Labor promises bigger tax cuts for the lowest paid and billions for health

Labor leader Bill Shorten is promising bigger tax cuts for those earning less than $40,000 a year and billions in health spending if his party wins the May election.

Opposition Leader Bill Shorten outlined Labor's budget response. Source: AAP

Labor is offering more generous tax cuts for three million of Australia's lowest-paid workers and promising to spend more on health if it wins the next election. 

Labor Leader Bill Shorten will use his budget reply speech on Thursday night to lay the foundation for an election campaign fought on fairness and Medicare. 

Deputy Labor leader Tanya Plibersek said Mr Shorten would detail their income tax relief plan in a "classic" Labor budget.

 

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Labor has already promised to match the government's plan to provide 10 million taxpayers earning up to $125,000 with an offset worth up to $1080 a week.

But says those earning less than $40,000 could be better off by as much as 30 per cent under its plan. 

"This government has forgotten people earning less than $40,000 a year," Ms Plibersek told reporters on Thursday morning.  

"There are almost three million Australians earning less than $40,000 a year that will be better off under labor." 

Labor says a lot of part-time retail workers will be better off under its tax plan.

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Couples with kids benefit the most from Coalition budget

The speech comes after modelling released on Thursday, showed inner-city middle income earners with children would benefit the most from the Coalition's budget. 

At the other end of the spectrum, older Australians and people living in regional areas will gain the least out of the Coalition's $158 billion tax reform package. 

Prime Minister Scott Morrison and Treasurer Josh Frydenberg say their tax cuts will leave low and middle income earners $1080 a year better off.

AAP