Finance Minister Mathias Cormann addresses the Sydney Institute in Sydney, Tuesday, Aug. 19, 2014.
Finance Minister Mathias Cormann addresses the Sydney Institute in Sydney, Tuesday, Aug. 19, 2014. AAP Image - Tracey Nearmy

Government threatens higher taxes if budget rejected

FINANCE Minister Mathias Cormann has warned increasing taxes might be the Coalition's only option if the Senate blocks its budget spending cuts.

He said his government must reduce the budget deficit another way if they could not garner support for them in the upper house.

Mr Cormann told ABC's Insiders that his government had laid out its plan to alter the unsustainable spending growth trajectory the country was on and challenged Opposition Leader Bill Shorten - whose party is opposing numerous budget changes - to put up an alternative.

"I don't agree we got it wrong," Mr Cormann said of his government's plan.

"(If) you don't want to balance the books by reducing spending, the only alternative to balance the books is to increase taxes."

His comments come after Prime Minister Tony Abbott told the South Australian Liberal Party annual general meeting on Saturday that his government would have to "take even tougher decisions" if it could not pass budget measures.

He is battling to secure Senate support for savings measures such as the GP co-payments, family tax benefit and university cuts, and fuel excise increases.

Among the measures that could return to the Senate this week is the mining tax repeal bill which was passed through the Senate last sittings with amendments the government would not accept.

The Senate pushed for amendments to the bill to preserve the School Kids Bonus, low income superannuation contribution and the income support bonus linked to the mining tax funds.

The defeat meant the Coalition did not have access to about $10 billion in spending linked to the tax which blows a big hold in its budget handed down in May but there are negotiations afoot for a compromise.

"We are quietly hopeful we'll get rid of this bad (mining) tax soon," Mr Cormann said.

Liberal Senator Ian Macdonald, who opposes the fuel tax increase and the GP co-payment, told ABC's breakfast program that some of the government's budget measures "need more thought". - APN Newsdesk