Australia's government is expected to release annual spending plans on Tuesday with a focus on winning votes at elections due within a year. Cheaper craft beer plus personal tax cuts compensated by strengthening company tax revenue have been flagged as well as more investment on roads and rail to stimulate economic growth.
Some media have reported that the government might better its timetable for returning the budget to surplus by the 2020-21 fiscal year by balancing the books 12 months earlier.
New budget starts July 1
Treasurer Scott Morrison, who will reveal to the Parliament later Tuesday his economic blueprint for the year starting July 1, said the government would live within its means.
“The plan for a stronger economy that I will be announcing tonight is about improving the opportunities for all Australians to live in a stronger economy,” Morrison told reporters outside Parliament House.
“It's a plan to lower taxes and reducing the pressure on households. It's a plan to back business to create more jobs. ... It’s a plan to guarantee the essential services that Australians rely on every day,” he added.
The budget is Morrison's third since he became treasurer and the last before the next election.
Universal health care
The government recently announced it had abandoned plans announced a year ago to increase the levy that Australians pay for their universal health care system from 2 percent of their income to 2.5 percent to pay for a newly established disability insurance program.
The Senate had refused to endorse the increase, and Morrison said it was no longer needed because the government's bottom line had improved in the past year through more tax revenue.
Global credit ratings agency Fitch Ratings last week said scrapping the levy increase while committing to fully funding the insurance program “poses a challenge” for the forecast surplus in 2020-21.
The government recently announced it would correct an anomaly that charged craft beer brewers a higher tax rate on alcohol produced than mass beer producers because the craft brewers typically use smaller kegs.
“Why should their business be held back because of tax systems that are out of date?” Morrison asked about the unfair treatment of small breweries that are being set up by the hundreds around Australia.
The government has also flagged modest tax cuts to low and middle income earners.
Rescue plan for reef
The government has already announced AU$500 million ($376 million) for a Great Barrier Reef rescue plan that includes programs to reduce fertilizer runoff from farming, reducing numbers of the destructive crown-of-thorns starfish and to fund research into coral bleaching.
Environmentalists argue that the funding won't tackle the main threat to the reef, global warming. They have urged the government to take greater action to reduce Australia's greenhouse gas emissions.
Prime Minister Malcolm Turnbull has said he will call an election early next year. But he could be tempted to call an early election if the budget is well received and his conservative coalition's standing in opinion polls improves. The government consistently trails the center-left opposition Labor Party in polling.