THE federal government has entered the election campaign as the underdog but believes Labor's momentum is building now the coalition's policy costings are under the spotlight.
On the third day of the run-up to the September 7 poll, Opposition Leader Tony Abbott went to Adelaide to unveil a 1.5 percentage point corporate tax cut.
The reduction to 28.5 per cent will cost $5 billion over four years, but Mr Abbott's not yet ready to say how exactly it will be paid for bar pointing to a broad $17 billion in coalition savings.
Prime Minister Kevin Rudd spent most of the day in the northwest of Sydney where he seized on media reports a coalition government could consider raising the 10 per cent GST to cover its budget "black hole".
Labor insiders told AAP the coalition was playing directly into its initial strategy of putting their opponents on the back foot over costings.
"We've got the coalition talking about what is going to become their number one problem in this campaign, which is their election costings," said Hawker Britton director Simon Banks, a former Rudd staffer.
"That's plenty of momentum."
Mr Abbott said his tax cut plan would reduce costs for 750,000 businesses, allowing them to expand and create more jobs.
"I want to make it absolutely crystal clear that the tax reductions that we have so far announced are more than funded by the sensible savings that were announced by us before the campaign commenced," he said.
The savings referred to include axing Labor's SchoolKids Bonus ($4 billion), cutting 12,000 public service jobs ($5 billion), a two-year delay in a superannuation contribution rise ($2.1 billion) and scrapping the low-income super contribution ($2.9 billion). These total $14 billion.
The coalition's $4.3 billion paid parental leave scheme, to be unveiled next week, will be paid for by a 1.5 per cent tax rise for Australia's 3000 biggest companies.
Shadow treasurer Joe Hockey said further savings would be announced during the campaign.
When compared to coalition policy announcements, the budget bottom line would be "better off".
Labor claims the coalition's starting point is a costings "black hole" of between $50 billion and $70 billion - which Mr Hockey denies.
Treasurer Chris Bowen said the coalition's approach to costings was "adding some fairy dust and saying something will turn up on the night".
"Australian families have every right to be very concerned that this will be paid for by reducing government funding to hospitals, schools and services," he said.
Labor also went on the offensive over the GST, after Mr Hockey said on Tuesday the GST would be "part of the equation" under a planned coalition tax system review.
"This is a big, big development in this election campaign," Mr Rudd said.
"What I would say loud and clear is that the Australian government I lead would not increase the GST, nor would it extend its scope."
Mr Abbott said if the GST came up during the review "we will consider what the consultations come up with".
"But the fact is we have no plans whatsoever to make any changes to the GST," he added, while visiting a drinks factory in the South Australian Labor-held seat of Makin.
Meanwhile, Labor and the coalition continue to discuss plans for a series of leader debates.
So far, they've agreed the first debate should be on Sunday.
The final decision on whether it will be Sydney or at the National Press Club in Canberra is still under discussion.
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