The mixed result in the analysis of Australia’s tax and handout system shows how much further the Rudd Government has to go in order to achieve its stated goal of a simpler, fairer and more jobs-friendly regime. The analysis shows that 97,000 families in the top half of the income ladder lost family payments because of the budget. However, the clawback was offset by 53,000 new family payment recipients coming from the bottom half of the ladder, due to other tax changes.

The Rudd Government has bowed to pressure from the Greens and Independent Senator Nick Xenophon and slashed the proposed income thresholds for the Medicare surcharge to $75,000 for singles, although Health Minister Nicola Roxon wants to leave the proposed new threshold for couples unchanged at $150,000.

Opening question time today, Opposition Leader Malcolm Turnbull challenged the Prime Minister to explain what he was doing to fireproof the economy in the wake of the crash of Wall Street giant Lehman Brothers. But Treasurer Wayne Swan accused Mr Turnbull of vandalising the surplus by blocking budget measures in the Senate.

This week saw big problems emerge for the Labor Party in New South Wales and Western Australia, while federally the Nationals shrank even further with the loss of Lyne. In the Senate, Steve Fielding voted down the luxury car tax increase, while in the United States, Sarah Palin has garnered an immediate and positive reaction.

Canberra’s defence spending has leapt by about 56 per cent in the past seven years to $25.66 billion, meaning it now spends more than some European Union countries. However, Australia is still dwarfed by the US, which has set aside $US696.30 billion ($832.7 billion) for its armed forces this year.

Family First senator Steve Fielding sided with the Coalition this morning to vote down the increase in the luxury car tax at the second reading, 34 votes to 33. Senator Fielding had wanted to exempt farmers and those in the tourism industry who use cars, worth more than the tax threshold of $57,180, as tools of trade.

Rebel Labor MPs have raised concerns about the Australian Building Construction Commission, as well as the welfare payment plan. But the Government defended both measures, arguing that it had flagged the welfare reforms in the May budget and that it had promised to retain the ABCC until 2010 at last year’s election.

While shadow cabinet has resolved to block the tax, the Opposition Leader’s office is refusing to release details until after tomorrow’s partyroom meeting. But senior Liberals said today that Woodside’s warning the tax may have to be passed on to consumers “strengthened the arm” of its critics.

Not only is Brendan Nelson advocating big budget cuts, he is proposing the spending of billions more on pensions. Every time, however, he attacks the Rudd Government for dudding pensioners, he is indirectly accusing the Howard government of intending to do the very same thing, simply because Labor pilfered John Howard’s $4 billion pensioner policy during the last election campaign, embellished it a little, and then implemented in it full in the budget.

Woodside Petroleum’s Chief Financial Officer Mark Chatterji said today that the oil and gas giant cannot simply absorb the cost of the Rudd Government’s proposed $2.5 billion new tax on condensate. “In order to stay competitive, businesses seek to pass cost increases on to their customers,” he said in a statement.