The Government has ramped up its
warning to high-income earners
that they will bear the brunt of the
pain of Tuesday's federal budget.
Finance Minister Lindsay Tanner
has declared higher earners will be
expected to use their tax cuts
which the Government has
guaranteed to isolate themselves
from a series of harsh budget
measures, set to lop between
$3billion and $4 billion off government
spending.
''People on high incomes people
like me will be getting significant
tax cuts,'' Mr Tanner said. ''We are
very conscious of the fact those
people on lower incomes and working
families generally have cost-of-
living issues, we're very keen to
make sure we protect them as much
as possible.''
High-income earners needed to
understand ''the tax cuts in particular
will be insulating them from the
impact of the budget cuts that
would spread reasonably wide''.
Mr Tanner would not be drawn
on whether the $5000 baby bonus
would be universally available, but
his remarks have all but confirmed
that some allowances will be
means-tested.
''We don't believe that there will
be substantial pain, or really major
pain for any significant groups of
people but inevitably when you
make spending cuts, that means
that there has to be pain,'' he said.
Reinforcing his hard line on government
spending, Mr Tanner
denied reports that Prime Minister
Kevin Rudd had vetoed cuts
proposed by Mr Tanner's razor
gang, the Expenditure Review Committee
of Cabinet.
''You get some pretty willing
discussions, because people,
ministers in particular, have strong
views,'' he said, adding that ''all the
players'', political and bureaucratic,
were ''very conscious of the wider
task'' of reining in spending to fight
inflation. ''It's just my particular
role to be the bad guy,'' he said.
Mr Tanner shrugged off calls by
shadow treasurer Malcolm Turnbull
for $6 billion of spending cuts,
saying Labor's $3-4 billion would
''make a difference''.
Both the Reserve Bank and
financial markets expected substantial
savings, and they would be
delivered, with low-income earners
particularly protected.
Mr Tanner also denied that the
Treasury believed that the new
Government's undoing of the Howard
government's WorkChoices
industrial-relations policy could
fuel inflation, saying inflation had
remained low through the last four
regimes of workplace law.
On the inflation front, Treasurer
Wayne Swan insisted that wage rises
had to be linked to productivity
gains to avoid a bout of wage-led
inflation. Speaking in the wake of a
15 per cent wage deal for Victorian
teachers, Mr Swan said, ''We put
forward a system of enterprise
bargaining where wage rises have to
be linked to productivity.
''That's the central element of our
industrial relations system that we
are putting in place.''
ACTU president Sharan Burrow
rejected last night the suggestion
that unions were making
inflationary wage increases, including
the Victorian teachers' pay deal.
''At the moment, we can see no
evidence of anything but reasonable
wage outcomes, most of them are
actually extraordinarily constrained
given the impact that WorkChoices
has had on people's purchasing
power and now of course, the
increased costs,'' she said.
''Working people deserve a pay
rise; let's judge each enterprise
bargain by its outcome and recognise
there are a lot factors that go
into those wage claims and the
outcome of bargaining depending
on the enterprise and the industry.''
Australian
Workers Union
national secretary Paul Howes said
there was added pressure to campaign
for higher wages but it was
in no way orchestrated across the
union movement and it would
always come down to bargaining
enterprise by enterprise.
''I think it's actually incorrect to
talk about a wages outbreak generally
because a wages outbreak
can't happen in a decentralised
wage system, so pattern
bargaining is illegal, we don't
pattern bargain and enterprises
that can afford to pay more will
pay more, places that can't afford
it won't,'' he said.
In the building industry,
CFMEU national secretary Dave
Noonan said wage rises of 5 per
cent for this year for building
workers in NSW and Victoria were
already locked into existing
enterprise agreements and that
outcomes for other states would
differ according to the enterprise.
The first of 10 specific budget
recommendations from the Australian
Chamber of Commerce and
Industry on workplace matters,
out yesterday, is a proposal to link
collective bargaining to productivity
and efficiency gains.
''The current 30-year-low level
in unemployment reflects past
reforms by governments of both
major political persuasions,'' the
submission said.
''... Overall, the Australian
economy is still growing but productivity
growth has slowed, and
skills and infrastructure
constraints are holding back
further growth.''
Mr Swan's view was mirrored by
the president of Labor's Caucus
Economics Committee, David
Bradbury, who said a tight labour
market was ''always a challenge''
in terms of wage rises and
inflation.
Mr Bradbury, who won the
critical Sydney seat of Lindsay
from Jackie Kelly at last year's
election, said he expected the
budget to provide ''the first downpayment,
specifically and generally''
of Labor promises for the
people of western Sydney.