Billions in tax increases outlined in the budget could be blocked by the Upper House, with the Government also facing a fight with state premiers over cuts to health and education worth $80 billion.
The Australian Financial Review says the fuel excise changes, worth $4.1 billion, and the $7 doctors payment, worth $3.1 billion, do not have the numbers to pass the current or new Senate.
Prime Minister Tony Abbott has subtly alluded to a double dissolution election if he can’t pass his entire budget, which also contains massive spending and welfare cuts, as well as a tax increase for high income earners.
The release of a federal budget rarely moves markets, as most of the major decisions have been leaked and priced in by investors. However, a budget stalemate and the resulting political disarray can have a negative impact.
Abbott said the eight senators on the cross bench who will share the balance of power after the new Senate sits from July 1 would lose their seats in a new election.
“We’re happy to talk respectfully to the independents and minor parties in the Senate and obviously a certain amount of horse-trading is something that you just accept is part of the business,” he said.
“What we won’t accept, though, is an attempt to completely frustrate the business of government. I don’t believe that they will try to completely frustrate the business of government because if there was an election again, hardly any of them would win their seats.”
Meanwhile, the states are furious over cuts to education and health. Hospitals and schools fall within the jurisdiction of state governments, and the Prime Minister has said they need to take more responsibility for funding.
Some commentators have suggested the move is designed to force premiers to unite in support of an increase to the GST.
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