More than $3.7 billion in cuts to health, aged care and welfare are being proposed as the federal government forecasts an increase in the budget deficit.
The Goverment has released its Midyear Economic and Fiscal Outlook, which has the budget deficit increasing to 37.4 billion dollars, up from 35 billion predicted in the May budget.
The timing of a return to surplus has been pushed back a year to 2020/21.
As Aileen Phillips reports, Labor and the Greens say the Government is targeting people who can least afford to pay while ignoring budget moves they say could address the revenue shortfall.
A $650 million cut to Medicare, $472 million removed from aged-care services over three years and a crackdown on welfare fraud.
Those are among the proposals the Government has put forward to return the budget to surplus a year later than forecast.
With commodity prices falling, especially the iron price, the Government has to try to make up billions in foregone tax revenue.
Finance Minister Mathias Cormann says the Turnbull Government is committed to being disciplined with taxpayers' money.
"We have stuck to our fiscal discipline. All decisions to increase spending since the budget, including those made in the context of Senate negotiations, have been more than fully offset by spending reductions in other areas. The policy decisions overall have improved the budget bottom line by just under $400 million over the forward estimates."
But Labor has condemned the budget update, saying it shows the deficit is up, debt is up, spending is up and growth is down.
Opposition Leader Bill Shorten says such a cut to Medicare is unacceptable.
"A $650 million cut from Medicare by slashing bulk-billing and diagnostic imaging services for people who are receiving cancer treatment. In addition, there'll be cuts to radiation and oncology programs. Also, for aged seniors with complex needs, they will receive hundreds of millions of dollars of cuts. Why is it that the Liberal Party, when in government, their only idea for the future of Australia when there is a problem of their own making is to force cuts onto those least able to protect themselves?"
Greens MP Adam Bandt say the Government has no contingency plan if the iron ore price continues to fall.
He says the Government has the ability to find $38 billion in savings if the Treasurer removes what he calls unfair tax breaks for the very wealthy.
"If the Treasurer takes off his denial goggles and admits that Australia has a revenue problem, then the Greens have the solutions. The Greens want to balance the books by axing unfair tax breaks for the wealthy, not by cutting Medicare, as this Government is proposing."
Treasurer Scott Morrison has defended the Medicare cuts.
"We're applying the same targeting that applies to doctors and bulk-billing of doctors to this area. The previous Government allowed this program to get out of control and to go beyond what we would consider was its original design. When you're dealing with the budget, you need to make sure not just that your revenue is fit for purpose but your expenditure is fit for purpose. And there are clear purposes around bulk-billing incentives, and, when they're out of alignment with the way the rest of the system works, well, that's how you bring your budget back to balance."
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