Lenore Taylor, political editor

theguardian.com, Thursday 15 May 2014

Labor leader vows fight to save Medicare and accuses ‘tea-party style’ government of trying to create a new underclass

Bill Shorten delivers the budget reply speech. Photograph: Mike Bowers

Labor will vote against $12bn in budget measures – including GP co-payments, higher fuel taxes, stripping benefits from single-parent families, cuts to pensions and higher student loan repayments – to stop a “brutal” budget from creating a new Australian “underclass”.

In his budget in reply speech Thursday night, Bill Shorten did not explicitly say how Labor will vote on the 2% “deficit tax” hike on earnings over $180,000, but it is likely to allow the temporary tax rise through, along with plans to freeze other family payments and government benefits.

The $7 co-payment for visits to the GP, the plan for lower annual increases in the pension and an increase in the pension age, and paying unemployment benefits for only six months of the year to under 30s are all also opposed by the Greens and the Palmer United party, meaning they are likely to be blocked in the Senate that sits from July. Labor will oppose the fuel tax rise, but it may be supported by the Greens – although they would like to stop the money being entirely directed towards roads funding.

The fate of other measures in the Abbott government’s first budget, including limiting special single-income family payments to families with children younger than six and forcing students to pay higher interest rates on their loans, now lies with the Palmer United party and other crossbench senators.

Shorten used the televised address to denounce the government as heartless, divisive, “tea-party style” ideologues bent on dividing the nation.

He said he was speaking on behalf of Australians “shocked by the brutality of this government’s attack on their way of life” and by “a budget that goes out of its way to create an underclass”.

He said the budget would increase the cost of living for every Australian family, and cited modelling showing that a single income family living on $65,000 with two children would be $1,700 worse off this year and $6,000-a-year worse off by 2016 – and if the family had average medical expenses it would be another $270 a year out of pocket.

“This is a budget drawn up by people who have never lived from pay cheque to pay cheque,” he said.

He also promised to fight against the $80bn in cuts to forecast federal funding to the states for schools and hospitals, but as will be included in the budget appropriation bills, it is not something the Senate can block.

Pointing out the cuts represented 80% of the “savings” in Tuesday’s budget, Shorten said Joe Hockey had “in an incompetent and cowardly way … [and] outsourced the main burden of his savings task to the states”.

Greens leader senator Christine Milne also gave a speech in reply to the budget last night, responding to Abbott’s veiled threats that an obstructionist Senate could result in a double-dissolution election with a simple reply: “Bring it on.”

“We will stand up to prime minister Abbott every step of the way, and we will block these cruel budget cuts. Prime minister Abbott has threatened to go to a double-dissolution election if the Senate doesn’t give him what he wants. Well, the Greens say, bring it on! Bring it on, Mr Abbott, we couldn’t be more passionate or more committed to kicking your mob out and stopping the damage you are trying to inflict on people, the environment and our country,” Milne said.

The Coalition had challenged Shorten to set out alternative ways to reduce the budget deficit, pointing to the fact that Abbott outlined savings in his final budget speech in reply as opposition leader. Shorten did not, using his speech solely to attack the government.

In the reply speech last year, then opposition leader Abbott did outline many policies his government is now delivering, but he did not mention many of the contentious budget revenue measures unveiled on Tuesday.

And in that speech Abbott also said “governments’ first job is not to make your life harder … Should the Coalition win the election, there will be no nasty surprises and there’ll be no lame excuses. No surprises and no excuses.”

Abbott and Hockey continued to insist their budget was not breaking promises and that its measures might not be liked, but they were needed.

“I don’t especially like the things we have had to do to clean up Labor’s debt and deficit disaster … but we have to accept the soft options that were peddled by the Labor party for three years are no longer available to the Australian people,” Abbott said during question time.

“This is the government with the intestinal fortitude to do the things the members opposite always lacked the guts to do … we have risen to the challenge of these times by delivering the budget that Australia needs.”

But according to Shorten, Abbott has delivered “a budget of broken promises built on lies”.

And state premiers continue to react with fury at the $80bn cut in their grants for hospitals and schools over the next 10 years – a strategy to force them to consider new taxes or a higher or wider-reaching goods and services tax. They have convened a meeting on Sunday, and in the case of NSW premier Mike Baird and Victorian premier Denis Napthine, called Abbott to voice their anger.

Even former prime minister John Howard criticised the budget’s cuts to the single-income family payment – family tax benefit part B – which he introduced.

Howard was generally supportive of the budget strategy, but said the family benefit cuts went “too far” and “in reality the constraining of tax benefits is in effect a tax rise for people in certain tax brackets”. Abbott said Howard had introduced the right policies for his time, but this government was facing different economic circumstances.

The measures Labor has said it will oppose raise $11.95bn for the budget over the four years of the forward estimates.

Speaking after Shorten's speech, Hockey said the Labor leader had offered not one single positive solution to the budget emergency.

"She'll be right is not a policy solution to the budget crisis Labor left," Hockey said.

Bill Shorten: 'This is a budget of broken promises' | World news | theguardian.com