Clive Palmer adds fuel to the budget bonfire

THE government has taken another blow in its struggle to pass its budget reforms as Clive Palmer vows to block a $2.2bn increase in fuel excise.

THE Abbott government has taken another blow in its struggle to pass its budget reforms as Clive Palmer vows to block a $2.2 billion increase in fuel excise.

Prospects are dimming for some of the government’s biggest savings, with the $3.5bn plan for a new co-payment on GP visits also doomed, according to public statements from the Palmer United Party leader and others who share the balance of power.

Joe Hockey hit back at Labor taunts yesterday over his attempts to sell fiscal reform during a torrid question time that was dominated by attacks on the co-payment, changes to the age pension and the cost of Tony Abbott’s paid parental leave scheme.

The Treasurer said Labor had left the nation with expenditure as a percentage of GDP well above the long-term average, which meant the only way to fix the budget was to cut costs.

“Either you have to reduce ­expenditure or you have to increase taxes,” Mr Hockey said.

As Labor attacked the budget cuts, Mr Hockey described himself as a “human shield” in the parliamentary debate. Bill Shorten used that remark to suggest later that Mr Abbott was using the Treasurer as a “human shield” to defend the budget.

While cabinet ministers continue to talk to crossbench senators and canvass alternative ways to cut outlays if the main budget reforms are blocked, there was little progress yesterday in the government’s quest.

Mr Hockey and Finance Minister Mathias Cormann have sought to pressure Labor by citing warnings from the Parliamentary Budget Office last Friday about the pressure of spending growth on big programs.

Labor Treasury spokesman Chris Bowen fired back late yesterday by noting the PBO report showed that outlays on paid parental leave would total $62bn over the coming decade. Mr Bowen said that sum was about the same as the cuts being made to pensions and family payments.

The PBO estimates the May budget changes, if enacted, would trim outlays on age pensions by $23bn over the decade ahead, although spending on the age pension would still be worth $601bn after the saving. The PBO estimates the cuts to family tax benefits would save $40bn over the decade, although outlays would still be worth $211bn.

Mr Bowen disputed the Treasurer’s claims in parliament that spending on PPL would lift productivity, pointing to a finding from the Productivity Commission that it was “unclear” whether bigger spending led to any broader community gains.