Scott Morrison’s optimistic Budget relies on seven years of plenty

TREASURER Scott Morrison has handed down a shamelessly political Budget that promises to do it all. But can he pull it off?

THE government is offering voters guilt-free tax cuts in a seductive package aimed as much at the coming election as its broad economic program.

It is laying out a program it says would cut $140 billion in revenue over 10 years in a three-stage reshaping of income tax, while slashing government debt.

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That’s the fiscal equivalent of boasting you can sprint 100m in six seconds on one leg. No one in modern Budget history has even attempted it.

But associated with the economics of the government plan is the undisguised political element.

Opinion polls report many voters want the deficit eliminated before the amount of tax they pay is reduced. Now they are being told they can have both.

You can get your income tax reduced without damaging efforts to reduce government debt, promises Treasurer Scott Morrison.

The government will reinforce the attractiveness of this package by insisting a Labor government would increase taxes and not fix debt.

Tax will continue to be the centre of Parliament’s debate for months to come.

Mr Morrison will this week introduce legislation for the proposed personal tax changes — including the big benefits for high-income earners — to the House of Representatives.

We can expect the legislation will then go to the Senate, which will still be considering the government’s proposed big cuts to corporate taxes.

Why don’t we have both? Treasurer Scott Morrison has handed down a Budget that pays down debt and offers tax cuts. Picture Kym Smith

Two big, boofy tax packages occupying the same upper house time and space. The politics will be brutal in this contest and the crossbench will again be the deciders.

The government must convince them the economy will grow enough to fund essential services old and new, and still pay for the tax reductions.

The full three stages of the income tax redesign will be completed over seven years — requiring seven years of plenty, to adopt a Biblical schedule.

And seven years also means two full terms in office after the election scheduled for early next year.

“There is much more to do,” Mr Morrison said in his Budget statement to Parliament.

As a demonstration of good debt reduction faith, Mr Morrison has projected the first Budget surplus for 2019 instead of the previously scheduled 2020. It will be worth $2.2 billion — coincidentally the surplus former treasurer Peter Costello promised in 2003 when the Howard Government was under pressure to use a revenue bounty to cut taxes.

On Monday night, Mr Costello said he and his ABC interviewer Leigh Sales would be dead before government debt — now over $500 billion — would be eliminated.

Finance Minister Mathias Cormann disagreed Tuesday, and pointedly noted spending under this government was projected to grow on average by 1.9 per cent. Under the Howard Government it was over three per cent.

And on debt elimination he joked: “I think Mr Costello was premature in announcing the timing of his demise.”