View from The Hill

View from The Hill

Labor plays hardball on debt ceiling – as well as on mining tax and carbon price

Shadow treasurer Chris Bowen says Joe Hockey wants a big heft in debt ceiling so he won’t have to come back to parliament again. AAP Image/Lukas Coch

The opposition is going into the new parliament with something of the “relentlessly negative” frame of mind that it used to attack in Tony Abbott.

It will try to deny the government its way on the three key legislative items to which Abbott is giving priority - including attempting to cut back the amount by which the Coalition can increase the debt ceiling.

As well as fighting the carbon price’s repeal, caucus today agreed to resist treasurer Joe Hockey’s plan to raise the debt limit to A$500 billion, and to oppose the abolition of the mining tax and the associated measures.

The government has to get the present $300 billion debt ceiling increased quickly because it will be hit by December 12. Hockey has said he is advised debt will go significantly higher than the $370 billion predicted under Labor, and recently announced a $200 billion lift in the ceiling.

But Labor said today it would seek to allow an increase to only $400 billion and if its amendment succeeded in the Senate, it would press it.

The Greens, who take a lenient position on debt, do not have a position yet and are expected to discuss their stand in their party room tomorrow.

If the $400 billion limit was imposed, the opposition would get another opportunity of a parliamentary debate when the ceiling had to be lifted again.

A spokeswoman for Hockey said tonight that Labor had lacked the courage to raise the limit when it should have. “Now because of their failed policies, their debt will continue to grow to more than $400 billion. Labor would rather play politics than admit their own economic mismanagement has left the Government with no option but to raise the limit.”

The government points out that in May 2012 then treasurer Wayne Swan tabled a minute by the Australian Office of Financial Management which said there needed to be a limit $40-60 billion higher than the peak projected. This meant that even on Labor’s own numbers in the pre-election Economic Statement a $400 billion limit would not be enough.

But shadow treasurer Chris Bowen said Hockey “must release updated budget estimates – and the impact his budget blow-out is having on peak net debt – before he can seriously expect the parliament to consider the debt limit legislation.”

“The only reason the Treasurer has put on the table for the 66% increase in the debt limit, is that it would be politically inconvenient to have to come back to the parliament again,” Bowen said.

“Just because Joe Hockey doesn’t want to answer questions isn’t a good enough reason to justify this massive increase in the debt cap.”

Bowen said Hockey had gone from promising to pay back the debt before the election to wanting to double the debt now.

Labor’s fight against the repeal of the mining tax will have the support of the Greens, so the government could have to wait for the new Senate’s arrival in July to get this through.

The mining tax repeal legislation also includes the repeal of the schoolkids bonus and the low income superannuation contribution.

The low income super contribution is a annual payment of up to $500 to help people earning up to $37,000 to save for their retirement. Abolishing the scheme saves $3.7 billion over the forward estimates.

About 1.3 million families are due to get the biannual payment of $410 for a high school student and $205 for a child in primary school in January. Abolishing this scheme would save about $1 billion a year. The next instalment will be paid if the legislation does not pass by Christmas.

The draft legislation would repeal the mining tax, which has raised far less than earlier anticipated, from July. Scrapping the whole package would save a net $13 billion over the forward estimates.

Opposition leader Bill Shorten told caucus today that this was not the government Australians voted for in September. “This is a government that told the Australian people one thing before the election and is now doing something else.”

Shorten said that going into the new parliament, “our party is united…We will take the fight up to Tony Abbott and this government”.

At the meeting of the Coalition parties, Abbott called on his troops to show the same discipline in government as they had in opposition.

Tomorrow will be taken up with the formalities of parliament’s opening, with Wednesday the first face off between Abbott and Shorten in their new positions.

New crossbench MP for Fairfax Clive Palmer is aiming to ensure he gets a slice of the attention. He has already notified the media of an 8am appearance tomorrow, to be followed later in the day by a National Press Club lunch.

Listen to Brendan Nelson on the Politics with Michelle Grattan podcast, available below, by rss and on iTunes.