The government tomorrow will introduce legislation to salvage a fraction of its social security budget savings but is shelving a raft of measures, including its attempt to make young people wait six months for the dole, because of Senate opposition.
While rejecting a report that it was abandoning controversial measures and refashioning its budget strategy, the government agreed to split its social services legislation to secure the $2.7 billion of measures Labor has promised to support.
These include the tighter targeting of Family Tax Benefit B by reducing the primary earner income limit from $150,000 a year to $100,000.
But another $9 billion worth of measures remains jammed, with Labor opposing and the government unable to get crossbench backing.
Apart from the dole waiting period, they include changes to pension indexation and family tax benefits and cessation of the seniors supplement.
The government has been holding out against compromise but the Palmer United Party this week reiterated there would be no deal on certain items so the Coalition gave way on splitting the legislation to deal with Labor.
But Prime Minister Tony Abbott, Treasurer Joe Hockey and Finance Minister Mathias Cormann rejected a report in the Australian Financial Review that the government was raising the “white flag” on up to $30 billion of savings over the forward estimates.
Abbott said that in flagging the restructure of the social services legislation “we’re not walking away from anything. We support all of the budget measures, but we accept that some of them are supported by other parties, some of them are still subject to negotiation with other parties and with the crossbench.
"We stand by everything,” he said.
Hockey said: “The bottom line is if you can win a battle, you take that victory but you never give up on the war and in this case, we are absolutely determined to stop the trajectory that Labor left of debt going to $667 billion in ten years, which is $25,000 for every man, woman and child in Australia.
"Now, if there is an inability to get a majority of the Senate, we are going to continue with the principles and we are going to continue with the policies … You never give up.”
In the meantime the government is looking for savings to cover new spending announced since the budget, including $630 million for national security. Substantial ongoing funds will also be needed for the Iraq commitment.
Labor’s family spokeswoman Jenny Macklin said that while the government planned to back down on cuts for now, Abbott had “shown his hand”.
“He is still intent on cutting the pension.
"He is still intent on cutting family payments.
"He is still intent on driving young jobseekers into poverty,” she said.