Finance Minister Mathias Cormann: If the budget spending cuts are not passed then “the only alternative to balance the books is to increase taxes”. Photo: Wolter PeetersThe federal government is digging in over unpopular cuts in the budget, with cabinet ministers warning other savings measures will be found if a compromise cannot be reached with the opposition and Senate crossbench.
Finance Minister Mathias Cormann said on Sunday that if the budget spending cuts and savings measures, including the $7 GP co-payment, the rise in fuel excise and changes to university fees, were not passed then “the only alternative to balance the books is to increase taxes”.
Education Minister Christopher Pyne said universities could face a “worst case” scenario of research funding cuts if the Senate did not pass his proposed higher education reforms, which will be introduced to the Parliament on Thursday and include deregulated university fees, cuts to course funding by about 20 per cent and increased interest payments on student loans,
A third cabinet minister, who asked not to be named, declared “we are not for turning. Nor are we worried” about the political impasse over the Coalition’s economic program at this stage of the electoral cycle.
“We are not fazed by six weeks of fevered speculation on the budget. We are at the beginning of the process not the end of it,” the minister said.
“The point is there are consequences to decisions that the Senate makes. We got elected to decide what measures to take, not the Senate, and if the Senate thinks it can manage the budget from the Senate they are wrong.”
The hardening of the government’s rhetoric comes before a cabinet meeting focused on strategy on Monday, before Parliament resumes on Tuesday and builds on Treasurer Joe Hockey’s warning of “emergency action” and Queensland-style austerity about two weeks ago.
In the past month, Mr Hockey has travelled widely to talk to the Senate crossbench amid signs of compromise on some measures and as the government attempts to reset political debate over the budget.
On Sunday, Senator Cormann said there was “no rush to deal with specific structural reforms” because many of these changes would not begin until next July or later.
“Essentially, 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 GDP and [if] you don’t want to balance the books by reducing spending, the only alternative to balance the books is to increase taxes.
“What is Bill Shorten’s plan? Is he planning to increase taxes in order to make up for Labor’s unsustainable spending growth trajectory?”
Mr Pyne said that if the Commonwealth grant scheme wasn’t cut “the only area the government can reduce spending is in areas like research”.
He said the government wanted university students to pay for 50 per cent of their education costs – they currently pay 40 per cent – and that “we’re not asking for their left kidney to be donated”.
Labor’s finance spokesman Tony Burke seized on government warnings of higher taxes as proof of what they were planning in the future.
“Mathias Cormann has been their most disciplined performer and he wouldn’t say this unless Tony Abbott seriously had plans to introduce a raft of new taxes,” he told ABC radio on Monday.
Mr Burke described the tax threat as “more about extortion than it is about governing”.
“This bizarre game where they’re saying if you don’t vote for an unfair budget, we’ll come up with something even more unfair,” he said.
The government may also swiftly again attempt to repeal the mining tax, a move that was stymied in the last sitting of Parliament because of the Palmer United Party’s desire to keep $10 billion in spending measures including the Schoolkids bonus.
Government sources insist that the bill to repeal the mining tax will not be split to allow the tax to be abolished but the spending measures retained.
Mr Palmer’s senators met at the weekend to discuss their budget position.
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