Families on average will be almost $47 a week better off under the Rudd government's first budget.
And a one-off efficiency dividend will save $1.3 billion over four years in departmental spending, Prime Minister Kevin Rudd has revealed.
Mr Rudd gave the public an insight into the budget, to be unveiled by Treasurer Wayne Swan next Tuesday night, in a speech to a business breakfast in Perth.
But he also used the speech to admonish Opposition Leader Brendan Nelson and treasury spokesman Malcolm Turnbull for accusing the government of talking up the inflation problem.
Rising fuel and food prices have helped push inflation to a 16-year high of 4.2 per cent, well outside the Reserve Bank of Australia's comfort zone of two to three per cent.
Dr Nelson has described the inflation crisis as a charade while Mr Turnbull has likened it to a fairy tale.
"There may only be three people in Australia who don't believe that inflation is hurting working families through rising prices and rising mortgages - Dr Nelson, Mr Turnbull and the tooth fairy," Mr Rudd said.
Mr Turnbull brushed off the criticism, saying he was concerned that Mr Rudd had been talking to the tooth fairy.
"The reality is that we do have an inflation problem," Mr Turnbull told Sky News.
"My beef with Wayne Swan has been from the very beginning that he is talking up inflation, he is exacerbating the inflationary problem by saying it is out of control."
Mr Rudd said inflation was a cancer that was eating away at all Australians' living standards.
He guaranteed that the $31 billion in tax cuts promised before last year's election would be paid in full.
He ruled out blowing other savings on quick fixes and handouts, saying it was time budgets looked beyond the next election.
"I am determined that this budget won't be another one-year wonder," Mr Rudd said.
"It will be a budget that sets a platform for long-term growth.
"It will begin to prepare Australia for the future - for the next five, 10 and 20 years."
He vowed to end what he called "profligate spending", saying cuts were needed to reduce pressure on families from high interest rates amid rising oil prices, the US sub-prime meltdown and the slide in the Australian stock market.
But the tax cuts would be delivered, despite fears they could add to inflation.
"Some economic commentators say we shouldn't be delivering tax cuts to these families," Mr Rudd said.
"But we promised to do so and we promised also to increase child care assistance in the budget and we intend to deliver on that."
Under the changes, a family with one parent working full time and the other working three days a week - for a combined gross income of $75,000 - would receive a tax cut of $27.88 a week.
And if the family had a child in day care for 30 hours a week, the child care tax rebate would deliver a further $19.05 a week.
Mr Rudd said many of the budget measures would not be popular, as the government diverted funds to rebuild neglected areas like education, health and infrastructure.
"The budget process has been long, tough and demanding," he said.
"We've had to make some difficult decisions on the way through and they won't all be popular."
