Former Prime Minister John Howard has backed the first Coalition federal budget since he left politics, but has warned its impact on the vulnerable should not be underestimated.
Speaking at a post-budget breakfast in Brisbane before more than 2000 guests, Mr Howard said cuts to programs such as the family tax benefit would hit middle Australia – those referred to as the "Howard battlers" during his years in office – harder than other sections of the community.
But he did not agree with the suggestion Tuesday night’s budget was the end of the “fair go”.
“I wouldn’t underestimate the impact of (the budget) on the disposable incomes of a lot of people in the low-to-middle,” Mr Howard said.
“If you are a single income family, with just over 100 grand, you’ll lose the family tax benefit, you’ll have the Medicare co-payment, you’ve got some of the other reductions of the fuel (excise) and so forth.
“…But to suggest it’s the end of the fair go, I think is quite ludicrous, but I wouldn’t underestimate the impact of it.”
“Does that destroy our egalitarianism? No, it doesn’t and in the end the greatest thing you can do for the vulnerable in the community is keep control of the nation’s finances.”
Mr Howard’s most stringent criticism was against the cuts to family tax benefits Mr Howard authored.
‘‘I have the old-fashioned view that a couple on $120,000 a year with two children should not have to pay the same tax as a couple on $120,000 with no children,’’ he said.
‘‘I still hold to the philosophical view that they aren’t welfare payments but, rather, they are tax breaks for the cost of having children.
‘‘I think a taxation system, if it is to have some sort of dimension of social vision, should recognise that it costs a great deal of money to have children.’’
Mr Howard described Treasurer Joe Hockey’s first budget as “the main game budget”, for which the government should be largely commended.
“What last night’s budget did was to tackle the central economic challenge that Australia now faces and that is to constrain the growth of spending and bring the bottom line back to balance,” he said.
“We aren’t actually in an aggregate budget crisis at the moment, but if we hadn’t taken the correct action that was taken last night we may well have had a budget crisis fairly soon.”
Mr Howard said while the Abbott government faced a “tough political sell” in swaying public opinion behind the budget, it could have gone even further.
“Being a political realist and being a very strong supporter of the present government and a strong supporter of the Prime Minister, I understand statements and I understand commitments that have been made” he said.
“But there are two great areas of reform, which this country sooner or later must return to – and I say return because we’ve drifted away from them.
“One is taxation reform and one of them is labour market reform.”
Mr Howard said unpopular announcements, such as the rise in the retirement age to 70, was necessary due to the change in demography.
Before a largely supportive business audience, the question of broken promises was raised during a panel discussion at the RNA convention centre.
Business and finance commentator Peter Switzer said Prime Minister Tony Abbott had little choice prior to the election.
“As someone who works in the media, I don’t like lying but … sometimes I feel as though you have to lie,” he said.
“When your wife asks you ‘do I look fat in this dress?’ you’ve got to lie.
“…There’s no way in the world if Tony Abbott had gone before the election saying ‘I don’t want to raise taxes, but if I have to, I will do it’ he wouldn’t have got up.”