Budget 2017 live coverage: Reaction, analysis on Scott Morrison budget
ANALYSIS, REACTION: In a surprising early victory for Scott Morrison, the ALP tonight said it will support the Treasurer’s new levy on Australia’s largest banks.
- Interactive: Budget at a glance
- Budget wrap
- Winners and losers
- Dennis Shanahan analysis
- Judith Sloan analysis
Budget 2017 Live: Here is how Budget Day 2017 played out, with video analysis of Scott Morrison’s second budget, key announcements, reaction and commentary.
• Budget 2017 Reaction and Analysis: Live Coverage
How the day unfolded
10.45pm: Hinch supports bank tax plan
Crossbench senator Derryn Hinch told Sky tonight he supported the increase in the Medicare levy because he was committed to the National Disability Insurance Scheme being paid for.
But he questioned how the news on the bank tax got out. “The one thing that struck me today was the levy on the banks – how the hell did that leak?
“Suddenly you found a $14 billion loss on banks (on the share market). I want to know how that leak happened – it’s a scandal.”
Senator Hinch said he liked the fact that money was being giving to organ donors.
However, Malcolm Roberts, a Queensland senator from One Nation, gave a negative reaction to the bank levy.
“Does anyone really think that the banks won’t just pass on the new $6 billion straight onto consumers,” he tweeted after the budget speech.
He also said that the budget was a failure as far as reducing the cost of living for everyday Australians.
One Nation leader Pauline Hanson said she had not had the chance to go through the budget in detail.
But one area she wanted the government to look at was raising royalties on Australia’s large gas and petroleum fields.
“We have gas and petroleum fields like the northwest shelf and we’re not getting a lot out of them in terms of royalties,” she said.
Senator Hanson said she also wanted the government to “rein in” welfare cheats, as there was “too much rorting” of Australia’s welfare system.
She said she also wanted the government to get “tough” on foreign ownership of Australian housing.
On the higher taxes on tobacco in the budget, she said it was wrong that smokers would be responsible for paying more taxes than multinational companies did.
10.25pm: Tomorrow’s front page: preview
And the Daily Telegraph’s front page tomorrow...
Front page of The Daily Telegraph #auspol and the budget play list https://t.co/C0GuljPC1k pic.twitter.com/DHfxViG1B0
— Christopher Dore (@wrongdorey) May 9, 2017
10pm: Transcript: Morrison’s speech
Read an edited transcript of the Treasurer’s budget speech, outlining the key policy areas.
9.55pm: Where the money comes.. and goes
9.45pm: Where’s the infrastructure cash going?
The Turnbull government will directly fund rail and road projects across the country and take full control of building a second international airport for Sydney. The budget provides an additional $20bn in capital spending — on top of $50m announced last year — for transport infrastructure using a combination of loans, grants and equity investments. See the interactive graphic below for commitments (click red circles for detail).
John Lyons 9.15pm: Labor to support bank levy
In a surprising early victory for Scott Morrison, the Labor Party tonight announced that it will support the Treasurer’s proposed new tax on Australia’s largest banks, a levy that is forecast to raise $6.2 billion.
The tax on Australia’s five largest banks is almost certain to be introduced after Labor announced that it would support it.
Labor’s Treasury spokesman Chris Bowen made the announcement on Sky News.
“We have to be responsible,” he said, adding that these were difficult fiscal times.
The speed with which Mr Bowen confirmed that the Labor Party would support the tax – within one hour of Scott Morrison finishing his budget speech - is almost unprecedented.
However, he said Labor needed more time to consider the Treasurer’s increase in the Medicare levy for high-income earners.
The bank levy will be imposed on the Commonwealth Bank, Westpac, ANZ, NAB and Macquarie Bank.
The independent senator Nick Xenophon also said he would support the levy.
In contrast to supporting the bank tax, Mr Bowen described the government’s housing affordability package as “a joke.”
He rejected the suggestion by Sky News’ David Speers that this was a budget that was likely to appeal to Labor.
People are saying this is a like a “Labor budget.†A Labor budget wouldn’t cut schools to give millionaires a tax cut.
— Bill Shorten (@billshortenmp) May 9, 2017
9.05pm: Medicare: what you need to know
- Scott Morrison’s decision to increase the Medicare levy will more than swallow the gains from the abolition of the deficit levy for many high-income earners when it kicks in from mid-2019, writes Sid Maher.
The Treasurer has announced the Medicare levy will rise by 0.5 per cent to 2.5 per cent in two years as the government moves to pay for its decision to fully fund the National Disability Insurance Scheme and underpin the nation’s health care system.
The decision — pushed out to beyond the next election — will disappoint taxpayers with incomes between $180,000 and up to $240,000 who will find themselves worse off under the new arrangements when they begin in two years. These taxpayers will however have been able to pocket the gains from the abolition of the deficit levy for two years.
But the increase the Medicare levy will also impact on other taxes which are linked to the top personal tax rate such as the fringe benefits tax rate. Read more in Medicare levy blow for taxpayers
- Patients are more likely to be bulk-billed after the Turnbull government announced the end of the Medicare rebate freeze — at a cost of $1 billion over three years — and scrapped plans to dump incentive payments for pathology and diagnostic imaging, writes Sean Parnell.
In a major departure from its Abbott-era approach to the portfolio, the Coalition has also forged agreements with disaffected lobby groups and offered Australians the reassurance of a Medicare Guarantee Fund to cover future budgets. Read more in End of Medicare freeze a bulk-bill boost
Brad Norington 9pm: PM spends big on infrastructure
Embarking on the most ambitious infrastructure spending program in a generation, the Turnbull government will directly fund rail and road projects across the country and take full control of building a second international airport for Sydney.
The budget provides an additional $20bn in capital spending — on top of $50m announced last year — for transport infrastructure using a combination of loans, grants and equity investments.
After identifying what they call “good debt” for projects offering potential capital returns and “bad debt” for recurrent budget spending, Malcolm Turnbull and his Treasurer Scott Morrison have decided to take much of their infrastructure bonanza off-budget.
The most high-profile infrastructure commitment will be a $5.3bn investment over 10 years, funded by debt, to build a new West Sydney Airport at Badgerys Creek. With Sydney Airport Group deciding the risks of medium-term financial return were too great to justify taking up its first option to build the airport, the Government has stepped in. It will take full control through the creation of a Western Sydney Airport Corporation to build and operate a new terminal and 3.7km runway at Badgerys Creek. Earthmoving work is due to start late next year, with the government hoping to fast-track the project so it can start operating as a second commercial Sydney airport for all domestic and international aircraft by 2026.
Rail projects are the other dominant capital spend for the Turnbull government as it seeks to modernise state-based passenger lines but most critically build an inland freight line stretching from Melbourne to Brisbane that can efficiently deliver goods and take pressure of traditional road transport routes.
In what Mr Morrison last night billed one of the biggest investments ever seen in regional Australia, the government will fund the inland rail project with $8.4bn in equity from borrowings that will be provided to the Australian Rail Track Corporation. Construction on the 1700km line is scheduled to start in the 2017-18 financial year and is projected to support 16,000 jobs at the peak of construction.
In Victoria, the government plans to provide a total of $1bn for regional rail and other infrastructure. Among the main projects are a $500m upgrade of the state’s regional rail networks, $100m for a Geleong rail line upgrade, $20m for the Murray Basin Rail and $30m for assessing plans for a proposed Tullamarine airport rail link.
In Western Australia, a total of $1.2bn will be allocated to Perth’s METRONET passenger rail network. The government has earmarked $237m for the Kwinana freeway and $100m for an upgrade of road access near the Fiona Stanley hospital area.
In Queensland, the government will spend $844m upgrading the Bruce Highway, including $530m for works from Pine Rivers to Caloundra.
MORE: The infrastructure projects in detail
8.50pm: Hugs all round
John Lyons 8.35pm: Reaction: ‘Liberal Treasurer, Labor budget?’
Two of the largest lobby groups – covering the housing industry and doctors – gave a very positive reaction to the budget.
While Bill Shorten said the government had failed “massively” to assist with housing affordability, the Housing Industry Association described the budget as “great”. It said it would encourage young people to put money aside.
The association’s Graham Wolfe welcomed the move to allow downsizers to put $300,000 per person into superannuation, but noted that people had to have had the home for 10 years.
The Australian Medical Association’s Michael Gannon also praised the budget, saying the government was getting back some of the goodwill it lost in 2014.
“There’s plenty of good news in this budget,” Mr Gannon told Sky News.
Mr Shorten mocked Mr Morrison’s theme in his budget speech that “better days are ahead”.
In a tweet, he said: “’Better days are ahead’… unless you need a job, or you’re a student, or you need to see a GP, or you’re trying to buy your first home.”
The Opposition leader went on to describe it as “a massive failure on housing affordability”.
“Turnbull is still giving tax breaks to wealthy investors and property speculators.”
His first interview after the speech was with the ABC’s Leigh Sales, who asked: “Could you be the first Liberal Treasurer in history to deliver a Labor budget?”
He batted away the question by saying the Liberal Party had always had a commitment to the homeless and disabled.
Independent senator Nick Xenophon said the government was trying to “cauterize” the attacks on it over Medicare.
Senator Xenophon said while the big banks would “cry blue murder” over the new levy on them it was in fact a “tickle” for the banks.
“Better days are aheadâ€... unless you need a job, or you’re a student, or you need to see a GP, or you’re trying to buy your first home.
— Bill Shorten (@billshortenmp) May 9, 2017
Judith Sloan 8.30pm: They can run but they can’t hide
The most extraordinary aspect of this budget, apart from its deeply Labor roots of big spending and big taxing, is the Treasurer’s speech itself. Who utters sentences such as “Terribly, this had meant families have even broken apart” or “Australians have had to dig deep to keep our economy on the right track” or “We will provide the Australian Taxation Office with additional funding to chase and tax the crooks”?
Someone needs to give the Treasurer - let’s call him Scott Morriswan - a tip: that he is not delivering some infantile sermon to an excitable congregation but rather a serious policy document that sets the fiscal framework for the next four years.
Read Judith Sloan’s full analysis here: Party trick of good and bad debt
8.25pm: INTERACTIVE: Budget at a glance
8.10pm: Winners and losers
See the key areas that Scott Morrison targeted in what he calls a “responsible, honest” financial statement.
John Lyons 8.05pm: Smart moves on housing
Scott Morrison has made two announcements on home ownership that are likely to prove popular with both young and older Australians.
One of the big announcements in the budget is that first-home buyers will be able to save for a deposit by salary sacrificing into their superannuation accounts.
This would be taxed at 15 per cent rather than at normal marginal rate.
In addition, the government would enable older Australians to downsize their house by allowing them to make a one-off contribution of up to $300,000 into a superannuation fund from the sale of their home.
This is likely to have a real impact in freeing up housing stock in the two most competitive cities, Sydney and Melbourne.
In both cities, often the home is lived in only by the elderly couple after their children have moved into their own homes.
On Sydney’s north shore, for example, thousands of large family homes are occupied by either one or two people due to the “empty-nest syndrome.”
But the budget speech attempted to be all things to all people and retreated from earlier rhetoric to repair the nation’s budgetary situation.
The speech appeared to deliver some money for a large amount of constituencies.
The Treasurer promised a huge boost to the nation’s infrastructure - which would include a Melbourne to Brisbane inland railway network.
Work on this would begin in 2017 and benefit all the regions along the route.
Mr Morrison said the government would continue to fund “Operation Sovereign Borders.”
“What others mocked as a slogan we turned into an outcome.”
Mr Morrison said the government had chosen to close the funding gap of the National Disability Insurance Scheme.
He said the government would provide an extra $18.6 billion for all schools over the next ten years.
He said the government would tackle rising electricity prices.
From July 1, a new levy has been imposed on the four large banks.
This would secure $6.2 billion which would go towards budget repair.
On housing costs, Mr Morrison announced that surplus defence land in Melbourne would be released on which about 6000 homes could be built.
States and territories would also be encouraged to transfer state land for residential development.
JAMES KIRBY ANALYSIS: Property investors hit in housing affordability package
David Crowe 7.50pm: Treasurer slugs banks, foreign interests, workers
Scott Morrison is slapping a $8.2 billion income tax increase on workers and a new $6.2bn levy on the big five banks to help achieve a budget surplus within five years, blaming the Senate for the need to raise more revenue.
In another political risk, the Treasurer unveiled an increase in the Medicare levy from 2 per cent to 2.5 per cent on almost every worker, arguing that all Australians should help fill a funding gap for the National Disability Insurance Scheme.
Employers will also pay $1.2bn more over four years for visas for temporary foreign workers, in a response to years of political argument over people on 457 visas taking Australian jobs.
Foreign investors will pay higher capital gains tax on their property purchases in a move to raise $581m over four years and show Australians the government is acting on housing affordability.
Read David Crowe’s full Budget 2017 wrap here
7.45pm: Dennis Shanahan’s verdict
“This budget may very well make Shorten regret the Medicare scare success, or at least his continued efforts to keep it alive and pursue the Coalition over the NDIS, Gonski school funding, negative gearing, housing affordability, savings measures blocked in the Senate and a banking royal commission.
“After too long, the Prime Minister has stirred from a fog of overconfidence, vacillation, unreality and delay to strike back at Shorten in the all the areas where he has hurt the Coalition most.”
Read Dennis Shanahan’s verdict in full here: Shorten’s scare tactics blunted
John Lyons 7.40pm: ‘Better days ahead’
Treasurer Scott Morrison has tonight pledged that Australia’s budget will return to surplus in 2021.
In his budget speech to federal parliament, Mr Morrison has promised “better days ahead” for Australians.
His theme of optimism is running through his budget speech tonight.
“We cannot agree with those who say there is nothing the government can do,” he said, regarding cost of living increases.
“I announce a fair and responsible path back to a balanced budget.”
“The budget is projected to return to balance in 2021 and remain in surplus.”
Mr Morrison said the government had been delivering a national economic plan for jobs and growth.
“Our export trade deals are bearing fruit,” he said.
The government would create the Western Sydney Airport Corporation, which would create 20,000 jobs.
Earthmoving work would begin in the second half of next year and it would be delivered by 2026.
more to come...
7.30pm: Watch Morrison’s budget speech
John Lyons 7.25pm: Massive infrastructure spending
Treasurer Scott Morrison is expected to announce a massive infrastructure program in tonight’s budget.
Sky News reported that in addition to the Melbourne to Brisbane freight rail and Badgerys Creek rail links there would be a further $10 billion for rail projects.
John Lyons 6pm: Balanced budget ‘on course’
Treasurer Scott Morrison is set to announce that Australia will return to a budget surplus in 2020-21, according to a report tonight.
Sky News reported that Mr Morrison would announce that his earlier stated aim to deliver a surplus by then would remain in tonight’s budget.
The network’s Kieran Gilbert also reported that the Treasurer would announce that the Medicare rebate freeze would be lifted including for specialists, not just GPs.
This follows The Australian’s report today that the government was planning to announce that a Medicare levy of 1 per cent would be imposed on high-income earners.
This would apply, The Australian reported, even if the person had private health insurance.
Here's the document.
— Paul Murray (@PMOnAir) May 9, 2017
They have increased the debt ceiling to $600b!!!
More #pmlive 10pm @SkyNewsAust #Budget pic.twitter.com/bJZXHbKHlR
In today’s newspaper economics correspondent Adam Creighton is sceptical of a return to surplus in 2021:
“The government will once again assume the economy goes gangbusters for five years in a row. And once again, it probably won’t. It is only because of these rosy forecasts the government will be able to present a return to a (tiny) surplus by 2021. In truth, rather than a surplus, in 2021 the government is far more likely to have a budget deficit of $37 billion, which is the amount pencilled in for this financial year.”
Read Creighton’s full analysis here: Time to factor in some realistic pessimism
John Lyons 5.45pm: Morrison’s juggling act
The federal Treasurer is about to deliver a “tightrope budget”.
Scott Morrison will attempt to arrest the government’s declining political fortunes while somehow managing to maintain the nation’s Triple-A credit rating.
In what is likely to have the giveaway feel of a pre-election budget, the government appears to have abandoned the budget-repair priorities outlined in the 2014 budget of the Abbott government.
This budget has been framed in an extremely delicate political and economic context.
Should international ratings agencies remove the AAA rating, the cost that the Federal Government pays to borrow money will increase.
Any downgrading could also have a damaging impact on business confidence and employment.
Tonight’s budget is certain to deliver substantial handouts to a wide range of constituencies.
Much of the new spending is expected to be funded by levies both on the major banks and on high-income earners by a higher Medicare levy.
Speculation about a levy on the interbank funding market led to a $14 billion sell-off today of shares in the big four banks.
The Australian revealed today that a proposal to increase a compulsory 1 per cent Medicare surcharge on high-income earners was taken to the final meeting of the expenditure review committee.
Many of the key measures have been revealed in recent weeks.
Those which have been revealed suggest a significant increase in spending.
From 7.30pm AEST, The Australian will have rolling coverage through the evening.
Chris Kohler 4.15pm: Bank stocks smashed
Almost $14 billion was wiped off the big four Australian banks today as investors scattered amid fears of a levy directed at the lenders in the federal budget. The financial sector, which is the largest on the local market by far, dropped 2.4 per cent while most other sector saw solid gains.
Weighed down by the banking giants, the S&P/ASX 200 closed in negative territory for the fifth time in six sessions, giving up 0.53 per cent to 5839.9 points.
Commonwealth Bank fell 3.9 per cent to $82.02, Westpac gave up 3.5 per cent to $32.88, ANZ dropped 2.6 per cent to $29.16 and NAB fell 2.1 per cent to $32.42. The collective fall in dollars and cents works out to be around $13.8 billion.
“CBA’s numbers were a little bit soft, that was the other thing, but of course the talk of taxes… the market is a little troubled on the back of all these things,” Macquarie division director Lucinda Chan told The Australian. “All the banks have now come out with their numbers and they haven’t done too badly, really.”
When asked if the banks were overvalued and due for this pullback, Ms Chan said it all hinges on dividends. “So long as [the banks] pay the dividends as the market expects then they are ultimately going to get the support.” Read more here.
David Rogers 4pm: Banks would likely slug customers
A potential transaction tax or “Tobin Tax” on interbank funding to raise $6bn from Australian banks over the next four years would likely be passed on to customers, according to UBS.
UBS analyst Jonathan Mott notes that Australian Banks have a very good track record of passing on higher funding costs, credit risks and other headwinds to customers. “Although there is likely to be political pressure and further calls for a Royal Commission, we would expect the Banks to pass a potential transaction tax onto borrowers,” he says. “We believe the easiest way for the Banks to achieve this would be to reprice their mortgage books — to offset a $1.5bn headwind we estimate the Banks would need to reprice their variable mortgage books by 12-15 basis points. Alternatively, the Banks could increase owner occupied mortgage rates by about 10 basis points and investment property loans by about 25 basis points and Interest Only loans by more. This would also help the Banks meet their lending caps imposed by APRA.”
He says any such tax likely only apply to the majors, potentially lopping about $1.5bn per annum — or 5 per cent — off their net profit after tax.
Reports of a potential new transaction tax appear to be magnifying a selloff in the sector today a disappointing update from CBA. CBA is down 3.8pc, heading for its worst day in 15 months and Westpac is down 3.3pc, on track for its worst day since June 2016. ANZ down 2.5pc, heading for worst day in 6 weeks. NAB down 2.1pc, heading for worst day in the past week.
Mr Mott is cautious on the banks after “a very subdued reporting season and with increasing risk to the Australian Housing Bubble.”
Follow the latest developments in business news at our BusinessNow blog here.
Rachel Baxendale 3.30pm: PM’s final question
Malcolm Turnbull concludes Question Time by adding to his previous answer to Tanya Plibersek’s question about schools reaching the schools resource standard.
He previously said that by 2027, the commonwealth would be funding government schools to the schooling resource standard of 20 per cent of total funds (the states and territories are responsible for the other 80 per cent).
“Under the existing arrangements that were put in place by the Labor Party by 2027, 6,966 schools would still have been below the full schooling standard by an average of approximately $690,000,” Mr Turnbull said.
“So the reality is under the Labor Party’s plan, it would have taken 150 years for the schooling resource standard to be met and equitable, fair, consistent, needs-based funding to be achieved.”
That’s it for QT.
Rachel Baxendale 3.25pm: Last questions
On behalf of Communications Minister Mitch Fifield, Urban Infrastructure Minister Paul Fletcher highlights the government’s media and gambling reforms. Veterans Affairs Minister Dan Tehan similarly highlights Sunday’s landmark announcement of $350 million to address mental health issues and speed up the processing of claims for veterans.
Rachel Baxendale 3.20pm: Labor challenges Keenan
Labor then challenges Mr Keenan’s claims about AFP funding, with Shadow Justice Minister Clare O’Neil claiming the government cut $430m from the AFP in last year’s budget. “Isn’t it actually the case that despite the Prime Minister’s so-called funding boost, the Australian Federal Police will be over $110 million worse off?” she says. Mr Keenan says yesterday’s announcement represents the largest single investment in our domestic capability since the Howard government, and outlines a series of Labor cuts. “What has happened since we arrived opposite since 2013, we have consistently provided the Australian Federal Police and the law enforcement agencies that we have responsibility for with the funding they need to do the job,” he said. “The Shadow Minister has a record, say I announce $100 million for the Australian Federal Police next year, she would put out a media release saying we are cutting it by $100 million in four years time. This is the level of understanding it has with the shadow Minister over there.”
Rachel Baxendale 3.15pm: Terror Budget boost
Justice Minister Michael Keenan uses a dixer to highlight the government’s bolstering of the Australian Federal Police, with $1.5 billion to combat terrorism, $128 for the serious financial crime task force and $180 million if the physical protection of the Australian Federal Police.
“Yesterday, on top of this funding, we announced $321.4 million increase in the AFP’s domestic capability,” he says. “This represents the single largest funding for the AFP’s domestic capability within the past decades.
“This funding we announced yesterday will provide an extra 100 intelligence experts, 100 covert and surveillance experts and 100 forensic specialists to advance the fight against crime and terrorism.”
Rachel Baxendale 3.10pm: Last question from Plibersek
Yet another question from Tanya Plibersek on education. She accuses Malcolm Turnbull of cutting $22 billion from schools and claims only one in seven public schools will reach their “schooling resource standard” over the next decade. Mr Turnbull says there will be an increase in spending on all schools of more than $18 billion over the next 10 years.
“The Catholic system schools, which I was asked about a moment ago, will receive a total of $28.3 billion in recurrent funding over four years, and a total of $81 billion over 10 years,” he said. “For the information of members, average per student funding for the Catholic sector by 2027 will be $12,493.”
Energy Minister Josh Frydenberg, representing Education Minister Simon Birmingham, quotes former Liberal Party founder Sir Robert Menzies’ Forgotten People speech from 1942: “Over every school should be written in gold, here we deal with our future”.
“Mr Speaker, today, our school reforms, our reforms to preschool education, higher education reforms will ensure greater excellence and a more sustainable future and a fairer system for education for all,” Mr Frydenberg says.
Rachel Baxendale 3pm: Dutton’s fun with Labor ad
Immigration Minister Peter Dutton uses a dixer on the government’s citizenship reforms to criticise Bill Shorten for his dumped “Australian First” ad campaign and record on 457 visas.
“I noticed this week, Mr Speaker, the Opposition Leader is out there pretending he is the best friend of the worker but he wasn’t when he was the employment minister in the glorious Rudd/Gillard days of this parliament,” Mr Dutton said. “The Opposition Leader, while he is today pretending to be the friend of the worker, presided over a dodgy 457 visa program which saw 40,000 additional foreign workers coming into our country to go into jobs that should have been taken by Australian workers.”
Mr Dutton has a stab at Mr Shorten over perceived divisions between him and former leadership rival Anthony Albanese, citing The Australian ’s article today about Mr Albanese describing the “Australian First” ad as a “shocker”. “I won’t have you rubbishing The Australian newspaper,” Mr Dutton responds to jeers from Labor.
Rachel Baxendale 2.55pm: Shorten’s turn on Catholic schools
Now it’s Bill Shorten’s turn to challenge the PM on Catholic school funding. The Opposition Leader quotes Archbishop of Sydney Anthony Fisher saying: “The government’s formula will force fee rises of over $1000 for schools in Sydney. Modelling in other states found the same”.
Mr Shorten asks whether Mr Turnbull agrees or disagrees with the Archbishop.
Mr Turnbull says the funding for the Catholic sector will grow 3.7 per cent. “If the Catholic system is receiving the additional money, that is the proposition, and fees will have to go up at some schools, then presumably fees would go down at others,” he said. “It will be allocated on the basis of need and if the Catholic system wishes to reallocate money to its own need, it is perfectly able to do it.”
Rachel Baxendale 2.50pm: Pyne the ‘steel worker’
Defence Industry Minister Christopher Pyne gets a few laughs as he responds to a dixer from Brisbane Liberal MP Trevor Evans about what the industry is doing for our national prosperity.
“I can tell the member for Brisbane, Mr Speaker, that just last month I cut steel on the first of the 54 vessels that this government has committed to building in Australia,” he said.
“Last month, I cut steel and pressed the button and they are cutting services on the first of 54 vessels, the Pacific patrol vessels, Mr Speaker, creating over 500 jobs, costing $300 million and that is just the beginning.”
“Under Labor, the contrast couldn’t be more appalling — 49 projects reduced and 8 projects cancelled altogether. That is the record of the Labor Party in defence. Ours is proud. They should be ashamed of theirs.”
Rachel Baxendale 2.45pm: Plibersek again on schools
Another question from Tanya Plibersek for the PM on schools. She wants to know why Mr Turnbull said in his last answer that funding was “consistent” across schools when his own briefing document says “in relation to the funding standard that it is ‘misleading to say a consistent share’. Mr Turnbull says he could not follow Ms Plibersek’s question, but addresses her previous question by saying that St Clair High School will in fact be better off.
“The honourable member mentioned St Clair High School in New South Wales, and Mr Speaker, consulting the Education Department’s app and website, the funding, estimated Australian government funding for that school this year is $2.4 million,” he says. “It will increase by $121,000 next year. To 2027, it will increase to a total funding of $31 million, increased by nearly 7.5 million dollars over that period.”
Rachel Baxendale 2.40pm: Katter’s challenge for Josh
Independent Bob Katter has urged Energy Minister Josh Frydenberg to become a Ben Chifley or Robert Menzies and build a series of nation building projects in North Queensland, including dams, coal mines, the Galilee coal rail line, a fertiliser project, a transportation waterway for prawn farms, a solar farm and a “Northern Australia Snowy Mountains Authority”.
Mr Frydenberg said the government had allocated more than $2 billion to new water projects, several of which are in North Queensland, and said funding for the Galilee rail line would be determined by the Northern Australia Infrastructure Facility board. “We’re in favour of more jobs in the region, whether it’s in water, whether it’s in energy or, indeed, in coal,” he said.
Rachel Baxendale 2.35pm: More on schools
Schools are back on the agenda, with Shadow Education Minister Tanya Plibersek asking the PM about the Principal of St Clair Public High School in Western Sydney’s claims that the government has “wiped out the funding increases his school would receive under Labor’s education funding plan.” The principal told the ABC the funding for his school would be cut by $300,000 in the next year alone.
Mr Turnbull said the government’s policy was “fair, consistent and needs-based”.
“Honourable members opposite should stop fooling people about their imaginary funding promise and support a fair model, recommended by David Gonski,” he said.
Rachel Baxendale 2.30pm: ‘Labor’s mountain of debt’
Shadow Treasurer Chris Bowen asks whether Mr Turnbull can confirm that gross debt will blow out to a record half a trillion dollars. Mr Turnbull said Labor had gone to the last election promising $16 billion more in deficit than the government. “Never have I seen somebody so responsible for so much debt, stand up and suggest anything other than bringing it down, inching it down,” he said. “We have brought this budget back into a form where it is under control, and honourable members will see, at 7:30 tonight, when the Treasurer presents the budget, they will see further progress, as we deliver the fairness, the security and the opportunity, as we demonstrate that we will live within our means and not fling, as Labor did, a mountain of debt on the shoulders of our children and grandchildren.”
Rachel Baxendale 2.18pm: Battle of the Coral Sea tributes
In a demonstration of bipartisanship, Mr Turnbull and Mr Shorten have both spoken of the importance of the Battle of the Coral Sea and the US-Australia alliance following the Prime Minister’s commemoration of the 75th anniversary with US President Donald Trump last week.
“On the Intrepid in New York last week, Australians and American, leaders of our nations, veterans, servicemen and women, recognised and honoured the service of those who saved our nation 75 years ago, just as we honoured the service of those who defend our freedoms in uniform today,” Mr Turnbull said.
Mr Shorten said America’s assistance of Australia during the battle summed up the importance of the alliance and its ongoing relevance. “American pilots went up against overwhelming odds in defence of this country, and from that day on, I believe that an alliance which was strong was made irrevocable,” he said.
Rachel Baxendale 2.13pm: ‘He didn’t give a Gonski’
Question time has kicked off with Bill Shorten asking Malcolm Turnbull why he’ll be “cutting $22 billion from schools to pay for tax cuts for millionaires and big business” in tonight’s budget. The Prime Minister replied that the government is committed to “nationally consistent, fair, needs-based funding for all Australian schools”.
Mr Turnbull accused Mr Shorten of backflipping on Labor’s commitment to needs-based funding. “Mr Speaker, in excess of 75 occasions, (Mr Shorten) was certainly sticking to the script on this occasion, over 75 occasions he has said, ‘Fundamentally that needs-based funding will give our children across Australia the best start in life.’ He said that again and again and again and again.
“And what he did instead, what he did instead, he did not give a Gonski, he delivered 27 conflicting deals, which gave Australian children totally different levels of commonwealth government support, depending on what system they were in, what state they were in, whether there was an independent school or a systemic school, a complete shemozzle, impossible to understand.”
2pm Question time starts
Right, time to take a break from the budget. Rachel Baxendale will be providing updates from the first Question Time of the sitting week.
Rachel Baxendale 1.55pm: Youth jobs row
As journalists file in to the budget lockup, senators are debating the government’s Youth PaTH jobs program.
The program would encourage businesses to employ young people at the minimum wage of $17.70 an hour by giving them a subsidy so that their overall outlay is only $7.60 an hour.
So far there’s been a stream of criticism from Labor and the Greens.
Greens Senator Sarah Hanson-Young has accused the government of “pushing young people into poverty”.
Liberal Democrat David Leyonhjelm is also critical, but for rather different reasons.
“Businesses should simply be allowed to offer jobs to people at $7.60 an hour,” he said.
“After all, the dole delivers $7 an hour for doing nothing.”
Employment Minister Michaelia cash said the program would enable youth who wanted to get their foot in the door the opportunity to have the training to do so.
“These are young people who without the skills training are not going to get their foot in the door,” she said.
Richard Gluyas 1.30pm: Banks brace for budget levy hit
The major banks are bracing for the introduction of a levy on the inter-bank funding market in tonight’s budget.
While the initiative has not been confirmed, rumours are circulating that it could raise up to $6 billion over the forward estimates to help fund the National Disability Insurance Scheme.
Shares in the big four banks are trading sharply lower. Full story here.
John Durie 1pm: A budget of bank initiatives?
Treasury Secretary John Fraser is planning on calling the bank bosses tonight as the Treasurer unveils the budget to brief them on planned changes for the industry. This suggests the budget may be full of new bank initiatives.
The banks are already prepared for a levy to pay for the new super Tribunal to handle bank customer complaints. There will also be a levy to cover financial advisers who go out of business. But reports of a new tax on interbank transactions has the industry confused as to exactly how it will work.
The big banks pay close to the allotted thirty per cent tax now so an extra impost will add to costs. Typically the banking oligopoly passes such costs onto customers which defeats the purposes of any industry specific tax increase. All will be revealed tonight.
David Crowe 12.34pm: Abbott’s funding warning
Tony Abbott and former defence minister Kevin Andrews have used the Coalition party room meeting to put Malcolm Turnbull on notice about the government’s $18.6 billion school funding boost, warning of the impact on Catholic schools.
In the biggest debate of the Tuesday meeting ahead of the federal budget, the former prime minister told the Prime Minister and his colleagues of the need to be very careful in adjusting funding for the Catholic sector.
Liberal ACT senator Zed Seselja also aired his concern about the hit to Catholic schools in his region from a new funding formula that has sparked claims of a $3,000 increase in school fees over a decade. Full story here.
Stefanie Balogh 11.40am: School funding calculator
The Catholic education sector has hit out the launch of the Turnbull government’s school funding calculator today slamming it for peddling “misleading information’’.
Danielle Cronin, the acting executive of the National Catholic Education Commission, said the Coalition was further alienating the sector and causing anxiety among parents.
“The funding model used to populate the website relies on seriously flawed assumptions about the capacity of Catholic school parents to pay school fees,’’ she said.
Education Minister Simon Birmingham has today launched an online calculator to enable parents and schools to assess the impact of the changes. Full story here.
11.10am: Budget predictions
10.30am: What to really look out for
The government will continue to tout its 2021 surplus plan in tonight’s budget, but the assumptions made on commodity prices are just one of the roadblocks in the path of that goal, according to Westpac chief economist Bill Evans.
In a preview to the federal budget, Mr Evans highlights misconceptions about the trajectory of the iron ore price, measures to curb the housing affordability crisis, and where the government’s infrastructure spend is likely to go.
The problem with iron ore: “The target of a 2021 surplus is something that has been very dear to the government and we expect that they’ll be at great pain to continue to achieve that objective,” Mr Evans said, who says the government is overshooting its forward iron ore forecasts by about a third.
The housing ‘ghost tax’: “There’s going to be the so-called ‘ghost house tax’, where people who don’t let out their properties are taxed, and this is targeted particularly against international investors.
Infrastructure importance: “Infrastructure Australia has 18 projects that they have approved on the basis of cost-benefit. They’ve costed them at about $60 billion over 15 years and about half of them are dealing with congestion — that is traffic in the cities — and the other half are to do with interconnectedness.”
How will this impact the surplus? “Even though you can call a debt ‘good or bad’ … if you fund them through grants to the states they will still appear in the budget deficit or surplus, and a large number of projects will make it very difficult to announce a surplus in 2021, which I think they feel is absolutely necessary.”
You can read the full preview in BusinessNow live.
10.10am: Video — Morrison this morning
10am: Draw your own conclusions
9.50am: Demerits about ‘mutual obligation’
Liberal MP Steve Ciobo says a demerit-point system for welfare recipients who don’t turn up for job interviews or work-for-the-dole appointments is all about mutual obligation.
Slack jobseekers will start losing payments when they reach four points under a series of federal government measures, according to reports.
“No-one begrudges someone from having a helping hand when times are tough but we also expect that they will do what is asked of them,” he told Sky News. “We expect them to honour their half of the deal.”
Robert Gottliebsen 9.20am: Budget day behind the scenes
Ever wondered what happens during a budget lockup?
“There must be no communication with the outside world during the lock up. In the early days of mobile phones I took my mobile phone into the lock up not realising there was a new rule banning them, not just switching them off. It was about 7.27pm, just before the Treasurer rose to speak. I switched on my mobile to talk to the office. There was loud shouting and I felt like a terrorist. I was reprimanded but, as a result, today’s bagging service was introduced.”
Robert Gottliebsen’s behind-the-scenes look at his Budget Day schedule is a must-read today.
Emily Ritchie 9.05am: Sam’s stunt
Comedian Lawrence Mooney has taken to the steps of Parliament House this morning to demonstrate an awkward impression of Prime Minister “Trumble”.
.@samdastyari lets 'Prime Minister Trumble' (a.k.a @lawrencemooney) crash his parliament doorstop #auspol #Budget2017 pic.twitter.com/hYRtIM1wOG
— Sky News Australia (@SkyNewsAust) May 8, 2017
The gag, which was promoted as “epic” by Labor senator Sam Dastyari on Twitter, took aim at fake news and Malcolm Turnbull’s enunciation.
As for budget reforms, Mr “Trumble” announced there would be a cap on ageing, set at 88.
“If you reach that age we’ll just take you out to the farm with the incontinent labrador,” said Mooney. He also poked fun at Mr Turnbull’s mannerisms and what he called distraction techniques. “Over in this hand I hold my glasses quite emphatically as if to say ‘I read, but my eyesight is poor’.”
Greg Brown 8.55am: McManus — budget will favour rich
ACTU secretary Sally McManus is not buying claims that the budget will be fair, arguing the it will be favourable to the rich and to big business.
Ms McManus said that tax cuts for business and for the rich show the government is wedded to trickle down economics “like religious fanatics”.
“That is money that should be going into jobs, into schools, into Medicare,” Ms McManus told ABC Radio National.
Ms McManus said that infrastructure projects should come with guarantees that local workers will be employed rather than foreigners.
“And they have to be jobs that are properly paid, so not casualised jobs, not a repeat of what we see every time the statistics come out, that all of our good and steady jobs are being turned into casual jobs and contractors where all the risk moves onto the employee,” Ms McManus said.
“So it’s not just jobs it’s jobs that people can rely on to pay the bills and support their families.”
Emily Ritchie 8.45am: ‘Lack of trust’
Shadow treasurer Chris Bowen has lashed out at the Turnbull government this morning, saying the Coalition lacks empathy when it comes to schools funding reform.
“There is a lack of trust, lack of understanding, the lack of empathy and the lack of knowledge from Mr Turnbull and his ministers when it comes to schools funding,” said Mr Bowen.
He also said he is interested in seeing what the government will announce in regards to housing reform, arguing the Coalition is just playing catch up.
“A housing affordability which doesn’t involve proper reform of negative gearing in particular is nothing short of a swipe,” Mr Bowen said outside Parliament House this morning.
“We see the government trying to play desperate catch up with Labor on so many measures.”
Here is the Gonski 2.0 hit list.
Emily Ritchie 8.20am: ‘No silver bullets’
Mr Morrison insists he has been listening to frustrated Australians while working on his second budget.
“Australians have been making big sacrifices to ensure that we’ve achieved the growth that we’ve had and I want to tell them that it’s been worth it,” he said.
Mr Morrison also believes this year’s budget is grounded in the principles of fairness and opportunity and is a practical response to the challenges facing modern Australia.
“I’m responsibly optimistic that there are better days ahead, we can see them but we have to secure them,” said the Treasurer Scott Morrison outside Parliament House.
“What you’ll see tonight is that we’ve sought to be practical. Budgets are all about choices, this budget is about making the right choices to secure the better days that are ahead. It’s based on the principles of fairness, security and opportunity. The choices to ensure that we grow our economy for more and better paid jobs. The choice to ensure that we guarantee the services that Australians rely on. The choice to ensure that we put downward pressure on rising costs of living, and, as always, the choice to ensure that the government lives within its means.”
Mr Morrison said there was no silver bullet when it comes to delivering a budget without revealing any more detail about specific reforms.
“I think are tired of superficial responses that don’t treat problems seriously,” he said. “These are complex challenges and they need comprehensive solutions. But those solutions will only go so far and governments have to apply themselves to them.”
8.05am: Sam’s epic promise
We’ll let you know how this goes ... Sam Dastyari is, of course, facing a backlash following his housing affordability video.
To all of Canberra's press gallery. Be at SENATE DOORS at 8am. Today will be epic. (Can gallery ppl share)
— Sam Dastyari (@samdastyari) May 8, 2017
7.40am: Fund to boost Games medal haul
Tonight’s federal budget will include $15 million to help 2000-odd athletes ahead of next year’s Commonwealth Games on the Gold Coast, News Corp reports.
The fund will pay for equipment, coaching and high-performance training, and for athletes to travel to international meets around the world.
Emily Ritchie 7.30am: Demerit-point system for dole bludgers
Welfare recipients will face serious consequences if they aren’t actively looking for work under this year’s budget, with a driver style demerit system for benefit rorters set to be announced.
Welfare recipients who fail to turn up to job interviews or work-for-the-dole appointments will start losing payments when they reach four points — and when they hit seven demerit points, they will have their payment cut-off, News Corp reports.
Payments will also be cancelled immediately for welfare recipients who commit serious offences.
The demerit scheme is just one aspect of major reform to the welfare system contained in this year’s budget, which will focus on streamlining Centrelink payments and drastically reducing the number and complexity of benefits.
Emily Ritchie 7.15am: Credlin accuses PM
Tony Abbott’s former chief of staff Peta Credlin has hit out at the government, claiming this year’s budget is not about what’s best for Australia, but about Prime Minister Malcolm Turnbull trying to win Newspoll.
“The Prime Minister said 30 Newspolls and an economic narrative,” Ms Credlin told Sky News last night.
“Last time I looked he’s down 11 straight Newspolls in a row. He’s throwing everything and the kitchen sink at trying to return his popularity in Newspoll state. That is the measure we’re setting ourselves as a country. Can the Prime Minister survive a Newspoll rather than what’s in the best interests of our country.”
Ms Credlin also said it was worrying the government is burdened with such high levels of debt.
“We’re in a very tough situation, we’re at about 187 per cent of household indebtedness right across the country. You’ve got that issue and then you’ve got the government in no state to withstand any external shocks that might come into the economy. That’s worrying.”
She also criticised the Turnbull government over schools funding, saying Coalition supporters want the government to stop hitting their own.
“When last year’s budget hit our base for superannuation, it beggar’s belief that this year’s budget would again hit the aspirational coalition base on school’s funding. It is a fight we don’t need. We’re behind in the polls, when are we going to stop hitting our own.”
Emily Ritchie 7am: Key Budget stories this morning
Here are some of the main budget stories in The Australian this morning.
• Scott Morrison will tonight announce full funding of the National Disability Insurance Scheme beyond 2019, in a move that has forced the government to find an extra $6 billion in annual savings, reports Simon Benson.
• Funding to 51 private and Catholic schools will be cut or frozen under Malcolm Turnbull’s $18.6 billion education package, writes Stefanie Balogh.
• Small-business owners will win from policies that keep tax burdens lower for longer, writes David Crowe.
• A plan to streamline Centrelink payments will be unveiled in today’s budget, writes Sarah Martin.
• Defence will increase its fulltime civilian workforce by more than 1000 employees, writes Joe Kelly.
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