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CANBERRA, Nov 22 AAP

November 22 2012, 2:40PM

Opposition Leader Tony Abbott has warned the coalition might not be able immediately to introduce some policies and repeal others, such as means testing of the private health insurance rebate, because of budget constraints.

Mr Abbott told business leaders in Perth on Thursday the budget had gone from surpluses of one per cent-plus of gross domestic product to deficits of three per cent-plus.

"So there are lots of things a coalition government would like to do, but the fiscal reality is we won't be able to do all of them straight away," he said.

"We have support for private health insurance in our DNA, and we will restore the policies we know will work," he said in response to a question from the audience.

In his speech, he laid out the vision of a coalition government that would emphasise development.

"I would like to be, should I get the chance, a prime minister that revels in seeing cranes over our cities, who revels seeing bulldozers at work and who revels in seeing water coming from where it flows to where it's needed," he said.

He reiterated that tax reform would start with repealing the carbon and mining taxes.

"These two taxes which impact so disproportionately on a resource-rich, energy-intensive state as this one will be gone," he said.

"There is no country on earth that has ever taxed its way to prosperity."

A coalition government would aim to boost labour force participation and productivity, restore the Australian Building and Construction Commission, and address flexibility and militancy problems in the workforce.

One of its early acts would be to ensure union officials were subject to the same penalties as company directors if they broke the same laws.

"There will be, if I may say so, a level playing field among wrongdoers," he said.

A coalition government would live within its means, cut red tape and have a deeper engagement with Asia.

He agreed with a questioner that the world remained difficult and dangerous in many places.

"(But) if we keep our economy strong we will be able to afford the military hardware, the armed forces that we need to play our part in defending our country and in working with our allies towards a better world."