Budget to hit regional and rural Australians

AS the details of the full impacts of the Abbott government's first budget continue to be revealed, rural and regional Australians, especially those on lower incomes, can expect to feel it in their hip-pockets.

The budget task - to put the Commonwealth's finances on a path to surplus by 2023-24 - has been revealed as having major impacts on low and middle-income earners across the spectrum.

And despite Treasurer Joe Hockey's pre-budget promises of ensuring the burden of the task will be shared across society, the details and post-budget analysis show otherwise.

Out selling the budget in one of the government's toughest weeks since the September election, Mr Abbott said on Wednesday he would continue to explain the necessity of cutting spending.

The message sold to the people has been one of limited austerity, ending the "age of entitlement", and selflessness, partly based on the controversial (and much tougher) National Commission of Audit.

But that audit specifically ruled out looking at key measures which could have helped share the burden, including the revenue side of the government's books and tax breaks for some of the nation's wealthiest.

Analysis by the Australian Council of Social Services released on Thursday showed 52% of the "budget burden" would be borne by low income earners.

Overall, the budget laid out savings of $37 billion, $19 billion of which is borne by cuts in the growth of welfare payments and other measures for lower income earners.

The cuts that may hit higher income earners, the ACOSS analysis showed, was just $5.7 billion of the total $37 billion in savings measures - or 15% of the "budget burden".

Much of the welfare savings would come from realigning growth in pensions to a lower index system (average earnings), rather than actual inflation felt in the nation's economy.

Across middle income Australia, the changes to the Family Tax benefits will squeeze those with children over the longer term - in a bid to get married mothers working earlier - although some extra payments were included for single parents.

While key areas of high unemployment on the New South Wales north coast, central and southern Queensland and out west in the Sunshine State, can expect the brunt of tough new changes to welfare for young unemployed.

Key cuts and new taxes in health, including the $7 GP co-payment, originally proposed to help bring the budget back to surplus, will instead go to creating an eventual $20 billion medical research fund.

That fund, Mr Hockey said on budget night, would create the largest pool of government funds for medical research on the globe, partly paid for through the new fees for up to 10 GP visits a year for most Australians.

This payment, the National Rural Health Alliance and Rural Doctors Association of Australia say, has already started to see a drop in appointment bookings around the country.

RDAA chief executive Jenny Johnson said on Thursday it would hit rural Australians harder, with further to travel for appointments; despite those in regional areas commonly visiting their GPs less than city residents.

Another key hit to regional Australians in the long-term will be the reintroduction of fuel excise increases - frozen in 2001 by then-Prime Minister John Howard.

This will go up twice a year in line with inflation from August this year; a tax increase that Labor says is a "broken promise", and one that has raised the private ire of many regional Coalition MPs.

The trade-off in budget negotiations for the rise will be that the fuel excise rebate - largely used by farmers and miners - will also rise in line with the fuel tax, ensuring regional businesses on the land will not pay more for fuel consumed off-road.

But some of the most contentious changes are yet to be felt, including an $80 billion cut to schools and hospitals funding from state and territory governments, and almost $1 billion stripped from key payments to local councils.

These changes sparked a war council of state Premiers in Sydney last weekend, calling on Mr Abbott to abandon the cuts; but the states have gone quiet this week as talks begin on how to rectify the situation.

While Mr Abbott has said the cuts to state governments were not a move to increase the GST, state Premiers have two main options: to push for a share of income tax, or a rise or broadening of the GST base.

Closer to the people, councils have been hamstrung by the $1 billion in cuts to rises in financial assistance grants, forcing local government to plead with states for more funding, or look at increasing council rates to help pay for local infrastructure and services.

These key changes will most likely have a bigger impact in regional councils where a lack of a big ratepayer base sees residents paying a larger share for maintenance and to fund new projects.

The full impacts of other changes, such as the deregulation of university fees, are yet to be seen; being laid out over the next four years (or longer) or left to the market to decide how much voters will pay.

But with protests in city streets, concern in council and state government offices, and pensioners, welfare recipients and everyday Australians counting the cost; the government's budget sales pitch has been crucially undermined by both the scale and depth of the savings measures.

The government will now turn to other politicians in its bid to get most of the measures passed - with the most significant budget savings dependent on a healthy hearing in the Senate.

As the Senate focuses on budget estimates next week, with all parties aiming to get even more details, the government will be in Canberra, deciding what concessions to make to key cross-benchers to help pass its toughest measures.

But with Labor, The Greens and the Palmer United Party railing against the majority of the savings-needed legislation; the road ahead for the Abbott government agenda remains tough.



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