Federal budget 2017: ACT a bystander as Scott Morrison spends big

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Canberra and the ACT were largely bypassed as the Turnbull government's big-spending budget on Tuesday night radically repositioned the Coalition on health, education and housing.

Treasurer Scott Morrison announced a massive $75 billion infrastructure "funding and financing" plan for the next 10 years on roads, rail and airports, but practically none of it will be spent on projects in or even near the ACT.

The capital's public service departments and their employees are still expected to do much of the heavy lifting on "budget repair" as Mr Morrison hopes to move the nation's finances from this year's $29.4 billion deficit to a surplus of $7.4 billion in 2020-21.

Any respite from the hated 2.5 per cent "efficiency dividend" imposed on public service departments remains at least two years away, and public servants have been warned to get used to the slow or no wage growth they have endured for the past several years.

Elsewhere, Mr Morrison plans to help pay for his big-spending plans with an array of new taxes, levies and charges.


The Medicare levy will increase to 2.5 per cent from 2019 to fully fund the national disability insurance scheme and another levy, this time on the top five banks, will raise $6.2 billion in the next four years.

An extra $18.6 billion over 10 years for Prime Minister Malcolm Turnbull's Gonski 2.0 plan, which has proven unpopular with Canberra's influential Catholic schools, will bolster the Coalition's education credentials.

Mr Morrison is also spending up big to address his party's percieved disadvantage on health, with an extra $2.4 billion over four years for Medicare services, $2.8 billion more for hospitals and $1 billion to unfreeze the Medicare rebate.

Any money left over from the $8.2 billion to be reaped from the increased Medicare levy will be used to set up a "Medicare guarantee fund", that ensures the future of the popular scheme and guards the Turnbull government against another Labor "mediscare" campaign.

Families battling to get into Canberra's tough housing market for the first time will be able to salary sacrifice some of their wages into a superannuation-style savings account to help them save a deposit while there will be tax incentives for older Australians to downsize from larger homes in a bid to boost housing supply.

There will be some reduction in the tax offsets allowed under negative gearing rules, although the poplular tax break remains largely intact.

Foreign housing investors face higher capital gains tax on their profits and a $5000 slug if they leave properties empty for more than six months.

To underline the complete break with the disastrous 2014 budget that ultimately caused the demise of the Abbott government, Mr Morrison also announced he was finally axing the "zombie measures", $14 billion in cuts contained in the 2014 and 2015 budgets that the Coalition could not force through Parliament.

Mr Morrison's budget-night rhetoric was sharply at odds with that of his predecessor Joe Hockey in 2014 and 2015.

"We must choose to guarantee the essential services that Australians rely on," Mr Morrison told the Parliament on Tuesday night.

"We cannot underestimate just how important these services are to people."

"Our choices are based on the principles of fairness, security and opportunity."

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