Opposition Leader Tony Abbott.
Opposition Leader Tony Abbott. Chris Ison

Tony Abbott's 'blood oath' to axe carbon tax and save $5b

A COALITION government will press ahead with its promise to abolish the carbon tax, but will not remove the billions of dollars in compensation linked to the controversial policy.

Opposition Leader Tony Abbott used his budget reply speech in Canberra last night to outline a range of measures he claimed would improve the budget bottom line by $5 billion.

An Abbott government would achieve this saving:

  • by repealing Labor's increased humanitarian migration intake
  • reducing the Commonwealth public service by "at least" 12,000 through natural attrition
  • scrapping the green loans scheme
  • delaying by two years the increase in compulsory superannuation from 9-12%,
  • ceasing the low income superannuation contribution
  • and removing the twice-yearly supplementary allowance to people on benefits - both of which are linked to the mining tax, which he again vowed to repeal if elected.

"These measures alone will produce nearly $5 billion in savings which is more than enough for tax cuts without a carbon tax," Mr Abbott said.

"The carbon tax will go but no one's personal tax will go up and on one's fortnightly pension or benefit will go down."

While Mr Abbott has built his leadership on a "blood oath" to scrap the carbon tax - as his 13 mentions of the policy during the speech showed - his pledge to keep the associated tax cuts was an important shift in rhetoric four months out from the election.

In a performance that was as much an election pitch as a budget-in-reply speech, Mr Abbott criticised a number of the cost-savings measures announced by Treasurer Wayne Swan on Tuesday, including the scrapping of the baby bonus from March next year, changes to the Medicare safety net and the cuts to tertiary education to fund the Gonski reforms.

But importantly he left the door open to keeping every one of the measures, claiming Labor had created a "budget emergency".

"The Coalition may decide not to oppose any of them; doesn't commit to reverse any of them, and; reserves the options to implement all of them, in government, as short-term emergency measures to deal with the budget crisis Labor has created," he said.

"Far from cutting to the bone, we reserve the right to implement all of Labor's cuts, if needed, because it will take time to undo all of the damage this government has done."

Mr Abbott ruled out retaining any of the spending measures announced by Mr Swan on Tuesday "unless specified".

He confirmed he would not proceed with Labor's education reforms, citing a lack of support from the states and its hefty price tag.

But as expected the national disability insurance scheme would remain under a Coalition government.

Mr Abbott again vowed to have the Pacific Hwy duplication finished "well within this decade", as well as work starting on "parts" of the Bruce Hwy within a year of being elected, although he failed to put a dollar figure on the latter.

He also promised to produce white papers within two years on the issues of tax reform and COAG, with a focus on the responsibilities of different governments to ensure "the states are sovereign in their own sphere".

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