Newstart backflip causes $81m Budget blowout

It took just hours for the Morrison Government to make an embarrassing backdown on its first — and possibly last — Budget, with the change blowing an $81 million hole in the fiscal blueprint less than 12 hours after it was delivered.

IT took just hours for the Morrison Government to make an embarrassing backdown on its first — and possibly last — budget.

Instead of selling tax cuts and the first surplus in a decade, Prime Minister Scott Morrison, Treasurer Josh Frydenberg and Finance Minister Mathias Cormann held emergency meetings Tuesday night and early Wednesday morning.

They decided to extend their $75 energy supplement to Newstart recipients, blowing an $81 million hole in the budget less than 12 hours after it was delivered.

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On Tuesday night Labor had been circulating an amendment to the crossbench to do just this.

If it had succeeded it would have been another defeat on the floor of Parliament for the minority government.

People on Newstart were initially excluded from energy supplement which was going to most other welfare recipients, which would deliver $75 to singles and $125 to couples.

But before 8am Wednesday morning Mr Frydenberg revealed the payment had been extended, in a new budget initiative since the document was handed down the night before.

Federal Treasurer Josh Frydenberg. Picture: AAP/Sam Mooy

Opposition treasury spokesman Chris Bowen. Picture: Kym Smith

Opposition treasury spokesman Chris Bowen said the government had gone into “crisis talks” within hours of delivering the budget.

“The first budget backflip is the hardest, it gets easier after that,” Mr Bowen said.

“If that’s a budget blow out in the last twelve hours God knows what the Budget be like in 2024 when they’re promising tax cuts if they can’t keep the Budget until the next morning of Parliament.”

Mr Frydenberg said the Newstart allowance was not initially included in the original offer because three-quarters of its recipients move off it within 12 months and 99 per cent also receive another government payment.

But he did not say why the decision was made to extend it.

“Last night, the Prime Minister, the Finance Minister and myself discussed the issue. We thought it was appropriate to extend it,” he said.

“If you’re on Newstart, you get the payment. As simple as that.”

Mr Morrison said it was a “pragmatic” move to get it passed through Parliament.

And in another unexpected move, Mr Morrison impersonated fictional Kazakhstan character Borat, from comedian Sacha Baron Cohen’s film, while criticising Labor’s carbon credits plan during Question Time.

“(Labor) are going to force business to spend $36 billion, is our conservative estimate, on these carbon credits, carbon credits from Kazakhstan, so to make my point the Borat tax is where this ends up,” he later said on 3AW to explain the move.