Coalition’s about face on one-off payment prompts Labor to declare the budget is already ‘falling apart’

The Morrison government’s big post-budget sell has been disrupted by its own late-night decision to backflip on providing a one-off payment to recipients of Newstart.

The government used Tuesday night’s budget to provide supplements to welfare recipients, with $75 for singles and $125 for couples going to 2.4 million pensioners, 744,000 disability pensioners, 280,000 carers, 242,000 single parents and 225,000 veterans and their dependents – but not to people on unemployment benefits.

Government ministers argued in the run-up to the budget that people on Newstart should not get the additional help because unemployment benefits are transitory payments, not long-term support.

But with that stance generating political uproar, after a meeting late on budget night between Scott Morrison, Josh Frydenberg and Mathias Cormann, the government suddenly flipped. The backflip was telegraphed by the government during the traditional post-budget media blitz on Wednesday morning, prompting Labor to declare the budget was already “falling apart”.

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The Labor leader, Bill Shorten, said the government had “caved in to Labor pressure and backflipped on energy payments for thousands of vulnerable Australians, blowing an $80m black hole in the budget”.

During his post-budget address on Wednesday, Frydenberg confirmed the about-face would cost the budget $80m because the government intended to get the supplements out to recipients before the end of the financial year. He said the payment acknowledged that people were facing cost-of-living pressures, including high energy costs.

Asked why he had spent days arguing extending the one-off payment was inappropriate, then had abruptly agreed to hand out the payment on the morning after budget day, the treasurer said: “I think it’s very important that we alleviate some of these cost-of-living pressures, and we were focused on putting this additional $80m to work”.

“This will secure the passage of a piece of legislation through the parliament, and that is important as well, because we want it to be in people’s pockets before the end of this financial year,” the treasurer said. “That’s our commitment. There is no excuse not to pass it.”

Frydenberg confirmed people on Newstart would get the payment whether they were on the unemployment benefit for days or months. “If you’re on Newstart, you get the payment, it’s as simple as that, and the same applies, whether you’re on the disability support pension, whether you’re on the carer’s payment, whether you’re on the aged pension, whether you’re on certain veterans’ payments.

“They are the various payments that are now subject to this additional $75 per individual.”

The government didn’t include Newstart in the original proposal because it repeated a one-off payment made in 2018 under a deal with the former South Australian senator Nick Xenophon in Tuesday night’s budget.

With the parliament now gearing up for its final sitting day before the federal election, Labor made the backflip the focus of its question time attack.Shorten will deliver his budget reply speech on Thursday night, and the expectation is the government will call the election at the weekend.

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The shadow treasurer, Chris Bowen, declared during question time the shift on Newstart had followed “crisis talks” at the highest levels of the government. “Does this not confirm after six years of cuts and chaos the budget is a con job that is falling apart before our eyes?” Bowen said.

Frydenberg attempted to repel Labor’s attack by declaring the budget had pointed to a surplus for the first time since the global financial crisis. “What I can confirm to the House is that we announced a surplus. The last time the Labor party delivered a surplus I had a mullet.”

The Australian Council of Social Service and the Business Council of Australia continued their long-running calls for both sides of politics to commit to raising Newstart, rather than hand out one-off payments.

The BCA’s chief executive, Jennifer Westacott, told the ABC she was “bewildered” by the lack of commitment from both the Coalition and Labor to boosting unemployment benefits.

“Labor says we’re going to review it. Well, what are you going to review? I mean, seriously, I mean, you know, it’s so demonstrably unfair,” Westacott said.