Treasurer Wayne Swan yesterday paid homage to the sector which saved Australia from the worst of the global slowdown and will be key to an economic rebound.

However, he warned that while the resources boom presented "enormous opportunities" it would also throw up significant challenges including skill shortages and other capacity constraints.

He also drove home the government's key policy aimed at harnessing the fruits of the mining boom - the Resource Super Profits Tax.

Budget papers reveal $38.5 million will be spent on marketing the new tax to the Australian public, which has raised the ire of the mining industry.

"Booms are not a permanent part of the economic landscape even if they might be expected to run for a decade or more," Mr Swan said last night in his third Budget speech.

"The revenue we raise (from the tax) will be directed to strengthen and broaden the whole economy, to invest in our productivity capacity, and to boost our national savings."

A rise in global prices for Australia's key commodity exports are set to drive a substantial lift in Australia's terms of trade, according to the Budget papers. They forecast terms of trade to rebound by around 25 per cent by mid-2010 - forecast to pour $30 billion into the economy.

The government yesterday said private sector activity was likely to fire economic growth of 3.25 per cent in 2010-11, rising to 4 per cent in 2011-12.

It said the jobless rate, which stood at 5.3 per cent in March, would likely fall to 5 per cent by the end of 2010-11, dipping to 4.75 per cent in late 2011-12.

This is well off the 8.5 per cent peak predicted in last year's Budget.

The Treasurer also confirmed that the Budget will be back in the black three years ahead of schedule.

A gradual recovery in tax receipts and a tight rein on spending will deliver a $1 billion surplus by 2012-13.

"This represents the most rapid fiscal consolidation in Australia since at least the 1960s," according to the Budget.

"As a result, Australia has one of the strongest budget positions in the developed world, returning to surplus before any major advanced economy."

Last year's Budget predicted that Australia would not climb from deficit until 2015-16.

An underlying cash deficit of $40.8 billion is expected in 2010-11, which is equal to 2.9 per cent of GDP.

This is almost $6 billion less than the Government's last set of forecasts and $16 billion less than the deficit predicted a year ago.

However, the Budget's updated economic growth forecasts are not as bullish as those in the Reserve Bank's latest quarterly statement on monetary policy.

The central bank last week predicted Australia's GDP would grow by 3.75 per cent in the year to June 2011, up from the 3.5 per cent it forecast in February

Source: Herald Sun