The Turnbull government’s first federal budget will be prudent and responsible, and will not hand out a “fistful of dollars”.

The prime minister began on Saturday the task of managing public expectations before the May budget, warning it would focus on living “within our means”.

However, he confirmed his first budget would contain “changes to our tax system” designed to promote investment, innovation and enterprise.

“This budget will not be about a fistful of dollars, it will be about prudence, fairness and responsibility to our future generations,” Turnbull told the Victorian Liberal party conference in Melbourne.



The warning came with a similar one for state governments, which recently shot down the prime minister’s proposal to levy their own income tax to pay for schools and hospitals.

“The premiers don’t want to raise taxes to pay for their spending; well neither do we,” Turnbull said.

He said the decision of the states and territories was a “revealing moment of clarity” for him, and made it clear all governments had to live within their means.

The only way then to create revenue was economic growth, he said.

“Excessive taxes, excessive debt serve as a handbrake on economic growth.”

Turnbull also declared Australia’s transition from a country experiencing a mining boom to a new economy the “one central issue” of the coming federal election.

But that may not be how his Labor counterpart Bill Shorten sees it. The opposition leader has spent most of his time this week pushing the Liberals’ cuts to education funding.

His deputy, Tanya Plibersek, repeated that message on Saturday, pointing to the Coalition government’s $80 billion cuts to hospitals and schools.

“In contrast, you’ve got an opposition that invests in health and education,” she said.

But Turnbull accused Labor of having no plans to pay for spending announcements.

“That is a fundamental test for Mr Shorten, the numeracy test if you like that he can no longer shirk,” he told the Liberal conference.

“How is he going to pay? Higher taxes, more debt or both?”

A Labor party led by Shorten was a risk to Australia’s economic advancement, he said.

“His is basically the Gillard agenda, with a new coat of paint.”

Meanwhile, Victoria’s Liberal party faithful have been told that the kind of fraud their former state director indulged in would never happen again.



Damien Mantach has pleaded guilty to 44 counts of obtaining a financial advantage by deception, and the party has moved to change its finance system.



His successor as state director, Simon Frost, said he was shocked to discover the $1.5m fraud.



“This appalling behaviour will never, ever be repeated,” Frost told the Victorian state council on Saturday.



The state president, Michael Kroger, said sweeping changes to the party’s finance structure would mean such theft could not happen again.



“I want members to be assured there are already a large number of governance protocol changes being put in place,” Kroger said.



He also flagged difficult conversations about preferences in Victoria, which has returned a Liberal vote lower than the national average at 12 of the past 13 federal elections.



“We’re the worst performing state electorally at a federal level. Twelve of the last 13 we’ve let the side down,” Kroger said.

While Labor wins 60% of preferences from minor parties nationally, in Victoria it wins 66%.



“So if delegates want to know why we seem to lose all these results, why it is we keep losing these seats by narrow margins, it’s because of our extremely poor performance in preferences from third parties,” Kroger said.



He said the executives were talking to all parties about preference flows.



Mantach is due back in court on May 6.

