MARK COLVIN: Tony Abbott said this year's Federal budget would be "pretty dull and pretty routine".
But four weeks on from that statement, it's looking a lot less likely.
The crash in ore prices has hit government revenues hard.
And there's little movement in the nearly year-long Senate logjam on a number of issues that flowed from the budget last May.
Now the Government says its key child care and families package in next month’s budget will depend on other savings passing through that Senate.
The Government says it needs the stalled savings from last year's budget to help pay for the new investments in child care.
Meanwhile, the Prime Minister’s confirmed that big business won't be charged a planned levy, but also won't receive a promised tax cut.
From Canberra, Naomi Woodley reports.
NAOMI WOODLEY: The federal budget is just one month away and the Government is giving more information about the economic conditions facing the country.
Today, the Prime Minister has revealed the likely impact on government coffers of the significant drop in iron ore prices.
TONY ABBOTT: Iron ore prices have fallen from record prices of $180 a tonne three years ago, and $120 a tonne at election time, to below $50 a tonne today. Since last year's budget, collapsing iron ore prices and the consequent write down in tax receipts have already driven a cut in government revenue of more than $30 billion over four years.
NAOMI WOODLEY: He made the remarks while delivering a speech to the Australian Chamber of Commerce and Industry setting out the Government's budget strategy.
TONY ABBOTT: There will be no new spending that's not offset against savings. As well, there will be no big new spending that's not directed towards making our economy stronger.
NAOMI WOODLEY: Mr Abbott used the speech to confirm a promised 1.5 per cent cut in the corporate tax rate won't be going ahead for big businesses, but neither will a levy of the same amount, which was to pay for his now scrapped paid parental leave policy.
Small businesses will get the tax cut, and the Government's considering other measures.
TONY ABBOTT: I can confirm though that the budget will have measures to cut small businesses tax bills, in ways that will stimulate investment, boost productivity, generate new jobs and make existing jobs more secure.
NAOMI WOODLEY: The Australian Industry Group's Innes Willox says that is welcome.
INNES WILLOX: There's a lot here that the Government can do. We've been pushing for some time around faster write-off of business assets, accelerated depreciation to bring that forward to encourage investment. We've also been pushing for the instant asset write-off to be reintroduced and put to a level at about $6,000 for businesses with a turn-over of $2 million or less. So that would assist small business.
NAOMI WOODLEY: But he says they are disappointed the Coalition's election promise of a corporate tax cut for all businesses won't be delivered from this July.
INNES WILLOX: You look at some of our competitor nations, Singapore and the like, they're well down under 25 percent, the UK has a 20 percent corporate tax rate. We need to find ways to make our corporate taxes competitive; we're relatively high among OECD nations for corporate taxation.
NAOMI WOODLEY: There had been some speculation that the paid parental leave levy would be maintained to pay for one of the centrepieces of this year's budget - a childcare and families package.
But Mr Abbott says that's not the case.
TONY ABBOTT: New spending will have to be offset by responsible and fair savings. That's why our childcare initiative for families is contingent; it is contingent on the delivery of savings to pay for it. Because we can't have the spending, without the saving to make it sustainable.
NAOMI WOODLEY: And the Social Services Minister Scott Morrison made it clear that includes savings from last year's budget, that are yet to be passed by the Senate.
SCOTT MORRISON: Well there are savings existing before the Senate, I've made that very clear, and those savings will be taken forward and they need to be supported in order to ensure that we can invest in this critical area of early childhood learning and childcare. We are keen to invest more in this area, but we are keen to invest more in a targeted way.
NAOMI WOODLEY: The South Australian independent Senator Nick Xenophon says if that's a threat by the Government to the Senate - it doesn't make sense.
NICK XENOPHON: We don't know what the childcare package will be, other than that the Government has abandoned its extravagant paid parental leave scheme. If the Government is heading down the path that I think it will be, in terms of making childcare more affordable, that will in turn mean greater participation - particularly of women in the workforce - which in turn will mean increased tax receipts.
So I don't quite understand the threats the Government is making. It's as though the Government is holding a gun to the crossbenchers' heads, but if you look closely I think it's just a water pistol.
NAOMI WOODLEY: The Government says the details of the childcare package will be released before the budget.
MARK COLVIN: Naomi Woodley.
The full story...
Abbott: Childcare package contingent on other budget savings
Naomi Woodley reported this story on Wednesday, April 15, 2015 18:00:00
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