Budget surplus under attack in the Senate

The Federal government is insisting that the Coalition’s plans to block tax measures, worth $6.2 billion in the Senate could put interest rates cuts at risk.

The  opposition, though, argues that this is nonsense, as the government is looking at budget surpluses worth a total of some $96 billion, over the next three financial years.

The argument was pursued, with some heat, in the Senate yesterday.

Senator Stephen Conroy, who represents the Treasurer in the upper house, described the Coalition’s stand as “unconscionable” in view of the present turmoil on world markets.

But the opposition pressed its argument that the government is trying to curb inflation by raising taxes.

It is opposing the so-called alcopops tax, measures to increase the luxury car tax and the imposition of an excise on condensate.

Senator Conroy lectured the opposition, as question time opened.

“It is the total size of the budget surplus that matters,” he said.

The government is budgeting for a $22 billion surplus this financial year.

Conroy said the Reserve Bank, which has signalled that rate cuts are likely, might well review its thinking, if a “massive hole” was blasted in the budget surplus.

A clutch of Greens and independents now holds the balance of power in the senate.