THE NEWS WRAP: Treasurer Wayne Swan to unveil spending cuts

Small businesses targeted by the taxman will be allowed to challenge the system without fear of reprisals under new proposals.

The move is intended to help businesses affected by the Australian Taxation Office’s controversial benchmarking system, which sets financial performance ratios for more than 900,000 small firms and investigates if unusually low profits are reported.

Swan to unveil spending cuts

Treasurer Wayne Swan is expected to announce fresh spending cuts later today as the Federal Government attempts to remain on track to achieve a budget surplus next year.

The mid-year economic update is set to include a $20 billion reduction in future spending, aimed at turning an expected $30 billion deficit this year into a surplus.

Qantas set for profit hit

Qantas has said that it expects to record a reduced profit for the first half of the year, following a turbulent period that has included industrial action and rising fuel prices.

The airline expects an underlying profit of between $140 million and $190 million for the six months to December 31. This is a 66% drop on the $417 million profit recorded in the same period last year.

Overnight

The Dow Jones industrial average increased by 307.88 points, or 2.74%, to 11,539.66. The Australian dollar was up to 98.87 US cents.