PM back to bitter reality

Tony Abbott's justifications for swingeing cuts to health, welfare, education, pensions and benefits also continue to unravel.

Fresh from hobnobbing with world leaders, Abbott has still to sell Budget to nation.

Australian Prime Minister Tony Abbott arrived back in Canberra yesterday from talks with world leaders in United States, Canada, France and Indonesia to the harsh realities of life at home.

More than a month after his first Budget, Abbott and senior ministers are still trying to sell its tough measures to a largely hostile nation, with serious roadblocks ahead in the Senate.

The present Upper House, controlled by Labor and the Greens, will be replaced next month with a new Senate in which power will lie with mining magnate Clive Palmer's United Party.

Abbott has still to introduce a number of measures, apparently in the hope that the new Senate will be more malleable, despite clear indications from Palmer that he opposes key elements.

"The Government is running scared of its own Budget," Opposition Leader Bill Shorten said.

Abbott's justifications for swingeing cuts to health, welfare, education, pensions and benefits also continue to unravel, with claims of a budget and debt crisis rejected by most analysts.

Warnings that the nation faces a wages blowout have run against figures showing a long-term decline in real wages growth, supported by recent trends. Reserve Bank assistant governor Christopher Kent said yesterday that in the past 18 months there had been no increase in the cost of labour required to produce a unit of output.

A survey yesterday undermined claims of an explosion in welfare dependency and costs.

A welfare crisis has been central to Treasurer Joe Hockey's Budget rhetoric, built around a theme that Australia was being impoverished by a culture of entitlement that could no longer be supported.

But the latest Household, Income and Labour Dynamics in Australia survey by the Melbourne Institute of Applied Economic and Social Research said that dependence on welfare payments had fallen sharply among the working-aged since 2000.

The survey, which regularly tracks a sample of 12,000 people, said the proportion of 18-64-year-olds receiving welfare had dived from 23 per cent to 18.5 per cent, with a halving of the number of households gaining more than 90 per cent of their incomes from taxpayers.

This includes falls in the number of retirees mainly dependent on benefits, a decline in the share of benefits in the incomes of single parents, and fewer people claiming parenting benefits and the dole.

In Parliament, Abbott faces real problems. While the Budget supply bills will pass, specific measures will come under serious - possibly terminal - challenge even in the new Senate.