Cormann threatens tax hikes over budget row

Cormann threatens tax hikes over budget row

Finance Minister Mathias Cormann has raised the spectre of higher taxes if the government can’t get its budget through the Senate.


Senator Cormann says it is a “statement of fact” that tax hikes will be necessary without cuts to government spending, if Australia is ever to pay off its billions in debt.

“We have laid out our plan to reduce the unsustainable spending growth trajectory Labor left behind,” he told ABC Television on Sunday.

“The only alternative to balance the books is to increase taxes.”

Prime Minister Tony Abbott has warned of having to make “tougher decisions” if controversial measures such as the $7 GP co-payment, welfare reform and university deregulation are blocked by the Senate.

A weak budget meant higher taxes and interest rates, he told the South Australian Liberal Party annual meeting on the weekend.

Parliament resumes on Tuesday after the five-week winter break, with the coalition still struggling to sell its unpopular budget to key crossbenchers.

The government will on Thursday introduce plans to deregulate university fees – which are being opposed by Labor, the Greens and crossbenchers in the Senate.

Education Minister Christopher Pyne described as “highly speculative” reports that the government would cut university research funding if parliament blocked the reforms.

However, he refused to completely rule out taking such action, which he said would be the “worst-case scenario”.

“I have absolutely no desire at all to see research funding (cut),” Mr Pyne told the Ten Network.

“I want to work with the crossbenchers to make sure that we all understand the high stakes that we are playing for.”

Meanwhile, Labor released health department figures which showed patients would pay hundreds of dollars more each year because of the co-payment and increased fees for subsidised medicines.

Those in the worst-hit electorate of Blaxland, in western Sydney, faced increases of up to $300.

The opposition also seized on a News Corporation Australia report of a compromise plan to exempt childhood vaccinations from the co-payment.

There was no fixing the “GP tax” and it should be scrapped, its health spokeswoman Catherine King said.

“It is bad for patients, it is bad for doctors and it is bad in the longer term for our health system as a whole,” she told reporters in Ballarat.

Greens leader Christine Milne said her party would not support a co-payment “in any shape or form”.

Some within government were also calling for a rethink on the controversial budget measure.

“This co-payment, I think is dangerous,” Liberal backbencher Ian MacDonald told ABC Television.

“Why don’t we bite the bullet, have another look at it, make sure it is fair.”