The Labor Party has agreed to support the government in abolishing a $3 billion tax cut that was due to be implemented on July 1.

By abolishing the tax-free threshold increase linked to Labor’s former carbon pricing levy, about 10 million taxpayers will not receive a weekly tax reduction of $2 or less, Mr Cormann said on Saturday.

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“The budget position is now improving, we are now on a believable pathway back to surplus,” he told reporters in Perth.

He urged the opposition to embrace its new-found bipartisanship.

“We call on (Opposition Leader) Bill Shorten and (shadow treasurer) Chris Bowen not to stop here. Keep looking at the measures we’ve put forward to repair the budget mess you left behind.”

The cut would have boosted the tax-free threshold from $18,200 to $19,400 from July 1.

Mr Bowen defended Labor’s about-face by saying a tax cut was no longer appropriate given the state of the federal budget.

“This wasn’t an easy decision for the Labor Party,” he told reporters in Sydney.

“But given this is the government’s position not to have these tax cuts, and given the state of the budget deficit, the responsible thing for Labor to do is to give its support.”

He did not rule out helping the government find further savings in the budget, but said Labor would remain staunchly opposed to some measures, including cuts to the family tax benefit.

“I’ve indicated there are some measures we are still looking closely at, like the change to pension assets, which we are working through very carefully,” he said.

– AAP