Handouts to car industry stay
The Abbott Government has dumped yet another key Budget policy amid grumbling among ministers and backbenchers about a lack of consultation and confusion about the cost of the U-turn.
The Government yesterday reversed its decision to stop handouts to the car industry because of fears that Toyota and Holden would join Ford in bringing forward closure of their plants to next year, leaving tens of thousands out of work in an election year.
Industry Minister Ian Macfarlane said retention of industry support would result in "hundreds of millions of dollars" ploughed back into the automotive sector.
But senior Government sources said the reversal would cost only about $100 million of a possible $500 million available under the scheme until 2017, because of falling car production.
Tony Abbott, whose Government trails Labor 45-55, two-party preferred in the latest News- poll, defended the decision of not going to Cabinet, saying it was ticked off by the Budget razor gang. "The decision not to proceed with the legislation is the sort of decision which does not necessarily go to Cabinet," the Prime Minister said.
The backdown on car industry subsidies has emboldened backbenchers agitating for Mr Abbott to dump a plan to save almost $23 billion by lowering pension indexation.
Liberal MP Warren Entsch has joined fellow Queenslander Andrew Laming in demanding the issue be revisited, warning it had allowed "fertile ground for the Labor Party to go right off the Richter scale".
Coalition MPs want Social Services Minister Scott Morrison to reconfigure the coalition pensions policy as part of a wider review of retirement income adequacy.
In recent days, Mr Abbott and Treasurer Joe Hockey have floated the idea of allowing young people to dip into their super to buy their first home.
Mr Abbott was press secretary to former Liberal leader John Hewson in 1991 when the coalition proposed a near-identical plan for under-35 first-homebuyers.
Former Labor prime minister Paul Keating said this idea would destroy "one of the best retirement systems in the world". Finance Minister Mathias Cormann is also opposed to the plan because it would drive up house prices and reduce retirement savings.
Opposition Leader Bill Shorten said a 25-year-old average wage earner's retirement nest egg would be about $100,000 smaller by 2055 because of the Abbott Government's seven-year freeze on lifting the superannuation guarantee to 12 per cent and the coalition's scrapping of the low-income super- annuation contribution.
"The Liberals' attack on Australia's world-class compulsory superannuation scheme will undermine retirement savings by nearly one trillion dollars and put greater pressure on the age pension," Mr Shorten will say in a speech today.
Labor's modelling shows freezing the superannuation guarantee and dumping the low-income superannuation contribution will make the national savings pool $983 million worse off by 2055.
'(It) is the sort of decision which does not necessarily go to Cabinet.' "Prime Minister *Tony Abbott *
