Prime Minister Malcolm Turnbull insists returning the budget to surplus is a long-term project that will be achieved through growing the economy faster rather than raising taxes.
He says the government’s approach is to eliminate unjustified spending, live within its means and maintain strong economic growth that boosts tax receipts.
“It’s been very effective in other times and in other places, and is exactly how (New Zealand Prime Minister) John Key got back into balance,” Mr Turnbull told Sky News on Sunday.
Opposition Leader Bill Shorten says while the prime minister has taken a GST increase off the table and failed to get an agreement that would have allowed the states to levy their own income tax to pay for services like hospitals and schools, both remain options.
“Mr Turnbull has a series of thought bubbles of ever-diminishing credibility,” he told reporters in Geelong.
“We all know that if Mr Turnbull wasn’t facing an election he would be pushing these schemes of his at a rate of knots.”
Treasurer Scott Morrison will release his first budget on May 3 – brought forward from May 10 to make room for a possible double-dissolution election on July 2 – which will include the government’s much-promised tax reform package.
Finance Minister Mathias Cormann concedes there is a revenue problem in that economic growth is not as strong as the government would like it to be, saying it’s the responsibility of all governments that policies are put in place to maximise growth.
Stronger growth means more jobs – and the more well-paying jobs that are created, the greater the capacity to increase revenue.
“But if we want to strengthen revenue growth by strengthening economic growth, the worst thing that we could do would be to increase the overall tax burden,” Senator Cormann told ABC television.
This was not an “ideological obsession”, he said, but about raising tax revenue more efficiently and in the least distorting way.
Asked if he thought Mr Turnbull was pursuing his mantra of “lower, simpler, fairer taxes”, former prime minister Tony Abbott said: “Obviously I do”.
“The important thing is to ensure we have the right systems in place so that all of our people, particularly our most vulnerable people, can be supported in the way they deserve,” Mr Abbott told reporters before embarking on his annual Pollie Pedal charity bike ride.