Federal Treasurer Wayne Swan has announced an $18-billion deficit in this year's budget, as he detailed a 10-year plan to return to surplus.
The DisabilityCare scheme and the Gonski school funding plan are the centrepieces of the budget, together with spending on infrastructure.
Canberra Correspondent Amanda Cavill reports.
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Almost $100-billion of expenditure on education and disability insurance is to be locked in for at least ten years as the government tries to protect its reforms from future economic pressures.
Wayne Swan says $43-billion will be trimmed from other programs to pay for the major reforms, including scrapping the baby bonus.
"This budget makes historic investments in our children's education, in care for our most vulnerable citizens and in building our nation. But you only get to make the big investments if you are willing to make the savings to fund them. To fund the critical investments over the next decade and return the budget to surplus, this government has made $43 billion in savings over the forward estimates."
The baby bonus will be replaced with an increase to family payment rates for newborns.
The measure will save the government $1-billion over five years and will see around 28,000 families cease to receive the benefit.
Labor's signature national disability care program will get more than $14-billion in new money to ensure it will be fully up and running on time.
The new investment for the scheme, now known as DisabilityCare Australia, is part of a total of $19.3 billion allocation over seven years, to roll it out by 2018/19.
Other major spending outlined by the Treasurer includes $24-billion for both urban road and rail infrastructure over the next decade.
"It's critical to invest in both urban and rail infrastructure. Traffic congestion costs commuters time with their families and is estimated to cost our economy up to $20 billion a year by 2020 if not addresses. That's why we have committed more to urban public transport infrastructure than all our predecessors since Federation combined. "
The cost of managing asylum seekers has hit the budget bottom line, with asylum seeker costs rising to $3-billion this year, $1.5 billion more than expected.
Australia's migration program will remain at 190,000 places in the next financial year.
From July 1 this year, the cost of a 457 temporary work visa will double, to $900.
Mr Swan says skilled migration is important for Australia and helps to underpin a strong economy.
He says that's in line with the government's overall aim of curbing spending, without hampering economic growth.
"Two simple but powerful words are at the heart of our approach and they mean an awful lot to every Australian watching tonight. Jobs and growth. We have taken the responsible course to delay the return to surplus. Because we put jobs and growth first. The alternative cutting to the bone, puts Australian jobs and our economy at risk."
On Indigenous affairs, the government has announced $777 million towards new Close the Gap national partnerships over three years.
The Australian Indigenous Education Foundation will receive receive $10 million towards scholarships to send Aboriginal children to top high schools.
And $24.5 million dollars has been committed for the Cape York Welfare Trial until 2015.
Mr Swan says the budget will be revenue neutral in two years, aiming for a $6.6 billion surplus by 2016-17.
