Federal Treasurer Joe Hockey says politicians and senior public servants will have their pay frozen to contribute to the repair of the federal budget, while a rise in the fuel excise will help pay for an ambitious infrastructure package.
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He has insisted the government has not broken its “no new taxes” pre-election promise and said he would not play "word games" over the pledge, despite expectations that a raft of new taxes and charges will be imposed in the budget including a deficit levy on high income earners, a rise in petrol excise and the introduction of a GP co-payment.
Mr Hockey labelled his first budget, to be handed down on Tuesday, a “contribute and build” budget that would ask Australians to do their part to ensure the welfare and prosperity of the nation.
“I don't accept that we are breaking promises. I don't. Because what you will see on Tuesday night is that taxes will be lower under the Coalition than they would have been if Labor were re-elected. Now, that is a very significant commitment we made and we are sticking to it.
“Don't assume they are new taxes. We never said we will never change a tax, or alter a tax ... in fact we were left with 92 announced but unlegislated tax changes by Labor which we have been methodically going through, and we have been getting rid of the ones that are simply unimplementable,’’ he told the Nine Network.
The pay freeze could cost Prime Minister Tony Abbott, who earns an annual salary of $500,000, an estimated $10,000 a year and up to $16,000 a year with the impact of his proposed deficit tax factored in.
Mr Hockey said that, in total, the budget would detail in excess of $40 billion in federal government spending on roads over the next six years - and this would spur an additional $42 billion in state government and private sector spending.
Fairfax Media revealed on Thursday that a $10 billion package of infrastructure would help form the centrepiece of the budget on Tuesday, and that it would build on a $35.5 billion package announced in February by the government that adopted many of Labor’s infrastructure plans while also re-prioritising some projects and adding in new projects that had been election promises.
The infrastructure money will include about $5 billion allocated to a fund that will be linked to Mr Hockey's "asset recycling" plan, that offers state government an incentive to sell off assets, while another $5 billion will be used to fast track projects including the WestConnex in Sydney and the East West link in Melbourne.
Mr Hockey said the money raised from the twice yearly rise in fuel excise would help pay for that new roads package.
"If we are going to make any changes to fuel excise it will go into roads and we are laying out a plan for the biggest increase in road expenditure in Australian history,'' he said.
“Over the next six years the Australian government, in partnership with the states and private sector is going to spend over $80 billion on new road construction. That is tens of thousands of new jobs," he said.
But opposition leader Bill Shorten said the government should be able to fund roads without asking people to pay a "petrol tax".
"John Howard was the one who created this so-called emergency ... he scrapped increasing the fuel excise. What Labor stands for, we think you should be able to run the government of Australia without stinging millions of Australians with a new petrol tax,'' Mr Shorten said.
Mr Shorten said the "petrol tax" and the "GP tax" - the most likely imposition of a $7 co-payments for doctor visits - were bad ideas and clear broken promises.
Opposition treasury spokesman Chris Bowen indicated Labor would not stand in the way of a freeze on politicians' pay, but Mr Bowen took the government to task for the looming cuts in Tuesday's budget and argued they went "way beyond a broken promise".
“How many times did Tony Abbott say no new taxes? Joe Hockey said it himself. It's quite pathetic,’’ he told the ABC.
Mr Hockey brushed aside suggestions the pay freeze, under which the government will order the Remuneration Tribunal to freeze salaries for a year and cost a backbench MP an estimated $2000 pay rise, was a populist move such as that taken by former prime minister Kevin Rudd in his first budget.
“Whatever we are asking the electorate to contribute to the budget repair task, we are going to contribute ourselves as well. I think that's an important message to send,’’ he told the Nine Network.
Mr Hockey said the budget would never have returned to surplus under the settings left in place by the previous Labor government but that he would lay out a clear path to a 1 per cent surplus, as a percentage of GDP, by 2023-24.
“I inherited a rising unemployment rate to 6.25 per cent. We are going to do everything we can to make sure we never get there."
