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Getting the budget message right

Cabinet meets Monday amid mixed messages about the budget. With Shadow Assistant Treasurer Andrew Leigh, and Liberal MP Andrew Laming.

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Raising taxes would be "political suicide" for Prime Minister Tony Abbott says key crossbench Senator Glenn Lazarus who doubts the government is genuine about its threat if key budget measures aren't passed.

And fellow crossbencher Senator Nick Xenophon says the threat is "incredibly reckless and irresponsible" and has dared the government to raise taxes on superannuation if it is genuine about its threat, while Labor has labelled the tactic as tantamount to "extortion".

Independent Senator Nick Xenophon and Prime Minister Tony Abbott. The Senate is continuing to oppose key budget measures.

Independent Senator Nick Xenophon and Prime Minister Tony Abbott. The Senate is continuing to oppose key budget measures. Photo: Penny Bradfield

Finance Minister Mathias Cormann said on Sunday the "the only alternative to balance the books is to increase taxes" and Education Minister Christopher Pyne said the government would have to examine the option of cutting research funding if Parliament rejects his proposal to deregulate the university sector.

Palmer United Senator Glenn Lazarus said on Monday that the tactic would sound a death knell for the Coalition if followed through.

"I think it would be political suicide for the Abbott government if they did try and introduce more taxes to the Australian public, I can't see that happening," he told Fairfax Radio in Brisbane.

PUP Senator Glenn Lazarus says any tax rise would be ''political suicide''.

PUP Senator Glenn Lazarus says any tax rise would be ''political suicide''. Photo: Alex Ellinghausen

He said PUP would reject measures such as the proposed $7 fee for doctors' visits because they unfairly hit the poor.

Opposition Leader Bill Shorten said on Monday it was time for the government to dump its budget.

"We've seen in recent days the government move from insulting the Australian  people telling them they just don't understand the unfair budget when in fact they do," Mr Shorten told reporters.

"The government's moved from insulting the people of Australia to threatening the people of Australia."

Agriculture Minister Barnaby Joyce said on Monday that he "fully understands" voters' concerns but likened the budgetary situation to a "financial melanoma", which "will kill you" if left unaddressed.

 "In five, 10, 15 years' time, the chickens will come home to roost. We will be closing down hospitals, we won't have an ABC, we won't be able to defend ourselves because we will have run out of money," he said.

He said the government had to fix the budget and fix it early.

"We either accept that we've got a debt problem . . . or we basically say no, this is only a small melanoma on our arm and if we just wait long enough it will go away," he said. "No, it's a financial melanoma, it will kill you." 

But Senator Lazarus said the government's gloomy rhetoric does not match reality.

"We hear a lot of negative speak from the Government about the situation we're in I don't think it's as bad as what they're saying," he said.

Senator Xenophon on Monday described the government's budget negotiation efforts as "a little like groundhog day". He added that would not support Mr Pyne's "incredibly radical" proposal because it would be a "seismic shift" in the way education is run in Australia, which he complained "wasn't even hinted at" before the last election.

And he said threatening to cut research would lead to the "wholesale dumbing down of the tertiary education sector", which would lead to a "significant decline" in Australian universities' ability to lure overseas researchers.

He advised the government to abandon it's proposed $5.5 billion "extravagant indulgence" of a paid parental leave scheme and urged Treasurer Joe Hockey to take a leaf out of his Liberal predecessor Peter Costello's book and slug wealthy superannuants instead.

"In terms of tax increases, well of course that's an alternative," Senator Xenophon told ABC Radio.

"I think the government could take a leaf out of Peter Costello's book in his first budget, he looked very closely at the issue of superannuation at the top end, he had a temporary surcharge, maybe we should look at something like that before there's this reckless talk about slashing research funding," he said.

Mr Costello has since described the superannuation surcharge as "one of the worst decisions" he made as Treasurer.

Cabinet minister Kevin Andrews said the wealthy already paid enough tax.

He said on Monday that "if you're earning more than $150,000 a year you're already paying  somewhere in the order of $40-$50,000 in tax and we're putting an additional tax on top of that, so high income earners are already paying a substantial amount of tax".

"People who are on very low incomes don't pay any net tax when you take into account the benefits they are paid, so we are committed to a progressive tax and welfare system," he told reporters in Canberra.

Parliament returns this week after a five-week break, in which Mr Hockey has toured the country to meet crossbench Senators seeking their support for the budget. 

Labor's finance spokesman Tony Burke said on Monday the government's threats were "more about extortion than it is about governing".

"Mathias Cormann has been their most disciplined performer and he wouldn't say this unless Tony Abbott seriously had plans to introduce a raft of new taxes," he told ABC radio.

"This bizarre game where they're saying if you don't vote for an unfair budget, we'll come up with something even more unfair," he said.

with Lisa Cox

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