How your $2 loss is fixing the economy

BAD news Australia, the government has decided you’re not going to get an extra couple of dollars in your pay packet. On the plus side, you’re saving the economy.

Mathias Cormann is dropping into Gladesville RSL to talk to locals about what is in the budget for them.

LABOR’S backdown on a $3 billion tax cut has helped put the goal of a budget surplus back on track, Finance Minister Mathias Cormann says.

By abolishing the tax-free threshold increase linked to Labor’s former carbon pricing levy, about 10 million taxpayers will not receive a weekly tax reduction of $2 or less, Mr Cormann said on Saturday.

“The budget position is now improving, we are now on a believable pathway back to surplus,” he told reporters in Perth. He urged the opposition to embrace its new-found bipartisanship.

“We call on (Opposition Leader) Bill Shorten and (Shadow Treasurer) Chris Bowen not to stop here.

“Keep looking at the measures we’ve put forward to repair the budget mess you left behind.” The cut would have boosted the tax-free threshold from $18,200 to $19,400 from July 1.

Mr Bowen defended Labor’s about-face by saying a tax cut was no longer appropriate given the state of the federal budget.

Shadow treasurer Chris Bowen says it isn’t easy agreeing with the Liberals.

“This wasn’t an easy decision for the Labor Party,” he told reporters in Sydney.

“But given this is the government’s position not to have these tax cuts, and given the state of the budget deficit, the responsible thing for Labor to do is to give its support.” He did not rule out helping the government find further savings in the budget, but said Labor would remain staunchly opposed to some measures, including cuts to the family tax benefit.

“I’ve indicated there are some measures we are still looking closely at, like the change to pension assets, which we are working through very carefully,” he said.

Originally published as How your $2 loss is fixing the economy