Federal Budget 2017: Scott Morrison says he has focused on fairness

TREASURER Scott Morrison is banking on “better days ahead” as he unveils a big-spending, big-taxing Budget including an $8 billion hike in the Medicare levy. Work out what it means for you with our Budget calculator.

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TREASURER is banking on “better days ahead” as he unveils a big-spending, big-taxing Budget including a health levy hit on most Australians and help for housing affordability.

In a document critics branded Labor-lite, Mr Morrison yesterday also revealed serious welfare reform, the promised education changes, and a crackdown on the big banks.

Mr Morrison labelled an $8 billion Medicare levy increase as “fair”, outlining the 2017-18 Budget with a focus on “fairness, security and opportunity”.

He also said the National Disability Insurance Plan would be “fully funded” by the Coalition, saying the current gap was $55.7 billion over 10 years.

But to do that, the Medicare levy will go from 2 to 2.5 per cent from July 2019, raising an additional $8 billion over two years.

Low-income earners will be exempt — meaning singles earning more than $21,655 will be hit, and families earning more than $36,541.

Someone earning $80,000 would see their contribution creep from $1600 to $2000.

The Budget aims to neutralise Labor’s attacks on the Coalition, particularly their strident campaigning on Medicare and claims the government would privatise it.

Labor has also been calling for a Royal Commission into banks, and the government has done what it hopes will be a compromise. It will impose a liability levy on the big banks, and make them more accountable.

That levy will not be on people’s deposits or mortgages, and the banks can’t “go and lie to customers” to use it as an excuse to charge them more, Mr Morrison said.

A one-stop shop will help customers resolve disputes while senior executives will be able to be deregistered, and stripped of bonuses if they breach regulations.

As rumours spread about the bank levy, shares in the big four banks tumbled by $14 billion.

Mr Morrison pitched the Budget as a practical one that would harness the uptick in the global economy to steer Australia out of trouble while also “putting to rest any doubts about Medicare and the Pharmaceutical Benefits scheme” by reversing a range of rebate freezes and incentives.

The Government will legislate a “guarantee” of Medicare and the PBS by reserving money in a special fund.

A housing affordability plan — touted at one point as a centrepiece of the Budget — includes a new savings scheme for first homebuyers. They will be able to salary sacrifice up to $30,000 into their superannuation to use as a deposit, effectively delivering a bonus of 30 per cent or more.

Welfare payments including Newstart, and some pensions and allowances will be streamlined, and tougher penalties for non-compliance introduced.

Drug and alcohol testing will be introduced as part of a trial that may see people kicked off payments or steered into treatment.

While the 2017-18 deficit will sit at $29.4 billion, the Budget papers show Australia getting to a $7.4 billion surplus by 2020-21.

Mr Morrison said Australia has had some hard times, but that he has mapped out a way to “better days”.

A focus of the Government in selling the Budget will be telling people that they understand how languishing wages have led to an “acute sensitivity” towards cost-of-living pressures.

Mr Morrison said he and Prime Minister Malcolm Turnbull had talked to, and listened to Australians about their worries.

“I believe, though, that we are now moving towards the end of this difficult period ... there is clearly the potential for better days ahead,” he said in his Budget speech.

“Our choices are based on the principles of fairness, security and opportunity.”

Mr Morrison has divided the nation’s debt into “good” and “bad”, saying that recurrent spending — on welfare, health and education, for example — should be funded by recurrent income — taxes.

Racking up more debt should only be done if it’s to build investment opportunities such as infrastructure.

Adding to the debt is the government’s decision to ditch $13 billion in so-called “zombie measures”. They were unpopular decisions that the Senate refused to pass.

However, it is not guaranteed which of the new Budget measures the Senate will agree to.

The Advertiser asked Mr Morrison whether he had swapped the old zombies for new.

“You have to learn from what’s gone before. We’ll have to negotiate those thorough the Senate,” he said.

“The Senate has a right to express its view but equally the government has a right to put forward measures it thinks are reasonable.”

Asked whether he had laid the groundwork with South Australia’s Nick Xenophon Team — whose three Senators form a powerful bloc — he was optimistic.

“I would expect their support on a number of these measures,” he said. “But they are masters of their own domain.”

The winners and losers of the Federal Budget.

Insiders have told The Advertiser that they are optimistic about negotiations with the Senate. They have had several serious successes passing legislation with the help of NXT, often in exchange for bonuses for SA.

It is understood the crossbench has been happy dealing with Finance Minister Mathias Cormann to finesse legislation.

Asked whether he feared a backlash from within his own party — with former prime minister Tony Abbott still openly criticising government policy — Mr Morrison said:

“We’re a practical government and a practical government deals with problems and solves them.

“This is not a Budget for ideologues.”

Originally published as Federal Budget 2017: Scott Morrison says he has focused on fairness