Australia plans major spending plus surplus in 3 years

A 6.2 billion AU dollar (4.56 billion USA dollar) levy on the big banks, new taxes aimed at foreign investors who purchase Australian property and tax breaks for both small businesses and first-home buyers were the highlights of Morrison's address to Parliament overnight, in a package Prime Minister Malcolm Turnbull described as "fair on every level". Morrison says he will outline a budget for the next fiscal year that will be fair and rein in mounting debt.

Australia's banking sector reacted with fury on Wednesday (May 10) to a government plan to slug lenders with a hefty new levy, calling it a "naive" tax grab that sent the wrong signal to global financial markets.

"It is important to invest in infrastructure, but we have to make the right choices on projects as part of a broader economic growth strategy", he told Parliament. Morrison will pour A$5.3 billion into a new company to build and operate a new airport for Western Sydney by 2026.

The government is also planning to impose a 50% on foreign ownership in new property developments, which the government sees as a way of "increasing the housing stock for Australian purchasers".

The move to raise A$6.2 billion (S$6.4 billion) over four years through a 0.06 per cent charge on the borrowings of the big five banks - ANZ, Commonwealth, Macquarie, NAB and Westpac - was a key plank of the federal budget on Tuesday (May 9).

The measures will raise nearly $21 billion of new tax revenue over the next four years, and help give the Turnbull government a modest surplus by 2021.

And he spoke at length about his brother-in-law, Garry Warren, who has multiple sclerosis, and his wife Michelle Warren, during the speech, as he outlined why the government had chose to raise the Medicare levy to fund the National Disability Insurance Scheme.




It has committed to passing the tax cuts for all businesses at a later stage. A 2 percent so-called Temporary Budget Repair Levy paid on incomes exceeding AU$180,000 ($133,000) over three years ends in July.

At the same time on Tuesday, he hit the biggest banks with a new levy, cracked down on tax-dodging multinational companies, and charged university students more for their degrees. But the budget forecast a A$7.4 billion surplus in 2020-21, an improvement on A$1.08 billion at the mid-year review.

It sees the unemployment rate at 5.75% in 2017-18, easing from a 13 month high of 5.9% now while it pegged the consumer price index (CPI) at 2%, climbing to 2.5% by 2020-21.

The plan to cut to company taxes was the centrepiece of the 2016 budget but had to be split in two after the Senate rejected the full package.

Major ratings agencies have warned that Australia risks losing its coveted triple-A credit rating unless the government can cut spending.

Mr Morrison confirmed on Wednesday that it was correct to assume that a difference between what the budget papers said were "constrained" and "unconstrained" budget projections was the difference between what would happen if a Coalition government maintained its commitment to dealing with bracket creep and what would happen under a Labor government, which has no such commitment.

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