CANBERRA – A multi-billion-dollar small business boost, a crackdown on welfare, a tax system focused on “fairness” and mounting deficits have been laid out in the Abbott government’s second federal budget.

It has been described by Australia’s Treasurer Joe Hockey as the budget to encourage Australians to “get out there and have a go”.

The conservative government appears to have ditched austerity for a budget focused on driving growth, as it seeks to bolster its sagging popularity and head off a possible downgrade of the country’s top-notch credit rating.

Offering generous tax concessions to small businesses to encourage investment, in addition to extra child-care support to push parents back to work, Treasurer Hockey aimed to reach out to conservative heartland voters alienated by the last austerity-focused budget.

The government, led by Prime Minister Tony Abbott, has to call a general election sometime next year.

Like many advanced economies since the financial crisis, Australia is struggling to balance the need for fiscal discipline with policies that unleash growth potential.

Hockey promised to be able to return the country to a surplus within five years hoping to pacify concerns that Australia could lose its AAA credit rating by failing to end a string of deficits quickly.

Labor’s treasury spokesperson, Chris Bowen, said planned cuts to spending on welfare, education and child care remained on the table.

“This budget is a shambolic mix of two-year measures, political fixes and recycled attacks on Australians,” he said. “This government is focused on saving itself.”

Meanwhile, Hockey talked up the potential for small businesses to spearhead a recovery as a decade-long mining-investment boom cools, aided by record-low borrowing costs.

“Interest rates are low, the cash in the economy is enormous,” the treasurer said. “It just needs the incentive. That moment, the trigger, that is going to unleash that investment.”

Hockey predicted the deficit would fall to A$35.1 billion (US$27.7 billion) in the next financial year and keep on shrinking until a surplus was reached in fiscal 2020.

The projections are based on upbeat assumptions about the level at which unemployment is likely to peak and the price to which iron ore, Australia’s biggest export, is likely to fall.

Iron ore has shed more than half of its value over the past year, shrinking government tax receipts by as much as A$52 billion, as supply outweighs demand from China, Australia’s largest trading partner.

Hockey said he expected prices to continue falling, but that they would average about US$48 a tonne over the next fiscal year—not quite as bad as many feared.

The jobless rate, currently 6.2 per cent, would peak sometime over the coming year at 6.5 per cent.

“You can always look for the dark side of life,” Hockey said. “You can do that, but not me. I can see it on the ground. People want to have a go.”

The treasurer also pointed to promising signs in the world economy, such as a return to near-full employment in the US, an improvement in Europe and a resurgence of growth in Japan, alongside still-robust expansion rates in China.

“This is the growth opportunity Australia has been patiently waiting for,” Hockey said.

Separately, he announced a crackdown on multinational companies that send profits offshore to avoid paying tax, saying the practice was unfair to smaller firms.

“This is a budget that will invite the Australian people to have a go because that’s in our nature,” Abbott told parliament before the public release of the budget later on Tuesday.

A $5.5 billion package to help more than two million small businesses shares the buidgetlimelight along with the $3.5 billion childcare changes.

Small businesses will be able to immediately deduct any asset costing less than $20,000 – a massive increase from the current $1000 value threshold.

“Cars and vans, kitchens and machinery – anything under $20,000 is immediately 100 per cent tax deductible from tonight,” Hockey declared in his budget night speech.

“If there is an exceptional response, I say ‘fantastic’,” he said in a press conference in the budget lock-up. It means the economy is growing even faster than we might have forecast.”

Farmers will also receive full and immediate deductions for assets from 2016.

And from July 1, all small businesses – whether incorporated or not – will receive the promised company tax cut of 1.5 per cent, costing the budget $3.3 billion.

“This is where the jobs of the next decade will be,” Hockey said.

Small business groups say their members will heed the Treasurer’s call to go out and buy.

“They’re giving them something that will really motivate them to go and spend and buy things and grow their business and save their business and employ people and get cash flowing through the economy,” Peter Strong from the Council of Small Business said.

But the Council of Trade Unions doubts whether it will create new jobs, echoing the budget projections showing unemployment hovering around 6 per cent for at least the next four years and employment growth climbing just slightly from 1.5 to two per cent.

Unemployed people have won a reprieve from the Government, with a backdown on one of the most contentious measures from last year’s budget – the six-month wait for people under 30 to access benefits.

For people in a job, wages will continue to grow slowly, increasing between two and three per cent until 2018-19, when they may break through to 3.25 per cent.

Next year $38 billion will be spent to support families, which includes more than $7 billion on child care.

Under new child care support tables, a household on a combined income of $100,000 a year will get $3749 towards 10 hours long day care a week. A family on $80,000 will receive $4089.

Under new family day care assistance, the $100,000 family will get $3692 for each child, and the $80,000 family will get $4026. - PNC sources