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Government MPs raise voices against temporary deficit levy -

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SARAH FERGUSON, PRESENTER: No sooner had Prime Minister Tony Abbott returned to Canberra today than he found himself at the centre of a political storm over two of his more contentious policies. The temporary levy to be imposed on high income earners has provoked an outburst from within the PM's own ranks. Senators Cory Bernardi and Ian Macdonald say they don't support the levy and one of them is warning he may cross the floor of Parliament to vote against the levy and the Prime Minister's paid parental leave scheme. Political correspondent Sabra Lane reports.

NICK XENOPHON, INDEPENDENT SENATOR: It's not my fault, it's not the Senate's fault. The Government needs to get its act together if it wants to at least have the measures debated.

: It'd just be nice to see the Senate working very constructively to assist the Australian people. The deficit levy's something they should pass.

SABRA LANE, REPORTER: Fresh off the plane from his whirlwind world trip, the Prime Minister's arrived back in Canberra to a foggy Capital Hill, a metaphor of sorts for both the future of his government's first budget and the looming new Senate.

RON BOSWELL, RETIRING NATIONALS SENATOR: I don't know what the tactics are and I'll be out of here in two weeks' time.

SABRA LANE: Ron Boswell and 11 other senators will retire at the end of next week, some by their own choosing and some because they weren't re-elected and the long-awaited Senate numbers will change. For the next seven sitting days, the Government has the current chamber to deal with to get its Budget measures through, including the contentious temporary deficit levy on high income earners. Some of the barbs of criticism have come from the Government benches.

IAN MACDONALD, LIBERAL SENATOR: I would oppose the bill, not because I oppose - and I want to make this very clear - not because I oppose the hundred and - the tax on those earning $180,000 or more, but because I don't think it goes far enough. I think it should also be imposed on large companies who are earning more than $180,000.

SABRA LANE: The senator also opposed Labor's temporary hike in the Medicare levy to play for Queensland's flood and cyclone damage for the same reasons: that it should've applied to big business too.

Senator Macdonald wasn't alone in his opposition. Colleague, South Australian Cory Bernardi, doesn't like the deficit levy either because it means high income earners will pay 49 cents in every dollar they earn in tax.

CORY BERNARDI, LIBERAL SENATOR: This new tax bill is one of those measures that I find myself unable to support.

SABRA LANE: That puts the two senators on the same side as the Greens. They won't support the bill as they believe the levy increase should be permanent. The Coalition senators' opposition doesn't put the bill in doubt, as Labor will vote it through, a point acknowledged by both dissenters.

CORY BERNARDI: I know the numbers are there. I know that the Labor Party and the Coalition will be supporting this bill. I don't intend to cross the floor on it, but I do want my objection to higher taxes in this country to be registered.

IAN MACDONALD: My crossing the floor might be relevant in some occasion over the next year or so. It wouldn't be today because Labor are actually supporting this.

SABRA LANE: That's an explicit warning to his party about another controversial policy: the Prime Minister's signature paid parental leave scheme.

IAN MACDONALD: My inclination is to vote against that measure, but I'm waiting for the arguments. I want to see the fine print of legislation.

SABRA LANE: In detailing his reasons for objecting to the temporary deficit levy, Senator Macdonald lashed out at Mr Abbott's parental leave plan.

IAN MACDONALD: If we don't want to tax companies to pay off Labor's debt, why are we taxing them for a paid parental scheme that perhaps is a little before its time?

SABRA LANE: The senator's views on this aren't new, but to speak so publicly about it is bold. He's not alone in his objections. A number of MPs from both the Liberal and National parties remain opposed to the policy, no matter how often the Prime Minister asserts it will be implemented. And the Opposition's happy to keep needling Mr Abbott about it.

BILL SHORTEN, OPPOSITION LEADER: If the Prime Minister's own colleagues won't even support this unfair paid parental leave scheme, why should Australia?

TONY ABBOTT, PRIME MINISTER: I'm very happy to get questions from the Leader of the Opposition on this subject, I really am. I really am. Because this is an important social and economic reform and it will be delivered by this government.

SABRA LANE: On the temporary deficit levy, the Leader of the Government in the Senate, Eric Abetz, downplayed the dissent as a natural part of debate.

ERIC ABETZ, GOVERNMENT SENATE LEADER: What it shows is that the Liberal Party in particular, but the Coalition does have room for a wide spectrum of opinions and that is what we bring to the Parliament and it therefore stands to reason that some expression will be given to those varying views from within the same party.

SABRA LANE: Late today, Senator Ian Macdonald was keeping his voting options open, pending answers from the Finance Minister tomorrow.

IAN MACDONALD: If he can convince me it's a good idea, I'm with them.

SABRA LANE: The levy's one Budget item. The Opposition says there are two dozen others with a July 1st start date that haven't been introduced yet. The Government's flagging some of them will be on Thursday, perhaps underlining that old quote about laws and sausages: sometimes it's best not to see how they're made.

SARAH FERGUSON: Sabra Lane reporting.