How Joe Hockey's disastrous first budget fell apart, brick by brick

Gabrielle Chan Friday 8 May 2015 15.00 AEST

How the budget fell apart, in full

Medicare co-payments plans – modified and sidelined before fin­ally being scrapped

The 2014-15 budget plan to introduce a $7 co-payment was dropped in December. A plan to cut the rebate for some GP visits by $5 for adult non-concession patients but leave the option for doctors to recoup the $5 from patients was dumped. A plan to slash the rebate for short consultations by $20 was also binned in January. Now there is a full review of Medicare, in consultation with doctors and patient groups. Rebates remain frozen until 2018.

Paid parental leave scheme – dumped
Tony Abbott’s signature policy was dumped this year as a result of opposition within his party room and increasing leadership pressure which ultimately led an attempt to bring about a spill. The PPL scheme was originally estimated to cost $5.5bn a year, though it was only contained in the “contingency” reserve in last year’s budget.

Automotive transformation scheme savings – dumped
The government dropped its plan to axe $500m from the ATS between now and 2017. This was the fund to help component manufacturers transition as the last car manufacturers, Holden and Toyota, leave Australia by 2017. The amount of money that will actually be spent under the ATS remains a matter of contention.

Cuts to frontline community legal aid and other services – dumped
The government dumped its plan for $25m in cuts to legal aid services which affected Indigenous people and domestic violence victims, among others. It also found $230m for a two-year extension of the national partnership agreement on homelessness, which had been due to expire. Similarly, the government found $300m for a year-long extension of funding for mental health services. Alcohol and drug treatment organisations were granted a similar reprieve.

Joe Hockey’s first budget did not win over the Australian public. Photograph: Bloomberg/Bloomberg via Getty Images

The deregulation of higher education – modified then blocked and sidelined
The first in a long list of budget cuts that were blocked by the Senate but remain on the table. The 2014 budget planned to cut public funding for university courses by 20% and potentially increase loans by removing caps on the fees providers can charge. It also forced graduates to pay back student loans sooner but extended fee help to non-university courses such as diplomas and associate degrees. In negotiations, the government offered to abandon its proposal to increase the indexation of higher education loan program debts from consumer price index to the 10-year bond rate. But the Senate still blocked both versions of the bill. The government has vowed to try a third time to deregulate fees.

Changes to unemployment benefits AKA “earn or learn” – blocked and sidelined
Unemployed people under 30 would only be able to claim Newstart or Youth Allowance for six months of the year, and would have to take part in 25 hours a week of work-for-the dole programs if not studying or training. The social services minister, Scott Morrison, says he is open to alternatives.

Changes to indexation arrangements for pensions – sidelined and set to be replaced
Pension rises were to be indexed to inflation rather than a combination of inflation, the pensioner living cost index and as a percentage of average weekly male earnings. Morrison has indicated the government is preparing to scrap the cuts to pension indexation and instead will adjust wealthier retirees’ eligibility to the part-pension. Taper rates, which adjust the reduction in the full pension depending on the recipient’s assets and income, are also now in the spotlight.

Family tax benefit B cuts – modified
Government attempts to cut FTB-B to families with children under six were blocked and dumped. Labor did support cuts to the FTB-B income test from $150,000 to $100,000.

Increase in pension age to 70 – stalled
A bill to increase the pension age, announced in the 2014 budget, is stalled in the Senate.

Cutting seniors supplement – stalled
This measure cut the seniors supplement for anyone holding a commonwealth seniors health card or the veterans’ affairs gold card.

Increase in the Pharmaceutical Benefits Scheme – stalled
Patient contributions for PBS-subsidised prescriptions were set to rise by 80 centres for concessional and $5.00 for general patients above the annual indexation on 1 January 2015. The legislation remains blocked but the health minister, Sussan Ley, has just instigated a review which would remove free over-the-counter medications such as painkillers and antacids for pensioners and concession card holders under the safety net.

Capping redundancy entitlements – stalled
The Coalition planned to cap work entitlements for workers employed by companies that go into receivership. Under arrangements enacted by Labor, such workers were eligible for four weeks’ pay for each year of service. The government wanted to cap the amount at a maximum of 16 weeks, equal to four years of service.

Freeze to childcare benefit income thresholds – stalled
This measure was designed to freeze the childcare benefit income thresholds at 2014 levels for three years. After the Productivity Commission’s report, the government is considering a shakeup of childcare rebates before the budget.

Petrol excise indexation – dumped but revived by other means
Reintroduction of fuel excise indexation would have seen petrol prices rise by an estimated four cents to raise $2.2bn over four years. The Senate blocked the bill so the government introduced it by regulation. The Senate needs to tick it off later this year.

How Joe Hockey's disastrous first budget fell apart, brick by brick | Australia news | The Guardian