Mid-year budget update 2017: Scott Morrison grilled over wage growth, tax relief for Australians

TAX relief for middle Australia could be on its way with Treasurer Scott Morrison vowing to make it his mission along with getting the budget back to surplus.

AUSTRALIANS could see personal income tax cuts within two years with federal Treasurer Scott Morrison vowing to make it his mission along with returning the budget to surplus.

The federal Treasurer has been grilled this morning over the nation’s stagnant wage growth and when middle Australia will get a tax break after delivering the 2017-18 federal budget update yesterday.

While not committing to a firm timeline, Mr Morrison said it would be his goal along with getting the budget back into the black by 2020-21.

“Giving tax relief to middle income Australians is the mission the Prime Minister’s given me,” Mr Morrison told the Nine Network today.

“So there’s a bit of work to do on that between now certainly and the Budget and the Budget after that but that is what we want to see,” he said.

Federal Treasurer Scott Morrison visits the Sydney Markets in Homebush after handing down the mid year budget update yesterday. Picture: AAP

The government will face an uphill battle to implement its plan to drive business investment and wage growth however with Labor continuing to block it in the Senate.

Mr Morrison has argued Australia cannot afford to not cut its corporate tax rate from 30 per cent to 25 per cent to make the country a more attractive prospect for employers internationally.

“The only people standing in the way of frankly Australians having a better chance of higher wages is the Labor Party because what we’re trying to do here is drive investment, which drives jobs, which drives profits, which drives higher wages,” he told reporters in Sydney.

“That is achieved by reducing the tax burden on the economy and particularly for businesses.

“The rest of the world gets it — France gets it, the UK gets it, Singapore gets it, the United States gets it.”

Mr Morrison announced the government’s plan to take the federal budget from a $23.6 billion deficit to a $10.2 billion surplus in less than four years in the mid year budget update yesterday.

The Mid-Year Economic and Fiscal Outlook painted a picture of strong jobs growth over the past year, with an extra 380,000 jobs created and the unemployment rate falling to 5.4 per cent, its lowest rate in four years.

But the MYEFO documents contained the prediction that wage growth would remain sluggish over the next few years.

Scott Morrison (left) and Finance Minister Mathias Cormann delivered the Mid-Year Economic and Fiscal Outlook at Parliament House in Canberra yesterday. Picture: AAP

The government now expects to receive $8 billion less in revenue from individuals’ taxes over four years due to slow wage growth.

“The money won’t fall from the sky for wages,” Mr Morrison said yesterday.

“It needs to come out of a growing economy where businesses are investing and doing better.

“We’re seeing that investment now take place.

“We are seeing the profits lift, and those profits can translate into higher wages with continuing tightening of the labour market coming.”

There are also questions over whether the government can afford to provide tax relief for Middle Australia or cuts to the corporate tax rate when it’s seeking to reduce gross national debt, which is forecast to rise from $534 billion in 2017-18 to $583 billion by 2020-21.

Shadow treasurer Chris Bowen says Labor will continue to block a cut to Australia’s corporate tax rate. Picture: AAP

The gross debt in the MYEFO was $23 billion less than forecast in the May budget but remains a challenge.

“You can believe in budget repair or you can believe in a big company tax cut — you can’t really believe in both,” Shadow Treasurer Chris Bowen told Sky News today.

“This is very expensive for our budget.

“We’ve always got to have to a view to competitiveness.

“But governments have to prioritise.”