Welfare cuts: fed govt told to 'stick it'

Jennifer Rajca
AAP

Crossbench senators have told the Turnbull government to go back to the drawing board and rewrite an omnibus bill that ties an overhaul of childcare fee subsidies to a raft of welfare cuts.

"I can tell you what they can go and do with their omnibus, they can stick it where it fits," independent Jacqui Lambie said defiantly.

The Nick Xenophon team, which has three of the nine crossbench votes the government needs in the Senate, was a little less forthright.

It wants the government to explore other spending cuts to fund its $1.6 billion plan to improve childcare subsidies.

And it's not impressed the government has tried to win over cross benchers by promising to quarantine $3 billion in net savings to fund the national disability insurance scheme.

"As a negotiating tactic, this is as subtle as a sledgehammer," Senator Xenophon said.

Social Services Minister Christian Porter, who intends having further discussions with the senator, warned the list of savings in his portfolio was not endless.

Senator Xenophon has nominated defence spending as a possible target for savings.

"There is scope for there to be some sensible savings ... without in any way compromising the defence of Australia," he said.

Mr Porter said the government was not prepared to use more borrowings to fund the childcare changes.

"The main issue here is finding a way to fund a very serious $1.6 billion investment in child care which parents and families and mums are screaming out for," he said.

Mr Porter insisted "no-one is threatening the NDIS" and the government was committed to the program even though it hadn't been properly funded by Labor.

Senator Xenophon said using savings from welfare cuts to fund the NDIS was "robbing Peter to pay Paul".

He would rather see another increase in the Medicare levy to cover funding.

Cabinet minister Steve Ciobo warned there was not an endless supply of government money.

"There is no secret money tree in government," he told Sky News.

Liberal Democrat David Leyonhjelm said while Senator Xenophon wanted to give away more of other people's money he was of an opposite mind.

Senator Leyonhjelm expects Liberal-turned-independent Cory Bernardi won't support the omnibus bill if it doesn't save taxpayers' money.

"If it doesn't go into reducing the budget deficit I'm not going to vote for it," he said.

Senator Lambie said the government was being very cheeky about rolling the cuts in with the childcare changes because "they're never going to get it through".

Opposition Leader Bill Shorten dismissed as "obnoxious and abhorrent" the idea that the only way you could fund childcare improvements was to take money away from parents of older children.

"You can't rob Peter to pay Paul - this was a con job which does nothing to help families," he told reporters in Canberra.

Senator Bernardi said while the previous incarnation of the bill raised about $4 or $5 billion worth of savings the government is now putting the money into another big spending program.

"I think that is the wrong approach," he told ABC TV.

"I am reconsidering my support for it as well (as Senator Xenophon). It looks like it is dead in the water."

The Greens are expected to announce their opposition to the the omnibus bill later on Tuesday.