Its what you get when you put an inexperienced driver at the wheel - at the slightest sign of trouble, he has hit the brakes with both feet and yanked on the handbrake. a panic reaction.

It will replace the payments with a higher utilities allowance but will leave the sick and disabled and their carers hundreds of dollars a year worse off.

Although Families Minister Jenny Macklin refused to confirm the plan last night, she stressed the payments, created by the Howard government and paid for the past four years, had never been written into budget forward estimates and were "one-off".

As senior sources confirmed the payments were to be scrapped, Wayne Swan yesterday told a business lunch the Howard government had engaged in the "old politics" of pork-barrelling, leaving the incoming Government facing the need to make dramatic budget cuts to reduce the inflationary pressure that was driving up interest rates.

Terminally ill Queensland pensioner Ashley Norman, 73, contacted The Australian to attack the Rudd Government over its plans, saying Labor had supported the bonuses in Opposition.

"My wife gets $100 a fortnight to look after me," Mr Norman said from his home in Mackay. "She's got to do everything I did, everything she did and care for me like a baby.

"What he's (Kevin Rudd) doing is criminal. To take $1600 off us after giving it to us every year for four years, it's criminal."

Opposition frontbencher Tony Abbott accused Labor of using carers as "human shields in the fight against inflation".

"You've got this big surplus; you've got to do something with it," he said.

"Let's not victimise carers."

Mr Abbott said the cuts brought to mind a 2006 essay by the Prime Minister in The Monthly magazine entitled Howard's Brutopia: The Battle of Ideas in Australian Politics, in which Mr Rudd said Australia had become a brutopia because of the Howard government's "market fundamentalism".

"(The cuts) suggest that Rudd's essay was a political marketing exercise, not a statement of real personal belief," Mr Abbott said.

"What happened to Rudd's compassion? Rudd, it seems, is more capable of running a brutopia than Howard ever was."

Almost 400,000 Australians have received the Carer Bonus for the past four years.

The bonus paid $1000 to carer payment recipients and $600 to carer allowance recipients. Because many households received both payments, the bonus had become a regular $1600 windfall.

Ms Macklin yesterday refused to rule anything in or out in the budget, in line with the rote response being given by all ministers.

But she said the Rudd Government understood the difficulties faced by carers and was extending the Utilities Allowance to Carer Payment recipients for the first time with an increase to $500 a year, every year. "The Carer Bonus payments were only one-off payments, which the previous government never guaranteed into the budget," she said.

Carers Australia chief executive Joan Hughes said she held grave fears for the bonus. "We've already heard from various departments there's not going to be any more growth in our programs," she said.

The payment is one of at least 30 Howard government programs, worth $3.6 billion, to be dumped under Labor as it struggles to slice spending to curb inflation it blames on reckless spending and vote-buying by the previous government.

Prior to the federal election last November, Labor produced costings of its own election promises along with $5.4 billion in savings to be achieved through scrapping or modifying Howard government programs.

The razor gang is striking across all areas of government, with many slashed programs to be replaced by other new payments.

While some, such as the Carers' Bonus, will leave recipients worse off, others will be replaced by more lucrative spending schemes based on changed priorities.

For example, Mr Swan will replace the low-emission technology demonstration fund, worth $140 million over four years, with a range of climate change related spending worth significantly more.

Similarly, many old rural grants programs are to be replaced by others aimed at helping farmers adapt to climate change.

And Labor's abolition of a $359million dental health plan will be countered by more than $600 million in new spending.

Mr Swan, who has spent the months since Labor's election softening up the electorate for the spending cuts and attacking the failure of the previous government to guard against inflation, repeated the message yesterday in a speech to the Australia-Israel Chamber of Commerce.

The Treasurer said the previous government had spent public money to win elections rather than ensuring the long-term productivity of the economy.

"Our election struck a blow at old politics and left us confronted with its legacy - a legacy of the old way that elections had to be bought, spending could be reckless, there was no need to invest in the future because pork-barrelling could get you through," he said.

"Put simply, the economy hasn't been adequately equipped to meet the challenges that have come with our 17 years of expansion coupled with the terms of trade boom. The supply capacity of the economy isn't keeping pace with demand."

The Howard government has been criticised for the generosity of its middle-class welfare, but in his first major speech since the election defeat, Mr Howard last night defended his record. "The taxation system should generously recognise the cost of raising children," he told an American Enterprise Institute dinner in Washington DC. "This is not middle-class welfare. It is merely a taxation system with some semblance of social vision."

Mr Norman has spent weeks attempting to find out whether the Rudd Government would continue with the carer's payment for his wife, Patricia, 70.

He said he had written seven letters to Mr Rudd and received no reply.

Despite gasping for breath from chronic emphysema caused by laying asbestos roofs during his working life, Mr Norman has pestered anyone who would listen to him about the payment.

Yesterday he said he was told by Mr Rudd's Parliament House office that the payment would be axed. He said Ms Macklin's office told him they were considering dumping the payment while local Labor MP James Bidgood indicated there still might be a chance of saving it.

On Monday, he was admitted to Mackay Base Hospital. It was there that the doctor told him he would not have long to live. "They told me it's only a matter of time," he said.

From ABC NEWS

PM says carers, pensioners won't be worse off

Posted 47 minutes ago
Updated 8 minutes ago

Rudd guarantee: The most vulnerable in the community will be looked after. (ABC News: Damien Larkins)

Prime Minister Kevin Rudd has moved to reassure carers and seniors, saying they will not be worse off after this year's Federal Budget.

The Federal Government has come under fire for refusing to rule out the scrapping of a $1,600 bonus for carers, and a similar $500 payment for pensioners.

Mr Rudd says while he will not discuss the Government's budget plans in detail, he can guarantee the most vulnerable in the community will be looked after.

"When it comes to the bonuses system, carers and pensioners will not be any worse off under the budget," he said.

"Beyond that what we're looking at is ways and means by which we can provide greater financial certainty for carers and pensioners into the long-term future.

"When I said that our carers and pensioners shouldn't be left in the lurch, that is precisely what I meant."

But Opposition Leader Brendan Nelson says the Government must ease community concerns and say whether or not its intending to scrap the payments.

"These are the most vulnerable, the sickest and the weakest Australians," he said.