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Posted: 2015-05-29 19:32:15

Senate blockades will add $101 billion to federal deficits over the next decade unless deals are done to legislate Tony Abbott’s most unpopular reforms, according to figures suggesting the nation’s ­finances may never get to surplus.

The budget will have one or two years of surplus at the most before plunging back into perpetual deficit without successful negotiations in the Senate to pass almost 30 measures in limbo in the upper house.

New findings by the Parliamentary Budget Office show the blocked measures will save only $3.2bn, or 0.2 per cent of economic output, in the year ahead, but that this will rise to $8.8bn, or 0.5 per cent, within five years.

The government is assuming a surplus of 0.7 per cent of gross domestic product in 2022 before it starts to slip lower, which means the halt to the savings proposals could wipe out the surpluses.

The PBO, which is independent of the government, calculated the long-term savings from almost 30 measures stuck in the Senate and already included in the budget forecasts. The budget ­assumes all the changes are legislated, but Labor, the Greens, and crossbench senators have vowed to block most of them.

Greens leader Richard Di ­Natale repeated yesterday that he was willing to consider supporting the increase in fuel excise - which would raise $22.7bn over a decade - but not if the money went into road-building and therefore increased pollution.

Social Services Minister Scott Morrison has met crossbench senators to negotiate his new childcare funding plans, but Labor and the Greens are adamant they will not accept cuts to family tax benefits to pay for the new childcare scheme.

The PBO analysis shows the halt to Family Tax Benefit Part B when a household’s youngest child turns six would save $17.2bn over the decade. Other changes to family tax benefits that are stuck in the Senate would save a further $15.9bn.

Treasurer Joe Hockey has ­argued for long-term structural savings in the budget to repair the nation’s ­finances but has faced ­attacks from Labor over the government’s shifting rhetoric on whether there is a “budget emergency” that needs urgent action.

“We will make sensible savings and work with the parliament to ensure we live within our means,” a spokeswoman for the Treasurer said.

Policy decisions in this year’s budget added $9.3bn to the deficits over the next four years, the budget papers show, as the government outlined new spending on childcare while also offering a tax cut to small business.

Labor Treasury spokesman Chris Bowen said the PBO analysis showed that Mr Hockey’s ­return to surplus was a “house of cards” loaded with unfair measures that would not pass parliament.

“The Treasurer has clearly failed to fully offset new spending in breach of their ‘budget repair’ strategy,” Mr Bowen said.

“So much for the Prime Minister’s feigned indignation over Labor’s modest proposals to ­reduce super tax concessions for high-income earners, as the data shows that Tony Abbott will slug Australian motorists an additional $23bn over the next 10 years as part of his petrol tax hike.”

This article first appeared in The Australian Business Review

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