Abbott's budget reply: No nasty surprises; carbon tax to be abolished

A future Coalition government would defer the increase to compulsory superannuation and abolish boosted payments to the unemployed, students and parents, Opposition Leader Tony Abbott has rsaid.

Mr Abbott on Thursday night delivered his budget right-of-reply speech in parliament to packed-out public galleries in the lower house of parliament, two days after Treasurer Wayne Swan handed down the budget for 2013/14.

While he is standing by his pledge to scrap the government's carbon tax on big polluters, Mr Abbott has signalled households won't lose out.

"We will re-establish a tough cop on the beat, the Australian Building and Construction Commission" #auspol #budgetreply

— Liberal Party (@LiberalAus) May 16, 2013

"Living within your means is not mindless austerity - it's simple prudence...A Coalition government will keep the current income tax thresholds and the current pension and benefit fortnightly rates while scrapping the carbon tax".

"The carbon tax will go but no one's personal tax will increase and no one's fortnightly pension or benefit will reduce," he said.

Deferring the ramp-up of the compulsory super contributions, which are scheduled to gradually increase to 12 per cent by 2019-20, would save the budget $1.1 billion in 2016-17.

Under the Coalition, super contributions would hit that rate in 2021-22 instead.

Treasurer Wayne Swan has already described it as "cutting into the retirement savings of 8.4 million Australians" via Twitter.

.@tonyabbottmhr “Compulsory superannuation is one of the biggest con jobs ever foisted by government on the Australian people.”

— Wayne Swan (@SwannyDPM) May 16, 2013

The boosted welfare payments, which began in March 2013, are worth $210 for singles and $350 for couples, who are on parenting, unemployment or student payments.

They are funded by the mining tax, and would be cut, Mr Abbott says, because "the mining tax isn't raising any revenue".

Cutting the payments will save the budget $330 million a year.

Mr Abbott says they are "specific savings to cover keeping tax thresholds and pension rates without a carbon tax to fund them".

"Tonight I announce a major initiative to ease the financial pressure on Australian families," Mr Abbott told parliament.

"The Coalition won't shirk the hard decisions needed to get the budget back into surplus," Mr Abbott said.

Winners and losers: Where Swan's budget left you

"With a change of government, your weekly and fortnightly budgets will be under less pressure as electricity prices fall and gas prices fall and the carbon tax no longer cascades through our economy."

The carbon tax compensation package came into effect last July and included increases to pensions, family tax benefits, and boosted payments for the unemployed, students and lower-income parents.

The tax-free threshold was also tripled from $6,000 to $18,200.

Abbott slays Labor: "Second World War was more temporary than this government's deficits"

Mr Abbott took aim at the government for never getting its numbers right - as most ministers sat stony-faced and silent.

"It got the mining tax numbers wrong. It got the carbon tax numbers wrong. And last year's budget commitments to boost family payments and to cut taxes didn't even make it to this year's budget," Mr Abbott said.

"This year's supposed revenue shortfall went from $7 billion, to $12 billion to $17 billion in just two weeks...thanks to Labor's poor management over five years, there is now a budget emergency"

"Hence the Coalition may decide not to oppose any of them; doesn't commit to reverse any of them; and reserves the option to implement all of them," Mr Abbott said.

The cuts include scrapping the $5,000 baby bonus, which was introduced by the Howard government, and has been criticised as "middle-class welfare".

In October, the Opposition Leader criticised the Government's previous attempts to wind back the bonus, saying it showed a lack of "experience" with raising children.

We know this from tonight: Tony Abbott would delay super increases for workers & rip away the low-income super contribution. #budgetreply

— Australian Labor (@AustralianLabor) May 16, 2013

Axing the measure from March 1, 2014 will save the budget around $1.1 billion over five years.

Mr Abbott said the government had delivered seven deficits totalling $220 billion. He ridiculed its claims that the negative budget position was only temporary.

"With seven in a row, the Second World War was more temporary than this government's deficits," he joked.

The last time a Labor treasurer delivered a surplus was back in 1989, he said.

Coalition senators filled the front row of the Speakers Gallery to hear Mr Abbott speak.

Mr Abbott also repeated coalition promises to abolish the mining tax, cut business red tape by $1 billion a year, set up a commission of audit of government and stop the asylum-seeker boats.

Yesterday, Mr Abbott said he would respond "in a careful and considered way to the various initiatives in the budget in the days and weeks ahead".

On the chopping block

Earlier today, Prime Minister Julia Gillard challenged Mr Abbott to spell out exactly what cuts he would make, accusing him of having plans to "cut to the bone".

"If he is not taking the revenue from the carbon tax, what will be cut to make up that loss of revenue?" she said in Question Time.

"What's on the chopping block?"

The Opposition has already announced that it is going to cut the SchoolKids Bonus, which it estimates will save $1.2 billion a year, including administration costs.

It also plans to cut 12,000 federal public service jobs over the forward estimates through natural attrition, a measure it says will save $4 billion over the four years.

Another $1.3 billion over the forward estimates will be saved, according to the Opposition, by not proceeding with the Government's increase to the humanitarian refugee intake.

Treasurer Wayne Swan delivered his sixth budget last Tuesday night, laying out long range funding for Labor's centrepiece policies - the national disability insurance scheme and the Gonski school plan.

He also announced $43 billion in savings, including significant changes to corporate tax arrangements.

The baby bonus will be replaced with an increase to family payments (Family Tax Benefit Schedule A) of $2,000 for the first child and an additional $1,000 for subsequent children.

(inputs from AAP and ABC)