All hands on deck: Swan

Wayne Swan has declared all hands on deck, with every Australian to be asked to pull their weight to ensure the nation makes the most of Mining Boom Mark II.

Combining tough-love measures and inducements, teenage mums, the long-term unemployed, the disabled and those deliberately avoiding work will be expected to study, learn new skills or find a job.

Despite unveiling a $22.6 billion deficit for 2011-12 - $10 billion higher than predicted just six months ago - the Treasurer said the economy was the envy of the developed world and on track for a $4 billion surplus in two years.

The Budget forecasts unemployment to fall to 4.5 per cent by mid-2013, with the creation of 500,000 new jobs.

Mr Swan declared it would be "obscene" if the opportunities from the coming boom weren't shared by people at the margins of the workforce. "Our economy can't afford to waste a single pair of hands," he said. "We don't have an Australian to waste."

To that end, $3 billion will be spent over the next six years transforming Australia's training and apprenticeship system into one that responds to skills demands.

Of this, $558 million will go to establishing a National Workforce Development Fund to generate 130,000 high-skilled workers, especially those in dire need in WA and Queensland.

The worker-hungry boom States will also get top priority for the 16,000 extra skilled migrant places.

And temporary work visa holders who promise to work in regional Australia for two years will have their permanent residency fast-tracked.

Mr Swan booked $22 billion in savings over the next four years, with $2.4 billion from Defence, the $1.7 billion flood levy and a $1.1 billion gouge of the public service.

A clampdown on family payments will save $2 billion with a three-year freezing of the income cut-off point for Family Tax Benefit A and B, paid parental leave and the baby bonus, as well as various family benefit supplements.

And the dependant spouse tax offset - developed in the 1930s when women stayed at home - will be phased out from July 1, saving $755 million. About 100,000 will lose this entitlement.

Disability pensioners, teenage parents and people who have been unemployed longer than two years face tighter participation requirements.

Those collecting the Disability Support Pension aged under 35 capable of eight hours or more a week will have to go to Centrelink and find work or undergo training from July.

Despite the focus on participation measures, Mr Swan said it remained unclear what proportion of the 500,000 new jobs would be generated from the shift from welfare to work.

But it's not all stick.

To encourage single parents on the Newstart Allowance to do more work, they can keep an extra $3900 a year before losing their benefit from January 2013.

They will also be offered career advice, training and other services.

And to encourage teenage children staying at school, the Government is extending FTB Part A for dependent 16 to 19-year-olds in full time study, at a cost of $772 million.

Mental health is one of the few areas to get a substantial funding increase, with a $1.5 billion package to expand early intervention services for children and young people, and people with severe mental health problems will get more clinical and social support services.

An independent National Mental Health Commission reporting to the Prime Minister will be established - a key recommendation of the Government's hand-picked experts.

Reaction to the Budget was mixed.

Shadow treasurer Joe Hockey said it failed the essential test to ease the cost of living and the Government had failed to rein in its "wasteful and reckless" spending.

"We've seen a typical, old fashioned Labor Budget that's big on taxes and big on spending but fails to help households battling higher costs of living - petrol, electricity and gas, groceries, health costs and home repayments," he said.

But the Business Council of Australia said it was a "sound" document that had the right mix of spending restraint and measures supporting growth, but the BCA resumed its calls for wide-ranging tax reform.

Greens leader Bob Brown celebrated the mental health spending but said the Budget was biased towards unelected mining barons.

The Australian Council of Social Service welcomed the increased wage subsidies for unemployed people and the easing of income tests but criticised cutting benefits to the nation's poorest people, including sole parents with teenage children.

"The 'get tough' measures are unnecessary and will be counterproductive. Government has made a mistake by imposing 'activity requirements' on people on social security which in many cases won't help them into employment," ACOSS chief Cassandra Goldie said. "We are particularly concerned about the $56 per week reduction in payments for some groups of single parents with teenage children and the $43 per week reduction in payments for unemployed 21 year-olds."