Promised welfare boost the latest victim of budget blackhole

MORE than 1.5 million families will miss out on a promised boost to their welfare payments after the government revealed tax receipts would fall a whopping $17.billion short of its October forecast.

In the space of two weeks the government has issued three revised revenue downgrades - from $7.5.billion to $17.billion.

As recently as last week Prime Minister Julia Gillard was warning of a $12.billion budget blackhole.

Finance Minister Penny Wong said the government had been forced to walk away from its promise to increase Family Tax Benefit Part A payments from July 1, saving the government almost $2.billion.

The increased payments - up to $600 per year to low income families - was one of the key measures in Labor's "spreading the benefits of the boom" budget and were to be funded by revenue from the mining tax, which has been tipped to deliver just $800 million this financial year - significantly less than the $3.6.billion forecast in last year's budget.

"This is a difficult decision, but a responsible decision given what's happened to revenue," Senator Wong told Sky News.

"I do want to emphasise this is not money that is currently being received by families ... (who) will continue to receive the benefits they currently receive in the family tax area."

The Coalition was quick to pounce on the latest budget developments.

Opposition Leader Tony Abbott said it was proof the government was "incompetent and untrustworthy", while shadow treasurer Joe Hockey said Australians would rightly be scratching their heads.

"What the hell is happening in Canberra?" Mr Hockey said during a speech to Master Builders on Tuesday.

The Australian Council of Social Service was also critical of the decision to scrap the family benefit increase and questioned the government's priorities.

ACOSS CEO Cassandra Goldie said the decision would hurt families already under financial pressure and repeated calls for cuts to be made in other areas.

"We want to reiterate our call for the government to be courageous and shut down tax loopholes and wasteful spending at the top end," Dr Goldie said.

"We have identified around $6 billion in savings from tax avoidance measures such as the use of private 'discretionary' trusts and capital gains, international companies reducing tax paid in Australia, and the churning income through super accounts to avoid taxes on wages."

Dr Goldie also called on the government to adopt a better targeted family payment system so people in real need were getting adequate financial help.

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