Australia plans major spending plus surplus in 3 years

Morrison outlined plans to deliver A$75 billion in infrastructure funding and financing over the next years as the base of Australia's next growth wave.

It does take into account the Medicare levy increase in two years, a tougher stance on multinational tax dodgers and the levy on banks.

Nearly all Australians will pay more tax under changes announced in the country's annual budget by Treasurer Scott Morrison tonight.

Budget papers indicate the deficit, which is A$37.6b for 2016/17, will dramatically fall from A$21.4b in 2018/19 to just A$2.5b in the following year.

To do so, Mr Morrison is banking on what we'll call ambitious growth forecasts, bumping up the Medicare Levy, and asking the country's five biggest banks to chip in an extra $6.2 billion through a liabilities levy.

Those savings, including welfare reforms, had artificially reduced the red ink in the budget after they were blocked by opposition lawmakers in a hostile Senate where the government has a wafer-thin majority.

"Growth in payments has been restricted to less than 2.0 per cent per year".

The Australian Bankers Association described the new tax as "inherently risky", blaming speculation that the measure might be included the budget for banks losing AU$14 billion ($10 billion) in value on the Australian stock market earlier Tuesday.

Mervyn Tang, director of Asia-Pacific sovereigns at Fitch Ratings, said the new revenue measures in the budget implied a faster reduction in the government deficit.

"We are an immigration nation, but the fact remains, Australian workers must have priority for Australian jobs, so we're abolishing the 457 visas, the visas that bring temporary foreign workers into our country", Turnbull said previously.

Standard & Poor's did not immediately comment on the budget.

'This new tax is not a well-thought-out policy response to a public interest issue, it is a political tax grab to cover a budget black hole, ' chief executive Anna Bligh said.

"Contrary to the government's claim that the tax will only be levied on banking liabilities, the reality is that it will affect the entire banking system", Bligh said in a statement.

The center-left opposition Labor Party accused the conservative government of delivering a tax cut for millionaires and a tax hike for every working Australian.

Australia's peak housing body backs federal budget measures to help first home buyers save for a deposit and increase supply but warns barriers to foreign investment are unproductive.

Among revenue boosting measures was a six-basis point levy on the liabilities of banks with liabilities of more than A$100 billion from July 1, a move that will help the government raise A$6.2 billion through 2020/21 to aid budget fix.

That measure alone is expected to raise an additional $8.2 billion of taxes in its first two and a half years in operation.

The budget forecast real GDP at 2.75 percent in 2017/18, strengthening to 3 percent through to 2020/21.

The economy is on course to complete a world record 26 years of uninterrupted economic growth in the next few months and, once it overcomes the impact of Cyclone Debbie, should be travelling at a rate of 2.75 per cent in 2017/18 before accelerating to three per cent until at least 2020/21. Underlying inflation is stuck below the RBA's target band of 2-3 percent with wages crawling at their slowest pace on record.

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