Australian Treasurer Wayne Swan said next week's federal budget is forecasting an additional 500,000 jobs, with the aim of reducing the nation's unemployment rate to 4.5%.

Swan hinted at incentives in the May 10 Budget, encouraging companies to employ people from outside the main workforce, including older Australians.

"We're going to get more Australians into work and we're going to spread the opportunities of the boom," he told Network Ten on Sunday. "That is absolutely fundamental to the peace of mind and the living standards of average Australian families." Swan acknowledged, however, there were parts of Australia, like Cairns in far north Queensland, where unemployment was still high.

The Treasurer said the best policy the Government could adopt to help families with the cost of living was to ensure they had a job.

"We think it's vital, given that we have such a strong pipeline of work coming through, that we do everything we can to ensure those people who have the capacity to work are in a position to take up the opportunities in the workforce," Mr Swan said.

Opposition leader Tony Abbott dismissed the jobs forecast, saying it ignores the effects of the carbon tax. "I don't think the Government can credibly talk about jobs to be created unless they talk about the jobs that will be destroyed by their carbon tax," he said. "This carbon tax will very badly damage steel-making, aluminium-making, motor manufacturing and cement manufacturing in this country."

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