Louise Yaxley reported this story on Monday, May 12, 2014 12:10:00

ELEANOR HALL: We begin today with the revelation that tomorrow night's federal budget will see the axing, merging or privatisation of a huge number of Government agencies.



The budget will target 36 agencies on top of the 40 it has already abolished and will look to privatise several others.



The Finance Minister, Mathias Cormann, says Australia's Government is too big and wasteful.



But while its first budget may be intended to pare that down, it is already clear that the Abbott Government will face a challenge in the Senate to abolish some of those agencies.



Political correspondent Louise Yaxley begins our coverage.



LOUISE YAXLEY: The Government is planning to save about $470 million over four years. The Finance Minister, Mathias Cormann, is talking about cutting, merging or selling Government agencies.



MATHIAS CORMANN: Well, Government has become way too big and way too wasteful under the previous government.



LOUISE YAXLEY: But some of those agencies are sensitive and it won't be easy to convince the Senate to agree they should go.



There's pressure from regional areas to defend bodies like the Rural Financial Counselling Service, which helps farmers manage drought. And some sales could face a backlash.



The budget will include scoping studies for the privatisation of bodies including Hearing Australia, Defence Housing and the Royal Australian Mint.



The shadow finance minister, Penny Wong, questions the inclusion of Hearing Australia.



PENNY WONG: If you look at the things that are to be abolished or sold off, they include things like Australian Hearing with delivers services in remote Aboriginal communities. I don't know how the private sector are going to find that service, are going to be capable of replicating that service.



They're also abolishing a range of independent oversight bodies. All that means is more control and more power to Tony Abbott.



LOUISE YAXLEY: Health is in for a dramatic shake-up with a new co-payment for going to the doctor and for other Medicare services like blood tests.



The Government's also planning changes to health agencies. It's planning to put the National Preventative Health Agency and Health Workforce Australia into the Federal Health Department.



The shadow health minister, Catherine King, says she's concerned.



CATHERINE KING: There are some very good reasons those agencies, particularly in the health space, were set up in the way in which they were, particularly the Health Workforce Authority, which has been doing terrific work reversing Tony Abbott's cap on GP places, which saw literally a decade of shortages of doctors in this country.



They've been doing terrific work particularly in the space of nursing, trying to look at how we deal with workforce shortages.



LOUISE YAXLEY: Senator Cormann defends the Government's plans for health.



MATHIAS CORMANN: Our focus very much has been on building an even stronger health system to make sure that the world-class health system that we expect here in Australia continues to be affordable and sustainable into the future.



LOUISE YAXLEY: The potential abolition of the Renewable Energy Agency is already deeply contentious. Labor backbencher Kelvin Thompson is opposed to the idea:



KELVIN THOMPSON: This Government has shown outright hostility to renewable energy, which I think is foolish and short-sighted. It is in the national interest that we make a transition from fossil fuels towards renewable energy, and agencies like the Australian Renewable Energy Agency are playing an important role in achieving that transition.



LOUISE YAXLEY: The Greens were central to the creation of the agency and their deputy leader, Adam Bandt, is scathing about the planned cut.



ADAM BANDT: Well, it looks like Tony Abbott and Joe Hockey are going to take the axe to renewable energy. Lots of people are going to lose their jobs. Power bills are going to go up and Australia's chance to become a renewable energy world leader is at risk because of an ideological obsession from Tony Abbott and Joe Hockey.



LOUISE YAXLEY: The Renewable Energy Agency has a $2.5 billion budget to fund projects and research. Senator Cormann argues the Environment Department can take responsibility for renewable energy.



MATHIAS CORMANN: This is about making sure that Government is as efficient and as effective as possible.



There is a lot of overlap between existing departments of Government, whether it be the Department of the Environment when it comes to renewable energy or, indeed, the Department of Industry which has certain responsibilities in this area as well.



There have been too many agencies responsible for the same area of Government. This leads to blurred lines of accountability. It leads to uncoordinated action.



LOUISE YAXLEY: The Government is well aware this will be an unpopular budget but argues it's necessary.



Labor's not spelling out yet which measures it will try to block in the Senate until it sees the details. Instead, frontbenchers like Jason Clare are hammering the message that it will be a budget full of broken promises.



JASON CLARE: Tomorrow night will be the night of the long noses. Tomorrow night Tony Abbott will break most of the promises he made at the last election.



Tony Abbott made a lot of promises at the last election and tomorrow night I think we're going to find out that a lot of those were porky pies.



ELEANOR HALL: That's Labor's Jason Clare ending Louise Yaxley's report.