SENIOR Liberals say the federal government is braced for a voter backlash after the scale of budget cuts and broken promises are known.
The prediction is fuelling a febrile mood on the Coalition backbench and suggests the nation is in for a harsh budget to drive the balance sheet back to the black more quickly than previously indicated — perhaps within as little as four years.
Business leaders say anything longer than that would cause some to conclude the government lacked the “spine” to match its strong rhetoric.
“They’ve talked the talk, they sure as hell better walk the walk as well,” one said.
There is speculation thousands of apprentices will lose staged federal incentive payments of $5500 in total as the government argues a recent pay rise and its $20,000 interest-free loans provide enough help.
Fairfax also believes the government will raise the interest rate on student loans to offset higher education spending.
The National Commission of Audit recommended interest on student loans incorporate the government borrowing rate, as well as the cost of bad debts and administration. Bureaucrats have long pushed for the change, but it has been judged politically risky because of equity concerns. Higher interest rates would disproportionately affect women graduates who take time off work to have children.
Universities fees are also expected to be deregulated and federal support extended to for-profit colleges and sub-bachelor degrees. Despite the budget being painted as a harsh one, overall funding for education will rise and funding for key research maintained.
Among the other features are a deficit tax on high-income earners, the abolition or merging of up to 70 agencies, delayed pension eligibility until 70, GP co-payments, cuts to family payments, harsher rules for the dole and disability support pension, and a year’s freeze on MPs’ pay.
Liberal Party federal director, Brian Loughnane, is known to have told business representatives the government would take a hit from voters but the budget would also unveil several positive measures.
Mr Abbott has predicted voters would come to thank the government for the decisions as the nation’s finances improve.
While several Coalition MPs have expressed deep concern over the decision to break election promises by lifting petrol excise, bringing in $7-a-visit Medicare co-payment, and raising the top marginal income tax bracket, most remain resolute, knowing an election is still more than two years away.
Cabinet and the Coalition joint party room will discuss the budget today — an opportunity to express frustrations before it is tabled at 7.30pm, but too late to make changes.
A minister said, despite the leaks, there would still be a few surprises.