Budget 2014: Teresa Gambaro says proposed debt levy will 'devastate the economy'

Updated

Federal Government MP Teresa Gambaro says the proposed debt levy will "devastate the economy" and is urging the Cabinet to ditch the idea at its meeting in Canberra today.

The Member for Brisbane says the tax hike being proposed for higher income earners will be a broken promise, and has lashed out at the Prime Minister and his office's way of dealing with the backbench.

Ms Gambaro advocates more spending cuts over raising taxes and says the Government is failing to communicate with voters properly.

"We didn't go to the election with a debt levy and I believe it's a breach of promise," Ms Gambaro told the ABC.

Sorry, this audio has expired Audio: Teresa Gambaro discusses the proposed debt levy (ABC News)

"At the last election we went to the Australian people with a promise of being a government of no surprises, so it's absolutely incumbent that after the six years that we went through of Labor's chaos and confusion that we provide certainty and leadership."

Ms Gambaro has echoed concerns raised by former treasurer Peter Costello, who says the deficit levy will have "no economic benefits" and could harm growth.

"It will cause great uncertainty and it will cause devastating impacts on the economy," she said.

We didn't go to the election with a debt levy and I believe it's a breach of promise. Teresa Gambaro

"[It will] reduce consumer confidence, it will stop people from spending. That in turn will have an impact on the business community and their ability to employ people."

Cabinet ministers have arrived in Canberra to finalise the Government’s first budget due next Tuesday, including a critical decision on how the proposed debt levy will work.

Cabinet will be asked to approve raising income taxes for people earning more than $180,000 per year.

It is not yet decided how long the hike will last or if it could also hit those on lower incomes of above $150,000.

Speaking to reporters on her way to Parliament House, Deputy Liberal Leader Julie Bishop said she would not comment on deliberations before the Cabinet.

"I don't discuss Cabinet meetings in advance of Cabinet meetings. I don't discuss budget matters prior to the budget being handed down," Ms Bishop said.

Asked if a debt levy could constitute a broken promise, Ms Bishop said "everyone will have to wait until next Tuesday night when the budget's being handed down, that's a matter for the Treasurer to announce on budget night".

The Prime Minister is advocating the temporary levy because the Government says it is the only way the rich can share the burden of repaying the nation's debt.

Tony Abbott says it would not breach his pledge to not introduce new taxes because the levy would only be "temporary".

Growing list of MPs condemning debt tax

Ms Gambaro joins nearly half a dozen Government MPs who have gone on the record condemning the idea of a debt tax.

They include Liberal senators and MPs Zed Seselja, Cory Bernardi, Warren Entsch and Nationals MP John Cobb.

But other MPs are defending the executive's rationale, saying the Coalition inherited a deficit which has to be solved.

Liberals David Bushby, Bob Baldwin, Russell Broadbent and Ewen Jones are all backing the proposal to raise income taxes, with Mr Baldwin telling the ABC the debt cannot be solved by "wishful thinking".

Labor is opposing any deficit levy, calling it a "deceit tax".

Junior minister Jamie Briggs says Ms Gambaro is unwise to be pre-empting the budget, which Cabinet is yet to finalise.

"Teresa's a backbencher, and she's entitled to talk about issues that she wants to. But I think it would be wise for Teresa to wait until next Tuesday to start expressing views on the budget, until she's seen the entire budget," he said.

"So it seems a little pre-emptive for her to be commenting publicly in the media about something she doesn't know the detail of."

Mr Briggs also brushed aside Mr Costello's criticisms of the debt tax, saying it is not an unexpected attack from a former politician who has vacated the field.

"Former footballers always claim that football was a better standard when they played and thus their comparative performance was always better," Mr Briggs said.

"It's not surprising that people are entitled to their view."

Abbott needs to consult more with backbenchers: Gambaro

Ms Gambaro says the dissent from Government MPs is evidence the executive needs to fix the way it deals with the backbench.

"There's not enough consultation with the backbench," she said.

"I wasn't consulted on paid parental leave, I wasn't consulted on any of these prospective policies, and I think there needs to be greater consultation with the backbench.

"There is no question that there is a very tough budget deficit and that we have to take some tough measures, everyone understands that, but we need to take people with us and we need to communicate better."

And she says that includes the way Mr Abbott himself deals with his colleagues, as well as his office.

"He really does need to communicate with the backbench a lot better than has been the case," she said.

"I think that it needs to improve. There's not enough two-way flow of information, and when you're bringing in signature policies like paid parental leave, you really do need to bring that to a partyroom meeting.

"I don't think you can just pull surprises out of a hat."

Ms Gambaro says the electorate is not taking kindly to the Government's unexpected announcements, like the restoration of knights and dames.

"That certainly was a surprise ... and you even have a former prime minister questioning the validity of bringing that back," she said.

"I think there needs to be greater communication and the backbench needs to be consulted more and that's the way it is."

Topics: budget, government-and-politics, tax, federal-parliament, federal-government, liberal-national-party, liberals, abbott-tony, australia, brisbane-4000, qld

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