Australia's Budget bid to revive fortunes

Prime Minister John Howard hopes for a poll boost from the Budget boost

By CNN's Grant Holloway

CANBERRA, Australia (CNN) -- Australia's Coalition Government will use Tuesday's annual Budget to help claw back public support ahead of a likely general election in November or December this year.

Prime Minister John Howard's conservative government has been struggling in the opinion polls over the last six months, but will be heartened by a poll released Tuesday which shows it regaining lost ground.

The Newspoll published in The Australian newspaper shows the Coalition nearly level-pegging with the main opposition party, the Australian Labor Party, suggesting a recent series of policy reversals and dispersal of government largesse is having the desired effect.

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The Budget will seek to build on this momentum, with age-pensioners, self-funded retirees and small businesses all tipped to be winners after the document is released at 7pm (Australian Eastern Standard Time) Tuesday.

Australian Treasurer Peter Costello is expected to unveil a small surplus, less than $500 million, and far short of the $2 billion forecast last year.

Boost to spending hits bottom line

The Government has recently cut back taxes on items such as petrol and beer in a bid to soothe voter anger at recent price increases, but these moves have hurt the Budget bottom line.

The Government has also recently announced increased spending on roads, education and science and technology incentives, and on Monday promised $75 million to help dairy farmers hurt by industry deregulation moves.

A move to reduce the paperwork involved for small business following the introduction of a new tax system last year may also be helping the Government restore its fortunes.

Money to boost Sydney as finance center

Treasurer Costello is likely to predict respectable growth rates for the Australian economy for 2001-2002 of more than 3 percent.

Speaking to the Australian Broadcasting Corporation Tuesday morning, Costello said the biggest measures in the Budget would be cuts to business tax.

Treasurer Peter Costello says there will be cuts to business tax

"We want to make sure that Australian companies can grow and be strong in Australia," Costello said.

The Budget will also contain more money to boost Sydney's role as a financial center in the Asia-Pacific region.

Despite Tuesday's poll boost, the Howard Government still has some way to go before it has a real chance of gaining a third term at the helm.

November election likely

The Government will most likely call an election in November or December this year following the Commonwealth Heads of Government Meeting in Brisbane, Queensland, in October.

The impact of the new tax system, which includes a contentious goods and services tax, higher prices for items such as petrol, and a general downturn in the economy and the value of the Australian dollar are all likely to weigh against the Coalition.

Based on the most recent Newspoll, if an election were to be called today the opposition Labor Party would still take power.