Joe Hockey’s first budget on Tuesday will ask Australians to contribute to building a “stronger and more prosperous” economy.
People can expect a number of hits as the treasurer tries to repair what the government calls “the mess left behind” by six years of Labor government.
Mr Hockey’s repair job includes a co-payment of $6-$7.50 when visiting the doctor, a temporary budget repair levy on high income earners, a future rise in the pension age to 70, the reintroduction of indexation on fuel excise and big cuts to public service.
Consumer confidence has fallen sharply in recent weeks as budget speculation gathered pace over such initiatives amid accusations the coalition will break election promises with tax increases.
But the Abbott government will claim it has reduced taxes by $5.7 billion in the 2014/15 financial year through the planned scrapping of the carbon and mining taxes – although legislation for both remains stuck in the Senate where the government does not have a majority.
In contrast, there was an extra $107.3 billion in additional taxes under Labor.
The coalition can also point to clearing a backlog of 92 announced, but not enacted, tax measures made by previous governments that will restore certainty and stability to the tax system.
Mr Hockey posted a 37-second budget message on You Tube on Monday, saying there would be key initiatives in health, education, welfare, infrastructure and defence.
“It will reshape the destiny of the nation and build a stronger and more prosperous economy into the future,” he says.
The government has promised to return the budget to a sustainable surplus of one per cent of GDP over the next decade.
Economists are forecasting a deficit of around $30 billion in 2014/15, slightly smaller than the $33.9 billion predicted in Mr Hockey’s mid-year budget review last December.
They also expect the treasurer to upgrade the 2014/15 growth forecast to 2.75 per cent from 2.5 per cent, albeit still below the economy’s long-term average of 3.25 per cent.
Mr Hockey hopes an $80 billion road building program, that will include $40 billion of funding from the commonwealth over six years, will help to create “tens of thousands” of jobs and prevent the jobless rate hitting the 6.25 per cent predicted by Labor.
Business consultants Pitcher Partners Advisory believe the economy is finely balanced as it transitions away from mining investment into broader investment spending.
“We could choke that off if the federal budget is too harsh,” its director Andrew Aylward told AAP.