Deloitte Access Economics has detailed the cost to tax payers from the senate gridlock of key measures in the Federal Budget. They estimate the delay in scrapping the mining tax and the carbon tax could indebt the nation a further $300 billion by 2025. The interest alone would exceed $48 billion over the decade.

The Senate has vigorously opposed many of the government’s proposed key savings from the federal budget; most notably changes to pension, introduction of medical co-payments, and a reduction of family tax benefit eligibility.

Different parties oppose different areas of the budget reforms and are supporting one another in their respective opposition. Every day they prevail sinks the Australian economy further into uncertainty and encumbers businesses and constituents alike with unpopular, unwanted taxes.

Opponents of the government want their cake and to eat it too: They want the taxes repealed but the services and policies they support to remain. So the government is left with the unenviable task of either finding other ways to fund these services and policies or keep those unpopular taxes – taxes they were elected to abolish.

Chris Richardson from Deloitte Access Economics. Photo: www.deloitte.com

Chris Richardson from Deloitte Access Economics. Photo: www.deloitte.com

So while opposition to tax repeal may have laudable intentions the cost of obstruction is mounting. The Deloitte Access Economics model shows that the cost of this squabbling is leading to long term economic damage.

So far the senate has blocked: Proposals to toughen the eligibility to the Newstart program, the fuel excise indexation, the medical co-payment scheme, indexing of pensions to the cost of living, reforms to higher education (including interest on student debts), and reductions to the Family Tax Benefits scheme.

It has opposed these measures because the associated parties insist on keeping: the seniors supplement, the school kids bonus and the Low income superannuation contribution.

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