Budget 2014: Politicians face pay freeze; Joe Hockey says everyone must contribute

Updated

The Federal Government says it will freeze the pay of politicians and top public servants as it continues to push its message that all Australians must contribute to the budget repair.

Treasurer Joe Hockey said the Prime Minister will be writing to the independent remuneration tribunal to ask it to consider the Government's request for a pay freeze.

It would mean that from July 1, MPs will miss out on a 2.4 per cent pay increase, costing the average backbencher an estimated $3,900.

For Prime Minister Tony Abbott, who earns about $500,000, the pay freeze could cost him an estimated $10,000.

A decision is expected tomorrow - and it is likely the pay freeze will be granted.

Treasurer Joe Hockey told Channel 9 everyone must help to balance the budget, including politicians.

"I think we have got to send a clear message to the electorate that whatever we are asking the electorate to contribute to the budget repair task, we are going to contribute ourselves as well," he said.

Mr Hockey said he expected the tribunal would agree to the request "in due course".

Departmental secretaries and other public servants will also be affected and the pay freeze will also apply to the pensions and superannuation of former parliamentarians.

The move comes after a salary hike last year described as a "catch-up" by the tribunal.

Government frontbencher Jamie Briggs told Sky News that politicians have to make sacrifices along with the rest of the community.

"Well this is not about any of us, it's about the future of our country, but we need to share the burden obviously as well," he said.

Labor's shadow treasurer Chris Bowen said the Opposition will not stand in the way of the move.

"Our energy will be used defending the conditions of average Australians," he said.

"If [Mr Abbott] wants to engage in a wage freeze for politicians and has the agreement of the remuneration tribunal it's something we won't stand in the way of, but Australians will have a lot more to be angry about.

"If he thinks freezing his salary is going to make Australians feel better about pension cuts and tax rises I think he's kidding himself."

Fuel excise rise would be spent on roads: Hockey

Mr Hockey also told Channel 9 that any revenue generated by an increase in petrol taxes will be spent on roads, saying the Government wants to spend $40 billion on roads over the next six years.

"If we are going make any changes to fuel excise it will go into roads and we are laying out a plan for the biggest increase in road expenditure in Australian history," he said.

"That will be matched by the states and the private sector with an additional $42 billion. So it is a massive amount of money."

He said the spend would result in tens of thousands of new jobs.

"But most importantly it is going to address the significant drop-off in investment in construction in Australia associated with mining investment coming off."

Opposition Leader Bill Shorten said Labor would wait to see the detail on the infrastructure plan, but said it is unlikely to be a "great deal" for Australians.

"It's good that we might fund roads but [Mr Abbott] will charge people more to drive on the roads courtesy of his petrol tax," he said.

Mr Shorten said the Prime Minister must scrap a proposal to introduce a co-payment for visits to a GP, citing a Health Consumers Forum survey in which 69 per cent of respondents said the fee would discourage them from going to the doctor.

"Tony Abbott doesn't get that if you have to pay an extra $7.50 to go to a doctor and your child has chronic asthma or [you are] a pensioner battling osteoporosis or diabetes, you have to go to a doctor on a regular basis.

"Our hospital system gets clogged up; it means people will delay going to the doctor."

First tough budget in 20 years: economist

Deloitte Access Economics' Chris Richardson told ABC News 24 that MPs are not paid enough, and the pay freeze is "more about the politics".

"[It's] the first thing that Australia's had by way of a tough budget for better part of two decades now," he said.

"Everybody being seen to be part of that ... is the main reason we're talking about here. People may hate to hear it but we don't pay our MPs enough."

Mr Richardson said with a strong economy but a budget in need of repair, Tuesday's announcement will undoubtedly involve the Government doing things "it will hate to do".

"I take that in a sense as a good sign. It says the Government is serious about budget repair," he said.

He said the proposed deficit levy is to some extent a political move, and that without other savings measures it will make very little difference to the budget bottom line.

"If it's ... two cents extra in the dollar in incomes above $180,000, you're affecting ... 2.7 per cent of Australians who are personal income taxpayers, so not much more than 1 per cent of the entire population.

"It wouldn't raise much more than $1 billion in a year ... in an economy that's $1.6 trillion a year.

"If the only thing you were doing to fix the budgets - you ignore fuel taxes, you ignore all the things you should be doing on the spending side of the budget - if you just did a deficit levy above $180,000, two cents in the dollar, you would actually need about 20 of them."

ABC/AAP

Topics: government-and-politics, federal-parliament, budget, australia

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