Labor supports family tax benefits freeze

Stepping up the pressure on the Abbott government: Opposition Leader Bill Shorten. Photo: Alex Ellinghausen
Stepping up the pressure on the Abbott government: Opposition Leader Bill Shorten. Photo: Alex Ellinghausen

Labor will wave through controversial family welfare changes to freeze the rate of family tax benefits for two years, saving the budget $750 million per year in perpetuity and reducing further the list of no-go items identified in the first Coalition budget.

Sources in the opposition said the ALP was aware it could not be seen to be overly negative and that, in government, it too had ''paused'' increases to family payments.

The news is a welcome development for the Abbott government whose tough ''contribute and build'' budget has backfired, sending its public stocks plummeting and emboldening Labor, the Greens and the independents to block several elements seen as breaches of faith.

Prime Minister Tony Abbott is known to regard the public clamour for backdowns and concessions from the government as premature given that most savings measures have not even been written into legislation or introduced into the Parliament.

His senior ministerial group is urging waverers to hold their nerve and not be intimidated into accepting changes to initiatives before they are before the House or Senate.

Negative tide: Treasurer Joe Hockey in question time at Parliament House on Monday. Photo: Andrew Meares

Negative tide: Treasurer Joe Hockey in question time at Parliament House on Monday. Photo: Andrew Meares

The expected movement on family payments comes on top of Labor's other big concession, which is to simultaneously criticise the 2 per cent temporary deficit levy as a tax increase, and a broken promise, while letting it become law.

That will net the government another $3.1 billion in three years.

However, billions of dollars in budget measures face an uncertain future.

A report by Fairfax Media on the weekend revealed the government was realistic about negotiating some measures. Education Minister Christopher Pyne signalled a willingness to be flexible and ''respectful'' of opposition and crossbench senators.

Opposition Leader Bill Shorten stepped up his pressure on the government over the budget, taunting Liberal and particularly Nationals MPs in potentially hard-hit regional areas to speak out for the sake of their constituents.

''Today, Labor is asking all those Coalition members of Parliament - don't be brave in the privacy of your own room where no one can hear you speak,'' he said. ''There's millions of Australians who want you to tell the Prime Minister how dreadfully unfair his budget is.''

In Parliament, a defiant Mr Abbott continued to defend the budget as fair and based on the concept of spreading the burden, noting the tax increases on higher earners and the freeze on parliamentary salaries.

Privately, Liberals are taking some comfort from the fact that, despite the tide of negative opinion, the overwhelming majority of the budget will pass unscathed and the list of measures opposed by ''outraged'' Labor and Greens MPs is being whittled back.

Despite rumours of friction in the Greens over the proposed return of twice-yearly petrol indexation, the Greens look set to pass the fuel tax increase, raising more than $2 billion over the next four years.

Labor has slammed that as a cost for families in the outer suburbs that will go ''up and up and up'', reprising a favourite taunt of Mr Abbott's about the carbon tax.

The $7 GP payment continues to attract some of the most spirited opposition. The government signalled it was not prepared to give ground on the amount. However, insiders say it is possible it might be adjusted to exclude minors and pensioners.

Budget measures — likely failures and successes

$7 GP co-payment: In doubt and unlikely to survive.

Return of petrol excise indexation:  Likely to pass with Greens backing.

Scaled-back paid parental leave:  Status unknown — not given its own budget line.

Family Tax Benefits (B) tightening of eligibility for children:  Opposed.

Freeze of  Family Tax Benefits maximum payments for two years: Will pass with Labor backing.

Two per cent deficit levy for three years: Will pass with Labor backing.

Change to pension age to 70 by 2035: To be blocked.

Lower indexation rates for a slew of pensions: To be blocked.

Tightened rules for Newstart: To be blocked.

University changes to make fees higher and to make student loans more expensive: Status unknown


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