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Coalition senators Ian Macdonald and Cory Bernardi voice opposition to government's deficit levy

Coalition senator Ian Macdonald: "My crossing the floor might be relevant on some occasion over the next year or so.”

Coalition senator Ian Macdonald: "My crossing the floor might be relevant on some occasion over the next year or so.” Photo: Alex Ellinghausen

A senior Liberal Party senator has signalled he'll cross the floor to oppose the federal government's debt levy and could do the same on paid parental leave.

In an impassioned speech to the Senate, Senator Ian Macdonald also called for the GST to be broadened if state governments are to contribute more to health and education spending.

Senator Cory Bernardi during the debate on the deficit levy on Monday.

Senator Cory Bernardi during the debate on the deficit levy on Monday. Photo: Alex Ellinghausen

The Senate began debating the first of the budget bills, a deficit levy on incomes of $180,000 or more, on Monday. It is expected to pass with Labor's support.

But Senator Macdonald, who has been a vocal critic of his party since he was demoted by Prime Minister Tony Abbott, said he would oppose the measure because "I don't think it goes far enough".

He said although he was in favour of efforts to reduce Australia's debt, the levy should be applied to companies earning more than $180,000 a year and not just individuals.

Leader of the opposition in the Senate, Senator Penny Wong, during the debate on deficit levy on Monday. Labor will support the levy.

Leader of the opposition in the Senate, Senator Penny Wong, during the debate on deficit levy on Monday. Labor will support the levy. Photo: Alex Ellinghausen

"I desperately seek, as I have in the past, answers as to why the Labor Party had a [flood] levy scheme that doesn't include corporations and why my party now has a debt levy scheme that doesn't include corporations," he said.

South Australian Liberal senator Cory Bernardi also broke ranks, telling the Senate he was "unable to support" the levy.

"There are elements of the budget and the plan that has been put forward that I have a principled disagreement with," he said.

"And this new tax bill is one of those measures that I find myself unable to support."

Senator Bernardi signalled he would probably abstain from voting on the measure, rather than crossing the floor to vote against it.

"We should be looking to lower taxes in this country," Senator Bernardi said.

In a sign that there could be future trouble for other government measures, Senator Macdonald said: "My crossing the floor might be relevant on some occasion over the next year or so."

"It wouldn't be today because Labor are actually supporting this."

Senator Macdonald called on the government to instead look for permanent measures to boost the country's bottom line rather than "use this levy pretence".

He said the states were rightly being asked to contribute more to health and education but "they can't just do it on a wing and a prayer".

He said the answer was a broader GST as was "endorsed by the Australian people at the 1998 election".

Amendments moved by the Greens for the levy on high income earners to be made permanent were voted down.

Greens leader Christine Milne said the party could not support a temporary levy while the budget made an ideological attack on the country's welfare system.

“If ever there was a con job on the Australian people this is it, and I am surprised that the Labor Party has fallen into it,” Senator Milne said. 

Senator Macdonald also issued an attack on Mr Abbott's paid parental leave scheme and said he was seeking answers on how the proposal would affect voters in his state and stay-at-home mothers.

He reiterated his fear the scheme was too generous and not in keeping with the tough budget message the government was trying to sell.

"My inclination is to vote against that measure," he said.

Labor leader Bill Shorten later said ''the division of the Liberal Party is clear for all to see''.

''I just wish that these dissenting senators would stand up for low paid people with the same vigour they're standing up for Australia's top 1 per cent.''

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