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Worries about budget in election of choice

The heads of Treasury and Finance have expressed their concerns about the budget outlook, as has a major rating agency.

Labor argues the budget can't afford the Turnbull government's $50 billion in business tax cuts, but that's not stopping the opposition redirecting the money for its own agenda.

It's all about choice.

But such choices come at a time when the heads of Treasury and the Department of Finance, as well as a major global rating agency, express concern about the budget outlook.

After the Pre-election Economic and Fiscal Outlook was released on Friday, Moody's Investors Service again described as "challenging" the government's plan to bring the budget back to surplus in 2021.

It also expects the government debt burden to rise "somewhat higher" in coming years, constraining the ability to buffer potential negative economic shocks.

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Another ratings agency, Standard & Poor's, unusually has yet to make a formal response to the May 3 budget.

At the start of the third week of campaigning for the July 2 election, Labor was pledging to use $3.6 billion over a decade to maintain indexed increases to the cost of taxpayer-subsidised medicines.

That's on top of the $12 billion impact ending the freeze on Medicare rebates will have on the budget.

Opposition health spokeswoman Catherine King insists Labor has been pretty cautious when it comes to saving money in the health budget.

"It's a false economy ... that savings can come from health.

Having rejected the government's plan to cut the business tax rate to 25 per cent over the next decade, Finance Minister Mathias Cormann accused Labor of spending the $50 billion cost over and over.

At the same time Labor was promising more than $100 billion in taxes.

Along with abandoning a more competitive company tax rate, that meant the economy would be less successful, Senator Cormann said.

"There will be fewer jobs, less investment and less growth," he told ABC TV.

Opposition Leader Bill Shorten says the government is promising tax cuts to large business, foreign companies and big banks who don't really need them.

As well, Treasurer Scott Morrison was handing $17 billion over the next 10 years to people earning more than $80,000 by increasing a tax threshold for middle-income earners.

The government was also defending tax breaks for property investors at a cost of $32 billion.

"Scott Morrison, in those three decisions, is already spending $100 billion," Mr Shorten told reporters in Sydney

Prime Minister Malcolm Turnbull insists Mr Shorten has no way of paying for his additional expenditure other than higher taxes.

"The black hole of unfunded promises keeps on getting deeper and darker," he told reporters in his east-Sydney electorate.


3 min read

Published

Source: AAP



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