Treasurer threatens tax hike if $13b welfare cuts blocked by Senate

Treasurer Scott Morrison has threatened to increase taxes if a raft of welfare cuts, worth $13 billion, is blocked by the Senate.

Morrison argued if the Senate did not pass the savings measures he would either increase debt or increase taxes.

The government expected to generate $5.6 billion in savings through its welfare omnibus bill, which appears certain to fail, earmarking $1.6 billion for childcare fee subsidies and the remaining $4 billion for the National Disability Insurance Scheme.

News Corp reported on Wednesday that 86 per cent of personal income tax was funding special security benefits, with predictions this would increase.

In the lead-up to May’s Budget, the treasurer argued it was irresponsible for Labor and the crossbench to block savings when credit agencies already "put us on notice".

"If you don't fund it (the NDIS) by getting welfare under control, you've got two other options, increase taxes or increase debt," Mr Morrison told News Corp.

Labor, the Greens, the Nick Xenophon Team and Jacqui Lambie have all signalled they will reject the bill, leaving only One Nation in favour.

The treasurer said price fluctuations meant the government could not rely on a spike in iron ore revenues to bankroll spending and achieve structural change.

"If the parliament is going to insist that the government spend more and more money, particularly on welfare, then someone has to pay for that." he told Sky News Business on Tuesday.

There were only two options to do so, and finding savings was the government's first preference.

"But if you don't do that, you've either got to have higher debt - which is a tax on your children - or you have to do it with other revenue measures."

Opposition Leader Bill Shorten described the government's support for the NDIS as lukewarm, and he nominated a simple solution to its budget problem.

"Don't go ahead with $50 billion of corporate tax cuts," he told ABC radio.

"What the government says is increase the taxes on ordinary people or they take away payments from people who are less well off."

Mr Shorten queried why a planned cut in the company tax rate over 10 years was "sacred... off limits" but the rest of Australia had to pay more or lose more.

Deputy Prime Minister Barnaby Joyce said recurring expenditure like social welfare couldn't be put on the government credit card year in, year out.

"The nation can't do that otherwise your credit card gets bigger and bigger and more and more in debt," he told reporters in Canberra.

"In the end the people who lend you the money for the credit card say 'that'll do us'."

If nothing was done, eventually the country wouldn't be able to afford education or health systems, Mr Joyce said.

Today's top news stories - February 15