Fed: Budget to remain in surplus, PM says

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Fed: Budget to remain in surplus, PM says

(Eds: updates with opposition comments)

By Rob Taylor and Rod McGuirk

CANBERRA, April 6 AAP - The federal Budget would remain in surplus despite the drainon government coffers caused by the war in Iraq, Prime Minister John Howard said today.

Mr Howard said the war would cost hundreds of millions of dollars, but not as muchas many people feared.

Many analysts have put the cost of Australian involvement in the war between $600 millionand $800 million, with some estimates even topping the $1 billion mark.

But Mr Howard said the use of regular military forces meant many of the costs of thedeployment were already covered.

"It's going to cost some hundreds of millions. Just exactly I can't tell you untilit's over," he told the Seven Network.

"We will still have a surplus Budget."

Mr Howard said the government would maintain a surplus through strong financial managementand limiting spending to priority areas, such as defence.

"And the strong economy will continue to produce quite solid revenue," he said.

The opposition said Mr Howard had today confirmed that he had gone cold on a majoritem of his third term - work and family policy.

"John Howard's priorities are in the war room, not in the lounge rooms of Australianfamilies," opposition family and community services spokesman Wayne Swan said.

Mr Howard said he had never promised a work and family package in the next Budget.

"The evidence to date is that we have addressed a lot of the imbalances that did exist,"

Mr Howard said.

Mr Swan in a statement described the prime ministers remarks as extraordinary, giventhat the family payment system was a debt trap for working families, the tax system clawedback the value of overtime and maternity leave was not paid.

Defence Minister Robert Hill said the budget drain caused by the war would not leadto major defence spending projects being deferred or scrapped, such as new air-warfaredestroyers and F-35 fighter aircraft.

"We are not going to do that," he said. "All our major projects are progressing."

He said new projects were being funded through economic growth, boosting the currentdefence spending figure of 1.9 per cent of GDP.

Australian Democrats leader Andrew Bartlett said the Australia's most needy could notbe made to suffer by the government's war spending.

"The Budget will reveal the massive cost of this war on Iraq that Australia shouldnever have been involved in," he said in a statement.

AAP rmg/sek/brt

KEYWORD: IRAQ BUDGET SECOND NIGHTLEAD