Australia's conservative coalition government delivers tough budget

Australia's conservative coalition government on Tuesday delivered a tough 2014-15 budget, highlighted by spending cuts, tax increases and substantial public sector job losses.

Australians will pay more for their car fuel, to visit the doctor and for prescriptions, while those born after 1965 now face working until they are 70 before becoming eligible for the aged pension. Unemployment, disability and family tax benefits have all been tightened in an effort to reduce the deficit to 30 billion AU dollars (28 billion U.S. dollars) in 2014-15.

Prime Minister Tony Abbott had billed his government's first budget since being elected last September as "pain with a purpose" and his treasurer Joe Hockey duly delivered an uncompromising package of measures designed to bring the budget back into the black.

Hockey said the previous Labor government had run up five successive deficits, which had left 123 billion (115 billion U.S. dollars) in deficits and debt rising to 667 billion (624 billion U. S. dollars).

"The days of borrow and spend must come to an end," Hockey said in his budget speech to parliament.

But there were some sweeteners -- a 10 billion dollar (9.35 billion U.S. dollar) infrastructure package for major projects and a 20 billion (18.7 billion U.S. dollar) Medical Research Future Fund that would become "the biggest medical research endowment fund in the world" within six years, Hockey said.

A co-payment of 7 AU dollars (6.5 U.S. dollars) for visiting a General Practitioner (GP) or having a blood test or an X-ray will mean the end of free bulk-billed services, though the co-payment will help finance the new research fund.

Hockey emphasized the need for all Australians to share the pain, with high-income earners -- those earning 180,000 AU dollars (168,000 U.S. dollars) or more -- to pay a Temporary Budget Repair Levy of two percent on their salaries for the next three years.

"The age of entitlement is over," Hockey said, "It has to be replaced, not with an age of austerity, but with an age of opportunity."

The elderly have not been spared from the government's belt tightening. Pension rises will be indexed to inflation rather than a combination of inflation, the pensioner living cost index and as a percentage of average weekly male earnings, and there will be a tougher income test for self-funded retirees to receive Commonwealth Seniors Health Card.

The coalition has sought to make big savings by severely reducing the size of government, abolishing a range of industry assistance programs that will reportedly save 845 million (790 million U.S. dollars).

About 16,000 federal government jobs will be slashed over the next three years as more than 70 government bodies are amalgamated, abolished, or privatized, including the Royal Australian Mint. Some 3,000 jobs will go at the Australian Taxation Office alone.

Major changes to higher education include the deregulation of university fees and plans to cut public funding for university courses by 20 percent. Asking graduates to pay back their Higher Education Loan Program (Help) sooner will bring estimated savings of 3.2 billion dollars (3 billion U.S. dollars) in savings over four years.

But the government will extend Commonwealth Grant Scheme subsidies to higher education courses at the diploma, advanced diploma and associate degree level and will make funding available for courses provided by non-university providers, including private colleges.

Australia's security arrangements are also set for a shake-up, with the responsibilities of customs and immigration combined under the banner of the new Australian Border Force at a cost of 480 million dollars (449 million U.S. dollars) and 480 jobs.

On the environment, the government has committed 2.55 billion dollars (2.38 billion U.S. dollars) over the next 10 years for the Emissions Reduction Fund, but will cut at least 2 billion dollars (1.8 billion U.S. dollars) in other programs and scrap environmental agencies, such as the National Water Commission and the Australian Renewable Energy Agency. The government has committed to planting 20 million new trees and funding a Green Army of young people to tackle local environmental issues.

Other highlights of the budget included: a fuel tax excise will be reintroduced, adding between 2.5 cents and 3 cents a liter to the price of petrol; company tax rates will be reduced by 1.5 percentage points to 28.5 percent from July 2015.

Defense spending will rise, with 1.5 billion dollars (1.4 billion U.S. dollars) allocated for new hardware, but 1,200 civilian defense jobs will go.

The government will cut hospital funding to the states and territories; foreign aid will be frozen for two years, helping save 7.6 billion dollars (7.1 billion U.S. dollars) over five years; more than half a billion dollars is projected to be saved over five years by rationalizing indigenous services and transferring more than 150 programs into just five.