The government is prepared to concede defeat on some of its controversial welfare changes with a likely restructure of its social services bills, the prime minister has signalled.

The social security bills contain a slew of the government’s welfare changes, including taking unemployed people under 30 off the dole for months at a time and changing the way the pension is indexed. The bills are being debated in the Senate where a vote is likely to happen this week.

Tony Abbott said the government was flagging a restructure of the bills but it should not be seen as walking away from its policies.

“We stand by all of the budget measures. We accept that some budget measures do need to pass the Senate and we obviously want to put them to the Senate in the form which is most calculated to get passage of the relevant legislation,” Abbott told reporters.

“In flagging the possible restructuring of the social services legislation, we’re not walking away from anything, we support all of the budget measures and [while] some of them are supported by other parties, some of them are still subject to negotiation with other parties and with the crossbench. We don’t walk away from anything.”

Clive Palmer said on Tuesday the Palmer United party (PUP) was not open to negotiation on stripping under-30s of welfare for months at a time and Family First senator, Bob Day, has proposed reducing the six-month waiting period for the dole to four weeks.

Bill Shorten on Joe Hockey’s budget plans. Guardian

The treasurer foreshadowed further budget cuts to pay for Australia’s role in the fight against Islamic State (Isis) in Iraq, while declaring he would “never give up” on controversial measures that are unlikely to get through the Senate.



Joe Hockey said if the government were unable to get some of the measures – such as welfare changes, university deregulation, the Medicare $7 co-payments and indexing the fuel excise indexation – through the Senate it would just “continue with the policies”.

“If you can win a battle, you take that victory but you never give up on the war and in this case we are absolutely determined to stop the trajectory Labor left of the debt going to $667bn in 10 years,” he told ABC’s AM program.

Hockey would not put a cost on Australia’s involvement in Iraq, saying it would be revealed in the government’s mid-year economic and fiscal outlook (Myefo) in December when further cuts could be revealed.

“There have been a number of initiatives already announced which are very important, such as increased funding for security. We need to identify the savings that help to pay for those sorts of new initiatives,” he said.

“You’ll see it in the mid-year update which is in December, because we are, again, carefully and methodically going through the budget. We don’t do what Labor did, make it up along the way.”

Hockey’s fighting talk about the budget measures came after the Australian Financial Review reported the government was planning to “recast” its budget strategy without pushing some of the measures through the Senate.

Hockey called it “good policy” but would not say when other measures would be introduced to the Senate.

When asked why the government was still pursuing the unpopular $7 co-payment, he said: “We’ve always said we would negotiate with sensible people. Now if there is an inability to get a majority of the Senate we are going to continue with the principles and continue with the policies because ultimately what we are doing is right for Australia.

“Now you never give up, you never give up on what is right for the country.”

Hockey said the government had proved doubtful critics wrong on multiple occasions, citing the repeal of the mining tax and carbon tax and its asylum-seeker boats policy.

When asked about specific measures, such as university deregulation, and the fuel excise indexation, Hockey spoke strongly in favour of both but could not say when they would be introduced to the Senate.

“We are working through every single one, we don’t give up on good policy,” he said.

The opposition has warned against using the cost of the national security initiatives to push through budget cuts in areas such as welfare.

The shadow treasurer, Chris Bowen, said: “The Myefo I would expect, would reflect, government decisions and initiatives based on national security and defence deployment. That would be the standard practice and Myefo would be the opportunity for the government to update the people and the parliament of the impact of those decisions.”

“But they should not use it as an excuse for further and deeper cuts.”