Labor aims to punch a multi-billion hole in Hockey’s budget

Opposition leader Bill Shorten has savagely attacked the Abbott government’s first budget. AAP/Alan Porritt

Opposition leader Bill Shorten has pledged Labor will vote against budget cuts to university funding and student support, declaring that it “will not support a system of higher fees, bigger student debt, reduced access and greater inequality”.

The raft of budget measures Labor will try to strike down in the Senate, totalling more than $10 billion so far, also include the crackdown on the young unemployed, future indexation of the aged pension, and the proposed increase in the pension age to 70 by 2035.

Delivering his reply tonight, Shorten said the budget sought to “demolish the pillars of Australian society: universal Medicare, education for all, a fair pension, full employment”.

He described the changes to Newstart – that deny young people access to unemployment benefits for six months - as “perhaps the single most heartless measure in this brutal budget”. They “were purely ideological”.

“This Prime Minister’s vicious, victim-blaming policy will create a forgotten generation of Australians - shut out of the workforce,” Shorten said.

The government faces a struggle to get key budget measures through the Senate – either now or when new senators come in on July 1 - with the Greens and Clive Palmer’s PUP also arcing up. The GP Medicare co-payment seems most at risk.

Labor is opposing the co-payment, the indexation of petrol excise (which the Greens back) and a change to Family Tax Benefit B that would put a family off it once its youngest child is aged six.

Shorten did not mention the tax increase for those earning above $180,000 but Labor is expected to let it through.

Earlier, Prime Minister Tony Abbott said “I’m not going to be absolutely unreasonable” in negotiations to get measures through the Senate, but he expected MPs to “engage with the government and to deal fairly” with the government’s measures.

In a speech laced with extremely strong rhetoric, Shorten said this was “a budget of broken promises built on lies” which “goes out of its way to create an underclass”.

The budget was the beginning of extreme policies with an extreme impact on the Australian people, Shorten said. “This is just the beginning, turning Australia into a place most of us won’t recognise - a colder, meaner, narrower place.”

Based on a “myth” about the state of the economy, “the Australian people have been ambushed with unconscionable changes”. The Liberals’ budget “emergency” was “an attempt to justify the Abbott government’s blueprint for a radically different, less fair Australia”.

The budget would push up the cost of living for every Australian family and “smash family budgets across the nation”.

NATSEM modelling commissioned by Labor showed that a couple with a single income of $65,000 and two kids in school would have over $1700 cut from their family budget, Shorten said. “Add in health costs, and the Prime Minister is cutting nearly $40 from their weekly budget, every week.”

The cuts would get deeper and deeper, more than tripling to almost $120 a week by the time of the next election.

“In 2016 this family will suffer cuts of over $6000 per year. That’s around one in every ten dollars of the family budget gone.”

He said the $7 GP “tax” was being applied simply to break the universality of Medicare. “The basis of its application is purely ideological. The kind of thing you would expect from American Tea Party Republicans.”

Hypothecation of the co-payment to the proposed medical research fund did not justify a “tax on the sick or the wilful breach of promise it entails”, he said. Investing in medical research was crucial “but you don’t fund the search for the cures of tomorrow by imposing a tax on the patients of today”.

He said the planned $80 billion cuts on funding to the states for schools and hospitals was an attack of an unprecedented scale.

“These are unconscionable cuts to schools and hospitals imposed upon the states in order that they may do the Commonwealth’s bidding for a larger and wider GST. The Prime Minister and the Treasurer are blackmailing the states into becoming the Commonwealth’s cat’s paw - a trojan horse to a bigger GST but absolving the Abbott government of fingerprints and blame,” he said.

Never before had there been an attack of such a scale on the states, Shorten said.