Australians can expect tax cuts, help with power bills, and congestion-busting road and rail projects when Treasurer Scott Morrison delivers Tuesday’s budget.
The budget could also return to surplus a year early, in 2019/20, thanks to a spike in company taxes and record job growth.
“(It’s) a budget that will ensure hard-working Australians can keep more of the money they earn,” Prime Minister Malcolm Turnbull told cabinet in Canberra on Monday.
“A budget that will enable us to have the resources to keep Australians safe, and a budget that will ensure the government lives within its means.”
Mr Turnbull on Monday announced a $400 million project to duplicate the remaining single-track section of Sydney’s Port Botany rail line as part of a $75 billion road and rail infrastructure package.
He also flagged help for people dealing with high energy bills.
The promise of personal income tax cuts has been hinted at for months in what could be the final budget before the next federal election.
Mr Morrison says the cuts won’t be “mammoth” but says they will be affordable.
“We’re for lower taxes, because we’re for a stronger economy,” Mr Morrison told cabinet.
It’s expected part of the tax relief will come through increasing the low-income tax offset, while the budget promises tax cuts for higher income brackets by 2024.
Opposition finance spokesman Jim Chalmers says Labor wants to see lower- and middle-income earners get the most benefit from income tax cuts.
He says the coalition is using a temporary income spike to fund ongoing spending.
“We will go the election with a more responsible approach than the government, because we’ve taken difficult positions at great political risk to ourselves,” Mr Chalmers told reporters.
But Greens leader Richard Di Natale says he won’t vote for income tax cuts.
“We won’t support a tax cut to corporations and we won’t support income tax cuts that make inequality worse,” he said.
One Nation leader Pauline Hanson also says she wants to see the national debt paid down instead of income tax cuts.
Finance Minister Mathias Cormann defended the coalition’s decision to cap the amount of tax revenue collected at 23.9 per cent of gross domestic product limit.
Senator Cormann said the “speed-limit” on the public tax burden, above which revenue is returned through tax cuts, would keep the economy strong.
But public policy think-tank The Australia Institute describes the cap as “entirely arbitrary”.
“There is no objective reason why the government should set this cap,” institute executive director Ben Oquist said.
Mr Chalmers said no one cares about the “speed limit”, because the government has broken its own financial rules before.