UPDATE: 300 jobs to go as Govt slashes $7b in MYEFO budget revision
The Coalition has accused Labor's Canberra MPs of "rank hypocrisy" over reports about the public service's fears of tough spending cuts, while also questioning whether the Government will actually deliver them.
Cabinet meets today to finalise the budget revisions, which Treasurer Wayne Swan is expected to unveil this week, and the Public Service is bracing for the toughest spending cuts since the Howard government's first term; a time of mass lay-offs that plunged Canberra into recession.
LAY-OFFS: PS cuts for Canberra
Ministers have already warned senior bureaucrats to avoid decisions that will add to agencies' costs, with some departments expected to lose up to 5 per cent of their budget.
ACT Liberal Senator Gary Humphries said the report showed the rank hypocrisy of the Gillard Government and the cuts described would mean "job cuts across the board".
"ACT Labor MPs have been caught out for claiming the Public Service would be protected under Labor before the election, while their treasurer plans to make huge cuts a year after the election," he said in a statement.
"Kate Lundy, Gai Brodtmann and Andrew Leigh have to front the Canberra community as soon as these cuts are released and explain why they misled Canberrans before the last election
"Labor's attitude is to gild the lily before an election and reveal the truth after it. Just like Julia Gillard's carbon tax promise, ACT Labor candidates were campaigning against the Coalition's public service policies while they held similar plans in their back pockets.
However, Opposition treasury spokesman Joe Hockey said the Government did not have the ticker to make tough decisions on cuts.
He said Labor would not need to be threatening deep cuts if it had "done the hard yards earlier to cut its wasteful and reckless spending".
"Labor does not want to take the political pain on tough spending decisions. Instead it wants to blame international events. Wayne Swan doesn't have the ticker to take the tough decisions," he said in a statement.
Mr Hockey predicted the Government would "engage in budget gymnastics to try and give the appearance of a budget surplus".
"If the Government gives the appearance of saving money, then we need to ask the hard questions about whether they really do mean what they say. This is a government that has increased the size of the public service in Canberra by over 20,000 employees since they were elected," he said.
Mr Swan said yesterday the global financial crisis had wiped out ''massive'' sums in tax receipts, saying government revenue forecasts had fallen $130 billion over the five years to 2012-13. Revenue from one source alone - capital gains tax - was expected to be down by $7 billion over the next four years, he said.
''As the lessons of Europe's current turmoil show all too clearly, maintaining our fiscal rigour is absolutely critical at a time when international financial markets are punishing those countries that lack discipline.''
Trade Minister Craig Emerson said getting the budget back to surplus would make it easier for the Reserve Bank to cut interest rates.
"What we're seeking to do here is to create room for the other major instrument of macroeconomic policy, which is monetary policy," Dr Emerson told ABC radio.
"If we are able to create room for the expansion of investment in this country, where there's already a $430 billion pipeline, at the same time easing the pressure on monetary policy, that could create the circumstances of a further reduction in interest rates."
The Australian Council of Social Service said the Government should focus on "wasteful and poorly targeted spending and tax breaks", which would also help make room for "essential spending such as the long overdue increase in the unemployment Newstart Allowance and more investment in social and affordable housing".
Council chief executive officer Cassandra Goldie said much of the waste was hidden away in the form of tax concessions that mainly benefitted high income earners and were not
"ACOSS has long argued for changes to ensure that tax is based on ability to pay rather than sharp avoidance practices, such as the use of private trusts to avoid individual income tax and profit shifting within international companies to avoid corporate income tax. We also consistently advocated removal of poorly targeted tax breaks and expenditures," she said.
She cited the living away from home allowance, privileged tax treatment of private trusts, the health insurance rebate, and the concessional tax treatment of termination payments as some of the areas that should be closely scrutinised.
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