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Returning PM prepares to rejoin Budget fray

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When Tony Abbott flies into Canberra at 6am on Monday after his four-nation foreign trek, he’ll confront a chilled national capital. Winter’s finally arrived in the ACT; apt perhaps, because as federal MPs return to parliament, the Budget continues to receive a frosty reception.

After visiting the killing fields of Normandy, meeting his political soul brother Canada’s Stephen Harper, a host of international leaders, and finally US President Barack Obama, the Prime Minister returns to rejoin the fight for his Budget.

Fresh off the plane, Mr Abbott faces a gruelling fortnight of parliamentary sittings. These are the final weeks of the current Senate, and a number of long-serving parliamentarians will say their goodbyes. Amid the touching testimonials and send-offs there will also be tough behind-the-scenes negotiations.

Skirmishes on (almost) all fronts

The PM desperately needs to chalk up some sizeable Budget victories as he tries to regain momentum after a tough few months. Not only has May’s fiscal statement been widely panned, but the Government has been weakened by a number of self-inflicted wounds.

And there is likely more to come. Conservative Liberal backbencher Cory Bernardi will address the National Press Club on July 17 and the firebrand Senator is likely to flag a range of measures he believes are necessary to reinstate public trust in the political class.

Senator Bernardi is a big fan of the American Tea Party movement and Britain’s UKIP. While he won’t resign from the Liberal Party, he is putting his colleagues on notice that he is deeply dissatisfied – and that his vote cannot be taken for granted.

It’s not just the crossbench that will take finessing in the ‘new’ post-July Senate.

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Tony Abbott (L) with US President Barack Obama. Photo: Getty

Safe passage for levy

Still, there is one key budget measure – the 2 per cent ‘temporary deficit levy’ – that is almost certain to pass the Senate this week, giving the PM a much-needed win. The levy will apply to salaries over $180,000 and is scheduled to come into effect from July 1.

That will happen, but the fate of other key Budget reforms remain as uncertain as an Australian ski season.

As The New Daily has previously reported, a raft of budget reforms hang in the balance, with the Labor Opposition, the Greens and cross-bench senators unwilling to give their support. For the time being, at least.

Unless Mr Abbott can conjure up some magic, reforms to welfare payments, plans to lift the retirement age, and deregulation of the nation’s universities will struggle to get through.

The Greens have offered ‘in principle’ backing for the move to reinstate fuel indexation, but the environmental party wants some of the $2.4 billion in additional revenue to be invested in public transport – not ‘hypothecated’ for spending on highways and arterial roads.

Paid parental leave to suffer Labor pains?

Then there’s the PM’s signature reform, the paid parental leave scheme, which is about as popular as radio broadcaster Alan Jones at a fundraiser for Labor MPs.

Most of Mr Abbott’s senior colleagues are privately critical of the scheme, which the PM is committed to introducing taking it to two elections.

And in the last week, the rumblings from within the Coalition have got louder, infuriating senior party figures who fret about the apparent breakdown of discipline.

The PM has already cut the amount a person can earn, from $75,000 to $50,000, as he offered the first signs of compromise. He can’t afford to dump the scheme, much as many of his colleagues would like him to.

Mr Abbott would lose enormous political capital, just as Kevin Rudd never recovered politically after he panicked and dumped his emissions trading scheme in 2010.

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Palmer United Party and Motoring Enthusiast Party Senators are among those Prime Minister Tony Abbott will need to negotiate with if he is to pass key reforms through the Upper House. Photo: AAP.

Based on informal discussions with key cross-bench and Coalition senators, though, it’s hard to see how the PM’s preferred scheme will pass without significant further modification.

Nationals’ Senator John Williams, one of a handful of Government figures prepared to publicly criticise the PPL, has suggested the PM simply embrace Labor’s current scheme, albeit offering a more generous payment.

That model would have a much better chance of winning parliamentary approval, but Mr Abbott will be very loathe to junk his signature policy.

These are tough times for the Government and the prospect of an uncooperative and surly Senate from July 1, effectively ‘controlled’ by Clive Palmer and his band of crossbenchers is hardly likely to lift the spirits of the PM as he returns to Canberra. Frosty temperatures, and all.

Steve Lewis has 22 years experience in reporting Canberra politics, and is a senior adviser with Newgate Communications. He is also the co-author of the best-selling political novel, The Marmalade Files, and the forthcoming The Mandarin Code.

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