PRIME Minister Kevin Rudd says bringing the budget together is “tough as all hell”, but economists say the Federal Government will soon be wallowing in billions of extra dollars from the mining boom.

Economists estimate increased contract prices for coal and iron ore could rake in an additional $10 to $12 billion from company tax receipts, suggesting the Government will easily surpass its target surplus in next month’s budget.

The Government has promised to produce a budget surplus equivalent to at least 1.5 per cent of gross domestic product (GDP) as a result of tough spending cuts to help the Reserve Bank of Australia rein in inflation.

Mr Rudd said the budget process was going to be as “tough as all hell”, but would be aimed at assisting working families.

“We believe working families are under financial pressure, not least from recent increases in mortgage payments, but also what’s happened to petrol prices and what’s happened to grocery prices,” Mr Rudd said.

But not wanting to inflame current inflation pressures, the Government will not be throwing money at households.

UBS Australia chief economist Scott Haslem said the tough decisions being taken by Government were just as much about how to spend a “truckload of cash” to end up with a budget surplus that was politically palatable and not too large.

He calculated that before any new policies were announced, the Government would be sitting on a massive budget starting point surplus of $32 billion or 2.75 per cent of GDP for 2008/09, even with an anticipated slowdown in domestic demand and announced tax cuts.

However, he expected Treasurer Wayne Swan would deliver a surplus more like two per cent of GDP or $22 billion after significant spending on infrastructure and education, and possibly superannuation - difficult to criticise politically and less inflationary than giving money to consumers.

This compares with $14.3 billion estimated in the Pre-election Economic and Fiscal Outlook (PEFO) released last October.

Mr Haslem said he conservatively estimated the latest increases in bulk commodity prices would bring in an extra $10 billion.

“The issue there is to whether they are going to fully recognise that (increase in commodity prices),” Mr Haslem said

“At the end of the day they can tell us what they want.

“They can shove some money in the contingency reserve, they can cut the growth numbers more than I think they will, they can say the implications of slower growth are more significant on the budget numbers than I factored in.”

He said the 2008/09 GDP growth forecast would be cut to 3.0 per cent from 3.5 per cent as in the PEFO.

Mr Swan said the budget had to strike the right balance between the need to fight inflation and the slowdown in world growth.

He told Fairfax newspapers the IMF-World Bank meetings he attended in Washington this month had made him “even more acutely” aware of the risks international economic woes posed to the Australian economy.

Opposition treasury spokesman Malcolm Turnbull said the Government’s approach to economic management should be cautious but not over the top.

“We shouldn’t be rushing into measures, be they monetary or fiscal, that could, in effect, overdo the downward pressure on economic activity that’s coming from the rest of the world,” he told ABC radio.

“The treasurer’s got to be very careful not to be too scrooge-like with the federal budget.”

Find More Other News : Coal, Company, Exploration, Mine Trade & Market, Mining Finance, Mining Investment, Mining Top News, Natural Gas, Oil & Gas