New projects and spending cuts in budget

Federal ministers have unveiled almost $500 million in new projects, four days out from a budget in which government spending is expected to be slashed.

Families Minister Jenny Macklin outlined a $17 million scheme to issue personal debit cards to some parents to control how they spend their child welfare payments.

And Prime Minister Kevin Rudd said the budget would include a $470 million plan for Queensland high school trade training centres, promised during last year's election.

But Mr Rudd said the government would still push ahead with spending cuts in Tuesday's budget, expected to include means testing of the baby bonus.

Mortgage rates would increase again if his government did not produce a responsible budget, he said.

"If we don't fight the fight against inflation, what happens is it goes through to higher mortgage prices for working families," Mr Rudd told reporters in Brisbane.

"Therefore, we must fight the fight effectively. That means cutting government spending. That's what we intend to do in the upcoming budget.

"The alternative is simply to light a fire under inflation, which damages everybody."

Welfare groups have criticised the debit card plan, which will be rolled out in indigenous communities from July and across the nation later.

The scheme is aimed at cracking down on parents who spend welfare payments on drugs, alcohol or gambling.

Mr Rudd said it was the right way to go.

"The overwhelming focus here is to ensure, through these welfare debit cards, that with quarantined payments within them that you can make sure that food and basic groceries and necessities are being purchased for the kids in each family," he said.

"The overwhelming thrust of our welfare policy must always be the proper protection and preservation of the wellbeing of the child - that's what this is designed to do."

Child protection authorities will recommend which parents receive the card.

Ms Macklin denied it was a Big Brother approach, saying it was targeted at parents who neglected or abused their children.

"The good news is that most parents love their kids and do a good job for their kids," she said.

"What we want to do is make sure that where parents are letting their children down, where there is serious evidence of either neglect or child abuse, that we step in and guarantee that the welfare payments are being spent in the interests of the children."

Businesses that sign up with the debit card will have to be licensed and must agree not to supply alcohol, tobacco, pornography or cash on the card.

Mr Rudd also questioned whether wealthy Australians needed welfare benefits.

"Do millionaires need the baby bonus? I have a different view of that," he said.

However, people would have to wait until the budget to find out whether the baby bonus would be means tested.