Budget 2018: Morrison defends income tax cuts

Labor Leader Bill Shorten's budget reply promised more tax cuts for low and middle-income workers

Camera Icon Labor Leader Bill Shorten's budget reply promised more tax cuts for low and middle-income workers

Laws to cement the plan in place will be introduced to parliament on Wednesday, putting immediate pressure on the federal opposition to support them.

That's a year earlier than expected, and means whoever wins the next election will get to deliver the first budget surplus since before the global financial crisis.

"If Bill Shorten doesn't back the plan, then Bill Shorten has told Australians that he thinks taxes should be higher", the treasurer said.

Economic growth is tipped to strengthen from 2.75 per cent in 2017-2018 to 3 per cent in 2018-2019. The government has also forecast a return to surplus of A$2.2 billion in fiscal year 2020, 12 months earlier than scheduled.

In particular, Dales and Hickie say the government's revised budget projection - forecasting smaller near-term deficits and larger long-term surpluses - was only possible due to good news on the economy over the past year and some strong hopes for the performance of the economy over the next few years. "We are close to our destination". About A$500 million will be spent over seven years to try to rescue the ailing Great Barrier Reef.

Whilst the exact details of the budget remain under wraps, a few rumours have been leaked - with low and middle income earners, as well as baby boomers expected to be better off.

While the government made small upward revisions to its forecasts for real GDP and consumption growth, Dales and Hickie say the most significant revision was made to its forecasts for employment growth in the current financial year, driven by stronger-than-expected jobs growth that delivered unexpected income tax revenues as a effect.

Tax cheats - Black Economy Taskforce recommendations to bring in $5.3 billion over the next four years by targeting sectors that under report income.

Deloitte Access Economics' economist Chris Richardson said he was concerned that the nation's biggest trading partner, China, may experience a slowdown - a effect that would prove highly damaging. "There is that China risk; you don't need much to go wrong".

The tax cuts start at $200 a year for those in the lowest bracket, rising to $530 a year for those earning up to $90,000, from July 1 this year.

"The whole plan's in the Budget".

"The Government will also work with the States and Territories to develop a nationally consistent legal framework and establish a National Register or Enduring Powers of Attorney", the Treasurer said.

"Relative to the projections in December's MYEFO, new policy decisions have worsened the underlying budget balance by a cumulative $14.9 billion over the five years from 2017/18 to 2021/22", they said. He said the government had looked to growth in revenue and employment and concluded that "it's all looking up". The government of the day is going out here, there and everywhere to buy votes - yours, mine and our dogs - as evident by the leakages galore ahead of tonight's Federal Budget "smoke out" in Canberra.

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