A surplus of this size would be worth $20 billion to $21.5b, as the new government seeks to position itself as economically responsible.

Although the numbers are subject to final revision for the May 13 budget, a senior official told the Herald that the planned surplus would comfortably meet the Prime Minister's early promise that it would be at least 1.5pc of GDP.

In a further indication of restraint, the official said new budget spending would be held to 1-2pc in real terms, that is, after adjusting for inflation.

The Howard Government's final budget, for the year ending June 30 this year, is estimated to deliver a surplus of 1.3pc of GDP, or $14.8b.

New spending in the final Howard budget is estimated to be up by 4.5pc in real terms.

"I want people to look at this budget and say that they're starting to get the fundamentals right again," the Treasurer, Wayne Swan, said.

Mr Rudd said yesterday that "the challenge we've got is responsible economic management, that's number one, because we've inherited a government, with inflation running at record highs. It's the highest inflation rate this country has had in 16 years."

He has promised the budget will take pressure off inflation.

The Government's projected surplus and spending figures "are a bit of an improvement on Howard's record, but it's not overwhelming", remarked the ANZ's chief economist, Saul Eslake, a campaigner for fiscal prudence.

Chris Richardson of Access Economics said that word of the Rudd Government's expected spending was "the first significant budget leak" but that it showed disappointingly little restraint.

Mr Richardson said that "in last year's budget we had the government pressing on the accelerator with new spending and the Reserve Bank pressing on the brake", by raising interest rates.

"The real test of the Government is how much it helps the Reserve Bank by cutting spending. If it's still increasing spending, it's still pressing the accelerator to the floor. If they are not serious about cutting spending now in their first budget, they never will."

SOURCE: Sydney Morning Herald.