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Family tax cuts up for discussion in budget negotiations -

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ELEANOR HALL: The Federal Government is getting some positive signals from the Senate as it begins negotiations over this year's budget.

Several senators say changes to the proposed family tax benefit cuts are in active discussion.

But the Government still faces anger over its attempt to tie the multibillion dollar measure to its proposed increased spending on child care.

In Canberra, Naomi Woodley reports.

NAOMI WOODLEY: For the next two weeks senators will be in committees, grilling public servants and Ministers in the process known as estimates.

But in the background, negotiations over the Government's budget are proceeding.

RICHARD DI NATALE: I have had conversations with the Prime Minister, Finance Minister and so on.

We'll be talking to the Treasurer.

NAOMI WOODLEY: The new Greens leader Richard Di Natale has promised a constructive approach and he's again reiterated that the Greens would be willing to reconsider their opposition to an increase in fuel tax if some conditions like helping low income earners are met.

RICHARD DI NATALE: We need to ensure that if we're going to increase the price of petrol, that's the whole point of the pollution tax is that you provide people with alternatives, you use the money that's raised in those areas to help drive the transformation of the transport sector.

NAOMI WOODLEY: Senator Di Natale sounds less willing to compromise on another big savings measure still left over from last year's budget - the move to restrict Families Tax Benefit Part B to families with children under six.

The billions it would save is being earmarked to help fund the boost in child care payments in this year's budget.

Richard Di Natale has told News Radio he understands the Government is open to alternatives, but he's yet to be convinced.

RICHARD DI NATALE: If you're a single parent, a sole parent, and you're still supporting a young family, whether the support stops at six or 10 I don't think makes a big difference.

So there are things, and I know the Government is looking at a range of changes to the measure that it's proposed.

I'll look at any change that's put to us, but I don't want to see the support removed from one group of families in order to support another group of families - I think that's bad public policy.

NAOMI WOODLEY: Another key crossbencher, the independent Senator Glenn Lazarus, says he's consulting with the community about the changes.

GLENN LAZARUS: And I think there should be some flexibility in it.

I'm sort of heading down the path of maybe looking at reducing the age from 18 to something a bit lower, but I'd need to know what the implications are of that and as we speak I'm still obviously consulting the people that it would affect.

NAOMI WOODLEY: Another independent Nick Xenophon is wary about reducing the age threshold for the family payment, which primarily goes to single parents and single income families.

NICK XENOPHON: At the moment the Government's policy of cutting the Family Tax Benefit B once a child turns six is basically inviting having a nation full of Macaulay Culkins being home alone.

I think that the threshold is ridiculously low, even the threshold of 10 or 12 would concern me because the practical effect of it will be that some parents will have to stay at work and won't be able to look after their kids, and I think that is a retrograde move.

NAOMI WOODLEY: The proposed cuts to family payments are vehemently opposed by the Federal Opposition and make up a big part of its argument that the budget will affect low income earners the most.

Labor's finance spokesman Tony Burke has again pointed to modelling commissioned by the Opposition.

TONY BURKE: Well all of that will be out and it gives one very simple message: $6,000 hit for a typical family by this Government in this budget.

NAOMI WOODLEY: The Government had been calling for Labor to release the full results of from the National Centre for Social and Economic Modelling, or NATSEM.

Labor's now issued the interim report and the Government frontbencher Steve Ciobo told Sky it doesn't add up.

STEVE CIOBO: They've got a whole series of assumptions that they've built in.

Take for example the school kids bonus, now you'd recall we abolished the school kids bonus, we were up front about it, we said before the last election we could not afford it.

It was part of the $16 billion of expenditure that was tied back to the mining tax, that there was no funding for it.

Labor has built that in.

NAOMI WOODLEY: The budget is dominating political discussions, but momentum is also building for the Parliament to hold a vote on marriage equality.

The Greens Senator Sarah Hanson-Young has announced she'll begin formal debate on her bill later this month, with a view to have a vote on the 12th of November.

SARAH HANSON-YOUNG: This gives members of all parties the opportunity to think about how they will vote on this issue, but of course the impotence for Tony Abbott to allow his party room the opportunity to have a free vote, to vote with their hearts as well as their heads.

NAOMI WOODLEY: The Opposition Leader Bill Shorten is also trying to increase the pressure on the Coalition, saying he believes a marriage equality bill would pass if Government MPs were given a free vote.

ELEANOR HALL: Naomi Woodley in Canberra.