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Senate passes debt tax -

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EMMA ALBERICI, PRESENTER: The Federal Government's extra tax on the wealthy has now passed through parliament. The Budget measure is designed to reap billions and was a key plank of the Federal Budget.

It's had a rocky ride through the Upper House, not because of the Opposition.

Instead, a government backbencher stepped in to interrogate the Finance Minister.

Anna Henderson reports from Parliament House.

ANNA HENDERSON, REPORTING: The words the Government has been waiting for.

SPEAKER OF THE HOUSE: Those appear say aye.


SPEAKER OF THE HOUSE: Those against say no.


I think the aye's have it.

ANNA HENDERSON: The debt tax is through parliament with Labor's support. Just in time. The so-called temporary Budget repair levy is a short-term tax, kicking in from next month, imposing an extra hit on personal income above $180,000, providing a $3.1 billion windfall.

(Extract from budget)

"Temporary budget repair levy"

July 2014 - June 2017

Two per cent extra tax on personal income above $180,000.

3.1 billion dollars

The birth of this tax hasn't been without complications or deep reservations.

IAN MACDONALD, COALITION SENATOR: If not, I would hope that in the future Governments, be they of this persuasion or that persuasion, have an honest tax system where additional money is raised and not this, if I might say, dodgy arrangement.

ANNA HENDERSON: Government Senator Ian Macdonald wants the tax to apply to companies as well as individuals.

MATHIAS CORMANN, FINANCE MINISTER: If we were to increase company tax, it would make it harder for us to grow to get out of the situation that we've inherited where the economy is growing below trend.

IAN MACDONALD: Minister, thank you for that but with the very, very greatest of respect, could I just say that the arguments you raise are really - do not make sense.

ANNA HENDERSON: Other Budget measures like the increase in the petrol tax and tighter conditions for family welfare are likely to be introduced by the end of the week but the Government's expected to hold off with the promise of new friends and a new parliament in July to get them through the Senate.

In the meantime, Budget complaints continue even from the Coalition in NSW, handing down his own Budget today, the State's Treasurer again highlighted diminishing Federal funds.

BILL SHORTEN, OPPOSITION LEADER: A short time ago the NSW Liberal Treasurer said about the Prime Minister's $80 billion of cuts to schools and hospitals, "There is no point pretending that the broken agreements of the Federal Budget won't hurt the people of NSW."

TONY ABBOTT, PRIME MINISTER: There are no broken promises. There are no broken promises.

(Sound of outcry from parliament)

ANNA HENDERSON: Internal friction hasn't been isolated to one side of politics. Labor's warring with itself over off-shore processing. A minority within the party want overseas detention to end but the group, including backbenchers Melissa Park and Anna Burke, failed to convince Caucus which has instead passed a motion asking for better conditions in the centres.

ANNA BURKE, LABOR MP: I cannot agree to that personally but I sit in my Caucus, I abide by the Caucus decision but I also have the opportunity in that Caucus to express my concerns and those of the literally hundreds of people emailing me.

SCOTT MORRISON, IMMIGRATION MINISTER: People smugglers profited from the weakness of the previous Government and if they were ever to occupy these benches again they would profit again, the people smugglers, Madam Speaker, because their weakness bears them out.

ANNA HENDERSON: Political divisions were the last thing on the minds of both sides of Federal politics as they farewelled a fixture of the parliament. Queensland Nationals Senator Ron Boswell is retiring at the end of the month after a lengthy and memorable career.

RON BOSWELL, NATIONALS SENATOR: I am proud to say that I have given the big environment groups a bloody nose on more than one occasion. I will end with these words of St. Paul. My time of departure is at hand. I have fought the good fight. I have run the race. I have kept the faith. Thank you very much. God bless and good-bye.


ANNA HENDERSON: Labor Senator Mark Bishop is also bidding farewell with advice on the role of the Red Chamber.

MARK BISHOP, LABOR SENATOR: I hold to the view that the party or parties that control a majority on the floor of the House should govern in both places.

ANNA HENDERSON: As the Government contemplates the Budget task ahead, no doubt it's hoping for the same thing.

Anna Henderson, Lateline.