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Budget 2017: Get ready for a big-spending budget

Scott Morrison and Malcolm Turnbull are gearing up for a big-spending budget.

Scott Morrison and Malcolm Turnbull are gearing up for a big-spending budget. Photo: Getty

How time flies. It’s almost budget time again, a second attempt by Prime Minister Malcolm Turnbull and Treasurer Scott Morrison to set a convincing economic agenda for the nation.

It’s been a rough road for the revamped Coalition government. The austerity of Tony Abbott and Joe Hockey contributed to their overthrow, but Mr Morrison’s first budget didn’t have much more success, fixated as it was on unpopular corporate tax cuts and (*crickets*) nothing on housing affordability.

However, the government has learned its lesson. When Mr Morrison delivers budget 2.0 on Tuesday night, it will focus far less on spending cuts and more on cost-of-living relief and nation building.

“The budget will show we’re very aware of the pain that [Australians have] been feeling,” he told Nine’s Laurie Oakes on Sunday — a world of rhetoric away from the Abbott years.

“The government has a very clear understanding of the stresses many Australian families are facing.”

Unlike last year, the budget will be handed down on the second Tuesday in May, as is custom. The government broke tradition in 2016 because it wanted to be able to call a double dissolution election. It probably regretted the move, as the Reserve Bank cut the cash rate on the same day, somewhat overshadowing Mr Morrison’s speech.

For six hours on Tuesday, between 1:30pm and 7:30pm, The New Daily and other journalists will be ‘locked up’ with the budget papers, pouring over hundreds of pages to find what’s crucial to our readers.

And as the Treasurer stands in Parliament at 7:30pm to give his budget speech — a summary of what the government thinks is important in the papers — The New Daily will be sending a special edition to subscribers, followed by the regular email on Wednesday morning. (If you’re not a subscriber already, click here for a free subscription.)

What is budget 2017?

The budget sets out how the Turnbull government plans to spend your tax money, and is its economic blueprint for the years ahead. It covers both revenue and expenditure estimates for the current financial year (2016-17) as well as the ‘forward estimates’, a fancy term for the coming year (2017-18) and the three years after that.

You might get a windfall as a result of the government’s new spending programs and tax policies, especially if you’re a first home buyer or a fan of second Sydney airports. Or you could be asked to contribute more — if you’re a welfare recipient or former university student with a HELP debt.

Budget papers

How will budget 2017 affect you? Find out on Tuesday. Photo: AAP

Keep in mind that Parliament controls the government’s finances. Changes to taxation must be approved by both houses, and any spending must be passed as an appropriation bill.

So the budget is really the government’s wish list. As we saw with the ‘zombie cuts’ of the Abbott years (that is, measures which never got legislated), which Mr Morrison will finally drop, the Senate can easily undermine a budget plan. Anything the Treasurer promises on Tuesday may not necessarily become law.

What can we expect from budget 2017?

Scott Morrison said in March that economic growth, disciplined spending and tackling housing affordability would be his budget focus. But he’s quietly stepped away from housing, as the Abbott faction and the property lobby forces him to rule out a growing list of measures.

First home buyers can expect subsidised savings accounts to help them scrape together a deposit; more funding for affordable rental housing; incentives for older Australians to downsize, freeing up family-sized homes; and maybe a cut to the capital gains tax discount for property investors. Foreigners will likely be taxed more to buy property, and taxed more if they leave homes empty.

While middle-class adults get housing assistance, those doing it tough will suffer. Keep an eye out for a national cashless welfare card and greater pressure on dole recipients to look for work (despite the high 5.9 per cent unemployment rate).

Education will dominate the national debate, even though the government tried to make its changes to school and university funding a non-budget issue by announcing them early. Curbing funding excesses to private schools, while hiking debt repayments for low-income university graduates, won’t be going away anytime soon.

Also, Mr Morrison all but confirmed the budget will reverse the Medicare rebate freeze that gave Labor so much political mileage. He is expected to encourage doctors to prescribe cheaper generic pills and re-invest those savings back into more drug subsidies.

As for nation building, the government has previously projected the budget to return to balance in 2020-21, although there is widespread scepticism it can achieve this.

What might help is Mr Morrison’s plan to focus less on the ‘underlying cash deficit’, which is what everyone currently thinks of as the deficit, and instead put emphasis on the ‘net operating deficit’, which doesn’t count infrastructure spending. That will shave off billions.

The government will use this political cover to push through a big infrastructure program. Mr Turnbull announced on May 2 that the budget would include plans for the government to pay for a second Sydney airport at Badgerys Creek. It is also expected to fund a Melbourne-to-Brisbane rail line.

What won’t make budget 2017

Don’t expect any action on negative gearing, a tax deduction available to property investors that many experts believe is overheating the markets in Sydney and Melbourne. The Treasurer has firmly ruled it out.

Allowing first home buyers to put their superannuation toward a mortgage deposit also looks like its off the cards, after the Prime Minister reminded journalists he had opposed the idea in years past.

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