News National Gloves are off: Minister threatens tax hikes amid budget bill blockage
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Gloves are off: Minister threatens tax hikes amid budget bill blockage

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The Federal Government has intensified its warnings over the budget, threatening higher taxes if its savings measures are blocked by the Senate.

Senator Cormann says it is a “statement of fact” that tax hikes will be necessary without cuts to government spending, if Australia is ever to pay off its billions in debt.

“We have laid out our plan to reduce the unsustainable spending growth trajectory Labor left behind,” he told the ABC. “The only alternative to balance the books is to increase taxes.”

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The Abbott government is still fighting for its budget. Photo: AAP

According to figures released by the Government, Labor and the Greens are opposing $20 billion worth of savings measures.

Senator Cormann said those structural savings were needed to bring the budget back under control.

“If we stay on a spending growth trajectory that takes us to 26.5 per cent of the share of GDP, when tax revenue on average over the last 20 years was 22.4 per cent of the share of GDP and you don’t want to balance the books by reducing spending, then the only alternative to balance the books is to increase taxes,” Senator Cormann said.

This week, Senator Cormann said there was still ample time to pass key budget measures, given that they are not due to take effect immediately.

But the Opposition said the comments are at odds with the Government’s previous warnings of a “budget emergency”.

Senator Cormann told the ABC’s Insiders program the Government is “working in an orderly and methodical fashion” to implement its planned measures.

“As we work through the implementation of the budget, inevitably there is going to be noise, a level of conversation seeking to scrutinise the decisions the Government has made and why and that is appropriate,” he said.

“About half of all of our budget measures have gone through.

“Indeed, our biggest saving … the reduction in the funding growth in foreign aid to the tune of $7.6 billion over forward estimates – that went through.”

Senator Cormann said spending and debt growth does needed to be addressed, but in an orderly fashion.

“There is no rush to deal with specific structural reforms, which do not apply until July 1, 2015 [or] early 2016,” he said.

“It’s always been thus, that in relation to structural, medium term reforms, that you deal with them sequentially and in a prioritised fashion in the Senate.”

Federal Education Minister Christopher Pyne
Federal Education Minister Christopher Pyne. Photo: AAP

Pyne threat

Meanwhile, Education Minister Christopher Pyne says cutting university research funding will be the “worst-case scenario” if the government’s higher education reforms fail to pass the Senate.

But he has refused to rule out research cuts to make up a shortfall in funds potentially made by reducing the commonwealth grant scheme by 20 per cent.

The worst-case scenario would be research cuts without reform, Mr Pyne said.

“I have absolutely no desire at all to see research funding (cut),” he said.

“What I want to see is the reduction in the commonwealth grant scheme – but if that doesn’t happen, then universities will be able to … say the fact they have stopped that cut, they’ll be able to use that money for research.”

Labor has blasted that prospect as an attempt to blackmail the Senate. “(It’s) a disgrace,” opposition education spokesman Kim Carr said in a statement.

‘More sensible, moderate’: Government MP

The defence of budget measures by senior ministers comes as debate continues within the Government’s ranks on some key points of the budget “repair plan”.

Liberal Senator Ian Macdonald, who opposes the fuel tax increase and the GP co-payment, said the Government needed to adopt a more sensible and moderate approach to some of the measures.

He told ABC Weekend Breakfast the Government needed to have another look at its paid parental leave scheme until the budget bottom line improved.

“I have this view, that [in] being perfectly pure in the budget, fixing the budget up and [will mean we become] so unpopular in doing it that Labor will come back,” he said.

“Labor will have no qualms about racking up a $600 billion debt again. So it seems to me that we need to be a little bit more sensible and a little bit more moderate.”

Senator Macdonald said it was a tough budget to introduce.

“There is a few issues on the side people have concerns about,” he said.

“Things like the paid parental leave, like the co-payment, the fuel excise. These are measures which I think need more thought. That doesn’t mean to say the whole budget strategy is being put in jeopardy.”

-with ABC, AAP

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