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Senate blocks 'could blow $12b hole' in deficit plan

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Battle of the scare campaign

Old scare campaigns about the Commission of Audit and the carbon tax were refreshed in question time on Wednesday.

The Senate is set to give more money back to voters than the Abbott government has tried to save through its unpopular budget cuts, a former Treasury official has warned.

It means the Coalition's budget deficit could be $12 billion larger in four years than it originally planned.

The government expects to record a $33 billion budget deficit in four years, but that could blow out to $45 billion if the Senate succeeds in blocking a range of savings measures, Deloitte Access Economics director Chris Richardson says. He has warned that - based on savings measures before the Senate or due to go before it soon, and senators' stated intentions of support or opposition - the government's budget is likely to have a multibillion-dollar hole.

''People haven't yet realised that what we're seeing in the Senate is an anti-budget,'' Mr Richardson told Fairfax Media.


''The budget tried to save money but this Senate is spending it, and the net impact is that the Senate has more than undone what the budget tried to save over the next four years.''

Mr Richardson says the Senate looks likely to block a number of savings measures, including lowering the tax-free threshold from $19,400; the scrapping of family tax benefits and other welfare changes; the scrapping of the low-income superannuation contribution boost; and the axing of the Australian Renewable Energy Agency.

The cumulative effect means the budget balance will be $12 billion worse over the next four years, he says. And that figure could grow even bigger.

The indexation of the age pension and other adjustments are also likely to be blocked.

This is not included in the $45 billion figure, but if it goes before the Senate after the next election it may also be blocked at a cost to the budget bottom line.

Asked about Mr Richardson's warning, a spokesman for Treasurer Joe Hockey said the Coalition was determined to fix the budget and it hoped the Senate would help.

''We have no choice but to fix the budget now or the pain for all Australians into the future will be far greater,'' the spokesman said.

''We are already paying $1 billion a month in interest alone on Labor's debt.''

But shadow treasurer Chris Bowen said the government would not pursue expensive spending programs if it was serious about budget savings.

''If the government wants real budget savings, it should start with cutting its unfair and unaffordable $22 billion paid parental leave scheme,'' Mr Bowen said.

''It has also sought to roll back up to $1.1 billion in tax paid by multinational companies and removing a carbon price that raises $14 billion and replacing it with a multimillion-dollar slush fund to subsidise polluters, all the while going after low- and middle-income families.''

Mr Richardson said the government's ''budget repair'' job was not going well.

''If you say one of the tasks of the new Parliament was budget repair, you wouldn't give it a fail mark because its performance has not been good enough to call it a fail,'' he said.

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