Prime Minister Malcolm Turnbull will ramp up pressure on the federal opposition to support $6 billion in government savings it committed to during the election, promising he is ready to "reach across the aisle" to repair the budget.
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In his first major economic speech to the Committee for Economic Development of Australia [CEDA] ahead of Parliament's return on August 30 after nearly four months, Mr Turnbull will on Wednesday stress the importance of protecting Australia's AAA credit rating and link this to budget repair promises made by Opposition Leader Bill Shorten during the election.
The speech marks the opening salvo in a renewed government push to trim the deficit and frame the argument about the need for "tough choices" to ensure repair of the federal budget.
In the coming sitting of the Parliament, Mr Turnbull will promise an omnibus bill will be presented that pulls together government savings measures that "we understand from the election campaign the ALP is prepared to support".
"The budget bottom line that Labor outlined during the campaign relied on over $6 billion in Coalition savings that they have not reversed, including $3 billion in measures that they previously opposed," the Prime Minister will say.
"And this is after Labor's earlier multibillion-dollar backflips: $3.6 billion on the pension assets test and $4.5 billion on the School Kids bonus. We will work constructively with Labor and the crossbenches to pass these measures."
During the election campaign, for example, Labor reversed course and announced it would back cuts to R&D tax incentives and three small higher education savings measures, which were hangovers from the notorious Abbott-Hockey budget from 2014.
But even as the Prime Minister prepared to make the case for a more co-operative approach to politics and budget repair, Labor signalled on Tuesday it was ready to play hardball and test the stability of the Coalition's claim it had a "working" majority in Parliament.
The Turnbull government holds the slimmest possible majority of 76 seats in the 150-member Parliament and Labor has rebuffed initial requests for the government and opposition to enter into a "pairing" arrangement, which could effectively deny government MPs holidays or even sick leave.
The approach harks back to that of former opposition leader Tony Abbott in the hung parliament between 2010 and 2013 in which he often knocked back Labor requests for pairs except in exceptional circumstances.
Following the 2013 election loss, the Labor opposition backflipped and decided to block about $5 billion worth of budget savings it had itself proposed in government.
But Australians would not stand for a repeat of that "incredible" decision, Mr Turnbull will tell the CEDA lunch, and "nor will voters tolerate a repeat of Labor's most recent exercise in fiscal cynicism, where they opposed responsible savings right up until the eve of the election, only to capitulate at the last moment".
Both before and after the federal election, credit ratings agencies warned about growing risks to Australia's AAA rating, which help determine a country's borrowing costs and credit worthiness.
Standard & Poor's, for example, cut the outlook on Australia's coveted AAA rating from "stable" to "negative" and said there was a one-in-three chance the rating would be downgraded within two years, in part blaming the uncertain election result for the move.
"The ratings agencies sent unambiguous signals that there is still much to be done in getting the nation's finances in order," Mr Turnbull will say.
"If we aren't prepared to make the tough choices today, future generations will be forced to pay back the debt through a combination of higher taxes and a lower quantity - or diminished quality - of government services."
"We are ready to reach across the aisle. But Labor must be prepared to bring an open mind and some fiscal rationality to any discussions, as well as a commitment to support spending reductions they have already said they will back."
Looking further afield, Mr Turnbull will warn, political divisions in advanced economies, slowing global growth and a retreat towards "protectionism and inward-looking policies are starting to gain a foothold".
"Political responses to this mood of disaffection can have the potential to destabilise global growth, perhaps even reversing some of the spectacular gains we have made over recent decades through open markets and free trade."
