THE Gillard Government has been forced to walk away from another promise ahead of what is shaping as Treasurer Wayne Swan's toughest budget.
In the latest development, Climate Change Minister Greg Combet announced $1.4 billion of tax cuts from July 2015 would be deferred.
The cuts were abandoned due to a revision of the carbon price down from $29 in 2015, in line with the depressed price of carbon in the European market.
It comes a day after Labor announced it was dropping a planned increase to Family Tax Benefit Part A payments, due to a shortfall in the mining tax.
Under increasing pressure to deliver a sustainable budget, the government also revealed a tax revenue shortfall of $17 billion this week.
Mr Combet said the revision would mean the promised tax cut - equating to $80 a year for Australians earning up to $80,000 - would only be delivered once the carbon price returned to $25.40.
"All that we are dealing with here is a revision for a price forecast that is two years away," he said.
Mr Combet said the decision was "a sensible measure" that would be contained in the coming budget.
Opposition climate action spokesman Greg Hunt said linking the Australian price with Europe meant taxpayers were now facing a budget black hole of $6 billion to $8 billion.
"The government's solution for their financial mismanagement is to scrap the tax cuts and abandon programs which were promised to offset the cost to industry of the carbon tax," he said.
"The government gets the revenue numbers wrong and it is Australian families and businesses which are picking up the bill."
Shadow Treasurer Joe Hockey characterised the series of backflips as "breaking the bond of trust" with the Australian people.
Treasurer Wayne Swan also revealed last month the government was likely to reveal a budget deficit of at least $7.5 billion.
But modelling from Deloitte Access Economics released on Tuesday showed the real deficit could be closer to $10.9 billion, when the budget is finally revealed.
More to come.
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