Budget cuts loom to fund Islamic State fight

Treasurer Joe Hockey refused to reveal the cost but today confirmed the Mid Year Economic And Fiscal Outlook would reveal how it would be paid for.

Since the May budget Tony Abbott has announced $630 million in new spending to boost resources for intelligence agencies and to improve community engagement.

The Prime Minister has also deployed 600 defence personnel and eight Super Hornet fighter-bombers, together with other resources, to the Middle East to be ready to join the battle against Islamic State in Iraq. The operation could cost around $250 million every six months.

“There have been a number of initiatives already announced which are very important such as increased funding for security,” Mr Hockey told ABC radio’s AM program.

“We need to identify the savings that help pay for those sorts of new initiatives.

“You’ll see it in the midyear update which is in December.”

But Mr Hockey denied reports he had raised the white flag on changes announced in the May budget such as re-indexing fuel excise, the $7 GP co-payment and university changes that were not supported in the Senate.

He also rejected the claim that making unemployed people aged under 30 wait six months for the dole was a bad policy.

“If you can win a battle, you take that victory, but you never give up on the war,” he said.

“We are going to continue with the principles and we are going to continue with the policies because ultimately what we are doing is right for Australia.

“We don’t give up on good policy. We don’t give up on doing what is right to address the legacy that Labor left.”

Mr Hockey said it was hugely important the budget was returned to surplus so the government could begin to pay off the debt left by the former government and stop the trajectory of debt going to $667 billion in 10 years.

“We are working through our plan,” he said.

He said the government would take what it could get through the Senate but keep pursuing the rest.

Mr Hockey said critics had said the government would not succeed in repealing the carbon and mining taxes and passing other measures, but they had been proved wrong.

Finance Minister Mathias Cormann also said “nothing is on the backburner”.

“The government remains firmly committed to all of the budget measures,” he said.

Bill Shorten warned the government not to use the increased cost of national security as an excuse for unfair budget cuts.

“That would be a dreadful mistake by the government,” the Opposition Leader told reporters.

Mr Shorten said the budget was in chaos and disarray because it is unfair.

“If you thought this budget was a shocker, you ain’t seen nothing yet,” he said.