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Higher taxes in Australia's 'better times' budget

16 May 2017

The Treasurer also warned the banks not to try and pass the new tax on to their customers, saying they had no right to do so because it did not apply to mortgages or deposit accounts. A hostile Senate blocked several key planks of that Budget.

The government estimated the deficit for the current fiscal year ending June 30 will be AU$37.6 billion ($27.6 billion), AU$500 million ($367 million) worse than was forecast a year ago.

The Federal deficit will fall to a surplus to $7.4 billion in 2020-2021 from $29.4 billion in 2017-18 and $37.6 billion in 2016-17.

"Growth in payments has been restricted to less than 2.0 per cent per year".

Australia's five largest banks face a new tax on their borrowings from July, due to raise A$6.2 billion over four years.

Several heads of the banks have hit out at the new levy, warning that any additional costs will need to be borne by borrowers. Diron added that the removal of the zombie measures "enhances the transparency and predictability of budget outcomes, a credit positive".

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Labor said the government's "package of half measures" was no substitute for a royal commission.

The new scheme - modelled on a system in the United Kingdom - will help remove infrastructure obstacles in order to build new homes in areas where demand outweighs supply, particularly in high-density areas of Sydney and Melbourne.

Standard & Poor's did not immediately comment on the budget.

"In the future, the coalition government would love to reduce personal incomes taxes", the treasurer said during his traditional post-budget address to the National Press Club held in Parliament House.

Likewise, Westpac group CEO Brian Hartzer said the new bank tax is "a hit on the retirement savings of millions of Australians as well as all bank customers".

Shadow treasurer Chris Bowen said the government had "tried to catch up with Labor but they have failed miserably'.' But Labor signalled its agreement with the bank tax".

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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 made a decision to raise the Medicare levy to fund the National Disability Insurance Scheme.

A hot topic heading into Tuesday evening's budget has been an overheating property market, fueled by interest rates being slashed to record lows to boost growth as the economy shifts from a dependence on mining-driven expansion.

Another A$1.2 billion will be raised over the next four years by imposing a levy on foreign workers, another issue that has been heavily debated publicly, with Prime Minister Malcolm Turnbull promising earlier this year "Australian jobs for Australians".

The budget is forecast to log AUD7.4 billion surplus in 2020-21. Underlying inflation is stuck below the RBA's target band of 2 to 3% with wages crawling at their slowest pace on record.

Opposition Leader Bill Shorten called on Government to explain how it would fund a $65 billion "corporate tax give-away" and accused the Government of having five different versions of the total cost.

An inland rail linking Melbourne and Brisbane will get an $8.4 billion, with the project set to begin in the next financial year.

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Higher taxes in Australia's 'better times' budget