Australian Prime Minister Kevin Rudd has indicated his government will use this year's budget to wind back welfare payments to higher income earners.
Kevin Rudd's centre-left government will hand down a budget in May that is tipped to be one of the toughest in years, against a backdrop of plummeting taxation revenues and recession.
Mr Rudd has also suggested that his government could increase tax for high-income earners to bolster its budget and curb rising debt.
He says he has to make spending cuts somewhere in order to fund an increase in pensions. "People who are at the upper end over time perhaps could be in a position to provide greater support."
Mr Rudd did not specify the level of income he considers to be at the upper end, but did point to the government's last budget, referring to changes introduced to the $A150,000 threshold.
At present, people earning more than $A150,000 have access to government assistance through the first home owners grant and rebates for child care and private health insurance.
The New Zealand Government is refusing to confirm whether is about to back out of a second round of tax cuts promised before last year's election.
This week, it warned of a $NZ50 billion hole in its books over the next three years due to the global recession.
Britain's government has already raised taxes to 50% from 40% for those earning more than Stg150,000 a year as it forecast the recession-hit economy would shrink 3.5% this year.