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.

The Weekend Australian has obtained a letter sent from the Employment Department’s deputy secretary Jennifer Taylor to job providers which outlines how the tough new rules will work, including the possibility that those who miss an appointment may not have their payments backpaid when they start attending appointments again.

In an unprecedented move that is alarming job agencies, the new rules strip Centrelink of the power to make decisions and give job agencies unprecedented powers.

Under the changes, the allowance for “reasonable excuses” for not attending appointments will be changed to “extreme” reasons.

Welfare groups and job agencies will urge Labor, the Greens and crossbenchers to disallow the legislative instrument that is already before parliament to toughen the “reasonable excuse” provisions.

The previous Labor government sought to change the “reasonable excuse” rules in 2011, but was forced to back down. Groups including the Australian Council of Social Service and Welfare Rights will on Monday tell a Senate inquiry they will fiercely oppose the changes.

The instrument before the parliament provides examples of what would no longer count as a reasonable excuse for not going to appointments.

It says a person who was “subject to an assault a week before their failure would not have a reasonable excuse” because it would not “directly prevent them from meeting their requirement (unless they were still incapacitated as a consequence of the assault)”.

“However, if the assault had occurred the day before their failure, they may still be sufficiently traumatised by the incident to prevent them from complying,” it says.

Under the changes, illnesses must directly affect a person’s ability to attend an appointment, so people will no longer be able to say that an ongoing mental illness was the reason for missing appointments, for instance.

The changes come on top of a suite of welfare reforms that include taking unemployed people under 30 off the dole for six months at a time if they are not in work or studying, and requiring the jobless to apply for 40 jobs a month.

Assistant Employment Minister Luke Hartsuyker said he was committed to ensuring jobseekers did the “right thing” and met their mutual obligation requirements, such as attending scheduled appointments with their employment service provider.

“Most jobseekers do the right thing,” Mr Hartsuyker said. “Unfortunately there are some jobseekers who are intent on flouting the rules.

“Missed appointments are a significant waste of taxpayers’ money and employment service provider resources. The government’s changes will provide a stronger incentive for people to do the right thing.”

The letter sent to job agencies reveals that a new “streamlined non-attendance reporting process” will be introduced to replace the “current complex connection failure and contact request process”.

All jobseekers, including those with a “vulnerability indicator”, including homeless people, will have their income support payment immediately suspended if their provider decided to report the non-attendance to the Department of Human Services.

The “reasonable excuses” jobseekers can use will be tightened from July 1 next year.

“The government considers jobseekers need to be proactive in meeting their requirements and informing their provider beforehand when they are unable to do so and held responsible when they fail to meet their requirements,” the letter says.

Providers will decide whether to deny people back payment if they fail to attend an interview, even if they attend the rescheduled meeting. Under current rules, backpay of suspended payments is automatic if people attend a rescheduled appointment, with the rules focused on re-engaging the jobseeker rather than punishment.

The letter says the government is “serious about reducing red tape for employment services providers” and expects that the significant reduction in time associated with the changes for reporting non-attendance at provider appointments will more than offset the additional responsibility placed on providers to book new appointments (from September) and make determinations on their excuses (from January).

Maree O’Halloran from the National Welfare Rights Network said that if the changes went ahead, they would mean increased financial hardship for people living on $36 a day and more red tape for thousands of employment service providers.

“If employment providers assume responsibility for decisions to deny income support payments for people missing regular appointments we fear that this will fundamentally alter the nature of their relationship with jobseekers,” Ms O’Halloran said.

“Under these reforms, employment providers will be required to become instant experts on complex social security rules.

“This is unlikely and unrealistic.”

Jobs Australia chief executive David Thompson said the changes were unprecedented.

“It represents a significant shift of responsibility from government to contracted providers and is a matter of very grave concern to mission and values centred non-profit services from a moral point of view,” Mr Thompson said.

“On a practical level it will make it hard to establish effective helping relationships with the unemployed because job agencies will become the enforcer. This is quite unprecedented.”