike Fighter aircraft by two years.

The fighter deferral would take "out of the forward estimates for this year's budget between $1.5 billion and $2 billion", the minister said, adding that the "net benefit" to the budget was $1.6 billion.

Over the four-year forward estimate period, the total savings for the defence budget could be $4 billion.

Opposition treasury spokesman Joe Hockey said the government's "chopping and changing" on the Joint Strike Fighter program was a last-ditch attempt to manufacture a budget surplus.

"It is about shifting money out of one year and into the next," Mr Hockey said in a statement.

Otherwise, the government remains tight-lipped about what other cuts to expect in the budget that it says will deliver a $1.5 billion surplus in 2012/13, after a near $40 billion deficit in 2011/12.

But parents on welfare are expected to receive super cheap child care under a program expansion to be announced in the budget on May 8.

The initiative will see some paying just 10 cents per child per hour if they sign up to job training or look for work and meet strict eligibility criteria, News Limited reported.

Ms Gillard warned Opposition Leader Tony Abbott that any cuts he knocks back will just add to his own growing $70 billion costing black hole.

"Every budget save we put forward that he doesn't take adds to that total," she said.

"That adds to the incredible cutbacks he would need to make to pensions, health, education, Medicare right across the board if he were ever to become prime minister."

Mr Hockey said Labor had a black hole of $100 billion and growing, taking into account the setting up of the Clean Energy Finance Corporation, the National Broadband Network expenditure, its share of the Gonski education plan and the National Disability Insurance Scheme.

Liberal senator Arthur Sinodinos said while he agreed with a return to surplus, the government had made it difficult on itself by not doing enough over the past two years to bring the budget under control.

At the same time Senator Sinodinos, a former senior adviser to John Howard, said the Reserve Bank of Australia (RBA) had recognised that the economy was not doing as well as aggregate data would suggest and therefore injected some insurance in the system with a 50 basis point rate cut in the cash rate this week.

"I'm not wanting to talk the economy down. I want the economy to go gangbusters," Senator Sinodinos told Sky News.

"But I think the Reserve Bank has recognised that there is an inherent fragility, and they are trying to do something about it."

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