In a major pre-Budget speech Tony Abbott has flagged cuts to welfare payments that would hit retirees and families, but hinted at tax cuts in years to come if reforms were made in the short term.
Mr Abbott offered the prospect of personal tax cuts before the end of the decade if changes to the budget were made now, but concedes there won’t be many people without a grumble when the government hands down its first budget on May 13.
“The budget pain will be temporary but the economic improvement will be permanent,” he told the Sydney Institute on Monday.
“I want to assure vulnerable people that the age pension won’t be less tomorrow than it is today, and that people turning 65 tomorrow are certainly not going to have to wait five years to retire,” he said.
“To keep our commitments, there will be no changes to the pension during this term of parliament but there should be changes to indexation arrangements and eligibility thresholds for the long term.”
But access to welfare payments for families earning above $100,000 would be trimmed, and further reports have surfaced about a debt tax levied on all Australians.
New Corp. papers reported that a 1 per cent levy would kick in at $80,000, meaning a worker on that wage would pay an $800 a year to the government, or $15 a week. A worker on $150,000 would pay the government $1500 a year, or $29 a week.
Australian Chamber of Commerce and Industry chief operating officer John Osborn opposes the idea of a levy to help pay down government debt.
“The government promised no surprises and no new taxes and a debt levy would be an unwelcome surprise,” he told ABC Radio.
But Australian Council of Social Service boss Cassandra Goldie supports the levy.
She says Australia is one of the lowest taxing countries in the OECD and needs to strengthen its tax base.
“The levy would need to be done sensibly, it would need to be carefully targeted,” Dr Goldie told ABC radio.
“A levy is probably in the right direction.”
In the speech, the PM was careful to point out that all Australians would carry the burden of repairing the budget, and said high-income earners would be expected to contribute.
“I can assure you that everyone will be involved, including high-income earners such as Members of Parliament,” he said.
Mr Abbott also fuelled expectations that the government would proceed with a $6 co-payment for visits to the doctor.
Mr Abbott said he would not go back on his promise to maintain overall health, but suggested he would not hesitate to improve the efficiency of that spending.
“Part of that will be more price signals in the system with a strong safety net because free services to patients are certainly not free to taxpayers,” he said.