The baby bonus will be scrapped, as will middle-class tax benefits, while the ARENA clean energy agency has been spared as the government and Labor come to agreement on the controversial omnibus savings bill -- and saved even more than they planned to.
"This is an important next step in progressing and in achieving budget repair," said treasurer Scott Morrison in announcing the final bill.
"It is only another step, there will be further steps required, of course, and we hope that this is the beginning of further constructive engagement by the Opposition with the Government in getting the budget back into balance as soon as possible."
The government had been seeking to cut around $6 billion from its spending with the sprawling savings bill, with its initial framework including abolishing the Australian Renewable Energy Agency (ARENA) to save $1.3 billion. After finalising negotiations, Labor leader Bill Shorten and his financial team of shadow treasurer Chris Bowen and shadow finance minister Jim Chalmers crowed about the news they had managed to save ARENA by suggesting other savings.
"What we've done is ensure in discussions with the Government, $800 million worth of funding for ARENA over the next 5 years, no existing commitment affected and Arena will be able to continue its important work," Bowen told a media conference.
"We've also agreed that Mark Butler [shadow environment minister] and Josh Frydenberg [environment minister] will have discussions both about ARENA funding and any potential pathway to a more bipartisan renewable energy policy for the future."
The reintroduction of the baby bonus had reportedly been a major part of the terms set out by the Nationals when striking a new Coalition agreement with the Liberal Party in September. Fairfax reported at least one Nationals MP had been surprised that the baby bonus had been scrapped in the bill.
Labor said they had supported 20 of the government's 24 planned cuts, but with a few extra cuts, they had managed to take the savings up to around $6.3 billion -- more than the initial savings set out by the government.
Labor said they convinced the government to drop its plans to reintroduce the baby bonus, a one-off payment to families with newborn children, while also securing support for the abolition of the Family Tax Benefit-A supplement for families with incomes above $80,000, and keeping the Energy Supplement for everyone bar those on Family Tax Benefit and Commonwealth Seniors Health Card Holders.
Shorten defended the cuts to family tax benefits by saying the other concessions won in the bill would ultimately lead to better results for those on low incomes.
"It's a hard choice. In a perfect world you don't have to do any of these things," he said.
"But I tell you what, if you're someone who is only getting $260 a week, you're unemployed you've got no opportunities, you're not getting a job, cutting their income compared to cutting someone who might be on $140,000 and receiving an extra payment, I think we've got to look after the most vulnerable in our society as a priority."
Labor was also happy about protecting their own Child Dental Benefits Scheme by removing it from the list of cuts, as well as removing cuts to people with severe psychiatric conditions. Labor also said they had begun discussing how "to accelerate Australia's transition to a modern, clean energy renewable energy system."
In a statement, Morrison said the government would continue "progressing the government's reforms to Dental Services through separate legislation".
"Today the Turnbull Government has made immediate and tangible headway in the 45th Parliament towards balancing the Budget."