Australian Prime Minister Tony Abbott gestures as he gives a speech on a business event at the Shanghai International Expo Centre in Shanghai, April 11, 2014. REUTERS/Stringer
Australian Treasurer Joe Hockey presented on Tuesday night the Coalition's first budget, acknowledging the document would be hugely unpopular among Aussies.
Under the budget for 2014/15, the federal government projects total revenue to reach $385.5 billion, but it would not be enough and the Abbott-led government is forecasting a $29.8 billion deficit, expected to shrink to $17.1 billion and $10.6 billion in the next two years from the current $50 billion deficit.
To reduce the deficit, Hockey confirmed what has been speculated the past two weeks - the introduction of a deficit levy for Australians earning over $180,000 a year. The 2% levy expects to raise $3.1 billion. Prime Minister Tony Abbott has previously promised it would be a temporary measure.
It has other measure that Hockey acknowledges would be painful on the hip pockets of citizens, but which they must endure in the national interest. These include a fuel excise that will increase the price of fuel by up to 3 cents a liter, a $7 co-payment for visits to the doctor and job losses of 16,000 in the public sector.
It also raised the pension eligibility age to 70 beginning 2035. To ensure that older workers remain in the work force until that time, there would be subsidies of up to $10,000 for two years for companies that hire people over 50 years old.
Most of these measures caused the popularity of the Coalition to dip drastically ahead of the budget release since voters viewed them as a break to the then Opposition's campaign promise not to raise taxes.
But Hockey pointed to the Labor-led previous government as the culprit for the anticipated wide budget deficit, saying, "The challenge is not of our making, but we ... accept responsibility to fix it."
Labor used the opportunity to get back at the Coalition by calling the budget a document of "broken promises, cruel cuts and unfair increases in the cost of living."
Treasury spokesman Chris Bowen pointed to the $80-billion cut to education and health as hitting Aussie families. He said, "Labor understands that in challenging times, budges need tough choices. But these are the wrong choices for our future."
He squarely blamed Mr Abbott for breaking his election promise which "Australians will now pay the price."
Likewise, Greens leader Christine Milne criticised the budget as divisive, brutal and backward-looking, stressing, "There is no vision for the future of the country. Suggesting that you are looking after the next generation, when you are ignoring climate change, when you're directing infrastructure funding into roads instead of public transport, instead of the NBN, instead of renewable energy sector."
On Wednesday morning, Mr Abbott defended the budget as "fundamentally honest." He promised the government would not cook the books or make a series of rosy assumptions.
But he is aware some Aussies would be disappointed and will feel betrayed by the Abbott government, which is exactly what one female pensioner felt and expressed her indignation over the change in pension age. She told the PM, "If we pull the belt any tighter we're going to choke to death."