Budget a battleground i Ministers rage over $3 billion carbon tax cutbacks

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Budget a battleground – ministers rage over $3 billion carbon tax cutbacks

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Julia Gillard

Carbon tax cutbacks … Prime Minister Julia Gillard / Pic: Simon Chillingworth Source: The Daily Telegraph

SENIOR government ministers have privately lashed out at having to make savings in the May Budget to help pay for the $3 billion shortfall in this year’s carbon tax compensation bill.

As Prime Minister Julia Gillard and Treasurer Wayne Swan warn of tough measures to return the Budget to surplus, several ministers confirmed that they were being made to help pay for the early rollout of the carbon compensation package in May.

“Everyone is being asked to contribute to pay for this compensation package,” one minister said. “But in the process, we are going to hit people even harder.”

The concerns from senior ranks of the government followed admissions by dumped minister Robert McClelland on Monday that the broken promise on the carbon tax was killing the government.

Ms Gillard has refused to rule out changes to the Medicare Safety Net and other middle-class welfare programs to bring the Budget back into surplus for the coming financial year.

But another minister confirmed there was resentment among some members of cabinet about the “class warfare” rhetoric the government was engaging in over the Budget.

Ms Gillard earlier this week forecast more means testing of family payments to target those regarded as “high earners”. Treasurer Wayne Swan warned “welfare for people who don’t need it is dispensible”.

But there appears to be a growing angst in senior ranks of the government about the electoral implications of the carbon tax, which will come in on July 1.

The shortfall for the household compensation package for low-income families, to be rolled out two months early, is expected to be about $2.7 billion. NSW Treasurer Mike Baird, ahead of a meeting with Mr Swan in Canberra today, warned of further retaliation from the NSW government over the $1 billion carbon tax bill it faced if it did not recalibrate the compensation. He referred to the $944 million increase in mining royalties it had already imposed to get its own budget balanced.

“The best outcome for the people of NSW would be no carbon tax, but at a minimum, compensation must be reconsidered,” Mr Baird said.

“We reserve the right to act in NSW’s interests and will continue to do so.”

Mr Baird said the federal government was compensating the Victorian government about $2 billion but was not giving NSW a cent.

 

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