What’s in the ACT’s 2018/19 budget papers

Matt Coughlan
(Australian Associated Press)

 

ACT BUDGET AT A GLANCE

* $36.4 million surplus in 2018/19

* Forecast surpluses of $43.9 million in 2019/20 and $25.9 million in 2020/21

* $5.8 billion total expenses

* 2 per cent forecast employment growth

* 3 per cent state final demand

* 3.5 per cent gross state product


MEASURES INCLUDED IN THE 2018/19 BUDGET

* $1.7 billion for health

* $1.3 billion for education

* $583 million for justice and safety

* $539 million for disability, community services and housing

* Stamp duty for first home buyers abolished for people earning less than $160,000 a year

* $12.5 million for planning to extend the light rail to the city’s south

* A new gambling tax of 15 per cent on all bets made in the ACT

* New big screen, better turf and improved player facilities at GIO Stadium, home of the Canberra Raiders and the ACT Brumbies

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What’s in the ACT’s 2018/19 budget papers

Matt Coughlan
(Australian Associated Press)

 

ACT BUDGET AT A GLANCE

* $36.4 million surplus in 2018/19

* Forecast surpluses of $43.9 million in 2019/20 and $25.9 million in 2020/21

* $5.8 billion total expenses

* 2 per cent forecast employment growth

* 3 per cent state final demand

* 3.5 per cent gross state product


MEASURES INCLUDED IN THE 2018/19 BUDGET

* $1.7 billion for health

* $1.3 billion for education

* $583 million for justice and safety

* $539 million for disability, community services and housing

* Stamp duty for first home buyers abolished for people earning less than $160,000 a year

* $12.5 million for planning to extend the light rail to the city’s south

* A new gambling tax of 15 per cent on all bets made in the ACT

* New big screen, better turf and improved player facilities at GIO Stadium, home of the Canberra Raiders and the ACT Brumbies

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The 2018-19 Australian Budget – saving a windfall with the hope of (decent) tax cuts to come

(AMP Capital)
8 May 2018

Key Points

  • The 2018-19 contains a small welcome boost to households and keeps the budget on track for a surplus.
  • The main risk is that the revenue boost seen this year is not sustained & the budget continues to have relatively optimistic assumptions regarding revenue growth.
  • The impact on the RBA and shares is likely minimal.


Introduction

The 2018-19 Budget will be the last before the next election (due by May 2019) and so had to provide pre-election goodies but in a way that keeps the return to surplus on track. Thanks to an improvement in the budget position since the Mid-Year review, of around $7bn per annum, this has been made relatively easy. A modest fiscal stimulus will help households, but the main risk is that the revenue boost proves temporary.


Key Budget Measures

As always, most of the measures in the Budget were pre-announced or leaked. The goodies include:

  • Income tax cuts from July for low to middle income earners of up to $10 a week which is mainly achieved by lifting the Low Income Tax Offset and raising the $87,000 tax threshold to $90,000.
  • A plan for broader tax cuts starting in 2022, which from 2024 includes removing the 37% tax bracket and having the 32.5% tax bracket go all the way up to $200,000.
  • Dropping the planned 0.5% Medicare levy increase.
  • Ongoing commitment to cut the corporate tax rate to 25% for large companies by 2026-27.
  • Extension of the small business instant asset write off.
  • Increased spending on home aged care, various concessions for older Australians related to superannuation contributions and work tests, more hospital funding and new products listed on the Pharmaceutical Benefits Scheme.
  • An extra $25bn in infrastructure spending including the Melbourne rail link, Bruce Highway, Gold Coast/Brisbane M1, road and rail in WA and North-South Corridor in SA.

This is only partly offset by various savings including an illicit tobacco tax and the usual tax integrity measures to target the black economy and multinational tax avoidance.


Stronger revenue, but tax cuts

Thanks to stronger corporate revenue (due to reduced tax losses and higher commodity prices), stronger personal tax revenue thanks to higher employment and reduced spending the 2017-18 budget deficit is projected to come in at $18.2bn compared to $23.6bn in the Mid-Year review. The Government has assumed that much of this revenue boost will continue (see the “parameter changes” line in the table below) but has only used a bit of it to fund tax cuts and other measures. The net result is that the budget is projected to continue to track to a surplus – which is now expected to be reached one year earlier in 2019-20 albeit its only wafer thin at $2.2bn or 0.1% of GDP. The move back to surplus is slowed slightly by the fiscal easing from policy changes (predominately tax cuts). For example the 2018-19 deficit is projected to fall to $14.5bn but it would have fallen to $13.8bn were it not for the fiscal easing. That said the fiscal easing is small at 0.1 to 0.3% of GDP over the next few years and the progressive shift from deficit to surplus will mean that it will take more out of the economy than its putting back in.

Source: Australian Treasury, AMP Capital

The planned tax cuts for higher income earners next decade are designed to satisfy the Government’s commitment from the 2014 Budget to cap tax revenue at 23.9% of GDP (or total revenue once dividends are allowed for as shown in the chart below at 25.4% of GDP) on the grounds that this is around the historic highs (reached in the Howard resources boom years). This cap is now projected to be reached in 2021-22.


Source: Australian Treasury, AMP Capital


Economic assumptions

Most of the assumptions look reasonable, except that the 3% growth assumption is a bit on the optimistic side and it remains hard to see wages growth rising to 3.5% over the next four years given unemployment is not expected to fall much.


Source: Australian Treasury, AMP Capital


Assessment and risks

This is an upbeat Budget. First the near-term tax cuts for low to middle income earners will help households at a time of soft wages growth, falling home prices and tightening lending standards. This will be very small though at $10 a week (a sandwich and milkshake!) and will be slightly dampened because the majority of the benefit will come when taxpayers do their 2018-19 tax return sometime after June next year. Second, the Budget recognises that we cannot rely on bracket creep to cut public debt. The Australian tax system is already highly progressive and is becoming more so with the top 10% of earners accounting for 45% of income tax revenue, up from 36% two decades ago. Compared to other comparable countries the top marginal tax rate is both relatively high and kicks in at a relatively low multiple of average earnings. If this is not limited it risks dampening incentive and productivity. Third, the continuing focus on infrastructure is good for short term growth, productivity and “crowding in” private investment. It will help to keep the economy growing.


Source: ATO, AMP Capital

Finally, thanks to much of the revenue surge being saved the budget remains on track to return to surplus, in fact a year earlier than previously projected.


Source: Australian Treasury, AMP Capital

The main risks though are that we still be seeing a record run of 11 years of budget deficits. While our net public debt to GDP ratio is low at 19% compared to 81% in the US, 69% in the Eurozone and 153% in Japan, comparing ourselves to a bad bunch is dangerous and they are all a bit different with Europe and Japan borrowing from themselves and the US benefitting from its reserve currency status. The run of deficits being projected in the Budget still swamps those of the 1980s and 1990s. And this is without the deep recessions of the early 1980s and 1990s! Rather we have achieved this thanks to a combination of ramping up spending on a whole range of things without facing up to how they will be paid for. Unlike prior to the GFC we have nothing put aside for a rainy day (when net public debt was negative) and there is a risk that the revenue surprise seen lately will prove temporary if global growth or employment slows. This may particularly be a risk around 2020 if the global economy starts to slow again in response to Fed tightening.

We continue to rely on assuming strong revenue growth. Of course, bracket creep helps, but even with the tax cut plan the Budget’s projections for average revenue growth of a 5.6% per annum over the next four years seem a little high when nominal growth is forecast to run around 4.5%. The biggest risk remains that wages don’t accelerate as assumed leading to a resumption of poor personal tax collections.


Implications for the RBA

While this Budget should provide some boost to confidence – for which the next two months’ confidence figures should be watched closely, the fiscal boost to the economy and household income is modest with the latter only showing up sometime in second half 2019. So it’s unlikely to be enough to speed the economy up. As such, we see no reason to change our view that the RBA will remain on hold out to 2020.


Implications for Australian assets

Cash and term deposits – with interest rates remaining low, returns from cash and bank term deposits will remain low.

Bonds – a major impact on the bond market from the Budget is unlikely. With Australian five year bond yields at 2.4%, it’s hard to see great returns from bonds over the next few years albeit Australian bonds will likely outperform US/global bonds.

Shares – the potential boost to confidence from this Budget could be a small positive for the Australian share market. But it’s hard to see much impact on shares.

Property – the Budget is unlikely to have much impact on the property market. Interesting to note that the 2017 budget saw an effort to encourage retirees to sell the family home whereas this year there are measures to help them stay in it! We expect Sydney and Melbourne home prices to fall further.

Infrastructure – continuing strong infrastructure spending should in time provide more opportunities for private investors as many of the resultant assets are ultimately privatised.

The $A – the Budget alone won’t have much impact on the $A. With the interest rate differential in favour of Australia continuing to narrow the downtrend in the $A has further to go.


Concluding comments

The 2018-19 Budget has a sensible focus on providing a small boost to households (with the full impact of tax cuts not occurring until next decade) and to infrastructure at the same time as maintaining a return to surplus. The main risks are around whether the recent revenue windfall to the budget proves temporary and the assumptions for continued strong revenue growth.


Important note: While every care has been taken in the preparation of this article, AMP Capital Investors Limited (ABN 59 001 777 591, AFSL 232497) and AMP Capital Funds Management Limited (ABN 15 159 557 721, AFSL 426455) makes no representations or warranties as to the accuracy or completeness of any statement in it including, without limitation, any forecasts. Past performance is not a reliable indicator of future performance. This article has been prepared for the purpose of providing general information, without taking account of any particular investor’s objectives, financial situation or needs. An investor should, before making any investment decisions, consider the appropriateness of the information in this article, and seek professional advice, having regard to the investor’s objectives, financial situation and needs. This article is solely for the use of the party to whom it is provided.

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The 2018 federal budget at a glance

(Australian Associated Press)

 

The 2018 Federal Budget at a glance.

KEY THEMES

Tax relief; support for business, guaranteeing essential services, keeping Australia safe.

KEY FIGURES

Budget deficit – $14.5 billion

Economic growth (GDP) – 3.0 per cent

Inflation – 2.25 per cent

Unemployment rate – 5.25 per cent

INCOME TAX

Multi-year plan to make personal income tax lower, fairer and simpler.

Top tax threshold will increase from $87,000 to $90,000.

Those earning more than $37,000 up to $90,000 will save up to $530 on tax.

Tax changes to cost $13.4 billion.

SUPER AND PENSIONS

Pensions Loan Scheme opened to all older Australians without impact on pension or benefits.

Expanded Pension Work Bonus will allow pensioners to earn an extra $1300 a year.

Wage subsidies of up to $10,000 for employers who take on older workers.

AGED CARE

Increase in the number of home care places by 14,000 over four years at a cost of $1.6 billion.

$146 million to improve access to aged care services in rural, regional and remote areas.

Local sporting programs to encourage older Australians to remain physically active.

BUSINESS

Instant asset write off for business with a turnover up to $10 million extended to purchases up to $20,000.

Extra $250 million for the Skilling Australians Fund.

Black Economy Taskforce recommendations will bring in $5.3 billion over the next four years.

MEDICAL AND HEALTH

New five year hospitals agreement with States and Territories will deliver $30 billion in additional funding.

$500 million over 10 years for the Medical Research Fund.

Extra $1.4 billion for listings on the PBS.

$154 million to promote healthy living.

TECHNOLOGY

$2.4 billion to be invested in technology infrastructure including super computers and satellites.

Additional funding to protect farmers from pests, disease and weeds.

ENERGY

National energy guarantee to see annual power bills fall by an average of $400 a year.

Emission reduction target to remain at 26-28 per cent.

INFRASTRUCTURE

10-year $75 billion infrastructure projects already announced.

$1 billion Urban Congestion Fund to improve traffic flow and safety at state level.

$3.5 billion for a Roads of Strategic Importance initiative upgrading key freight routes.

EDUCATION

Needs based funding for schools to deliver $24.5 billion more over the next 10 years.

Schools to receive $18.7 billion, with a legislated rise to around $30 billion in 2027.

Universal access to early childhood education extended for a year costing $440 million.

BORDER CONTROL

$122 million to enhance screening of inbound air cargo and international mail.

$122 million to increase border force capability at nine airports.

$160 million to help agencies fight crime and prevent terrorism

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2018 Federal Budget – Winners and Losers

(Australian Associated Press)

 

Winners and losers in the 2018/19 Federal Budget.

WINNERS

Average income earners – 94 per cent of Australians will be on a tax rate of 32.5 per cent or less in 2024, with those on the average wage of $84,600 saving $530 a year.

Seniors – will be able to keep more of what they earn on the side, access equity in their homes for retirement and face a shorter waiting list if they are seeking care at home.

Small business – will get an injection of life from a corporate tax cut and a year-long extension of the instant asset write-off.

The sick – a new public hospitals agreement will deliver an extra $30 billion to 2024, while medicines to treat breast cancer and multiple sclerosis will be made cheaper.

Schools – set to benefit from an extra $24.5 billion under the so-called Gonski 2.0 needs-based funding package.

States – 10-year $75 billion infrastructure package for projects in various states and territories and a $1 billion Urban Congestion Fund to improve traffic flow and safety at state level.

Expectant parents – Hard copy baby book on a child’s health record will go digital, vaccine for whooping cough will be free for pregnant women, and $3 million has been set aside for a new simple guide for would-be parent to stay healthy and active during pregnancy.

LOSERS

The rich – not much tax relief for those earning over $125,000 until 2024/25 when the 37 per cent tax bracket is abolished.

Banking and financial sector – major bank levy to continue, executive accountability regime to start on July 1 and stronger penalties and enforcement against misconduct in the sector.

Multi-nationals – tax changes to remove loopholes that gives foreign companies a tax break over Australian companies and allow them to fiddle with debt to reduce their tax liabilities.

Digital giants – Discussion paper to come that will explore options for taxing digital business in Australia.

Terrorists and pedophiles – $160 million to help agencies fight crime and prevent terrorism, including $68.6 million to prevent child exploitation and abuse.

Visa overstayers – $122 million to increase border force capability at nine domestic and international airports.

Tax cheats – Black Economy Taskforce recommendations to bring in $5.3 billion over the next four years by targeting sectors that under report income.

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Budget has tax cuts, surplus a year early

Angus Livingston, AAP Senior Political Writer
(Australian Associated Press)

 

Workers will get immediate tax relief with the promise of more to come if the coalition wins the election, as a booming economy sends the budget back to surplus a year early.

Treasurer Scott Morrison is riding record job growth and company tax revenue to support his $140 billion plan to put hundreds of dollars a year back in taxpayers’ pockets.

“This is not spending or a giveaway. We are simply enabling Australians to keep more of what they have earned,” he said in his budget speech in Canberra on Tuesday.

The tax cuts start at $200 a year for those in the lowest bracket, rising to $530 a year for those earning up to $90,000, from July 1 this year.

“Anyone who thinks that doesn’t matter clearly is not in touch,” Mr Morrison told reporters.

That $90,000 figure is the new threshold for the 32.5 per cent tax bracket, while in four years time the $37,000 tax threshold for the 19 per cent rate will be lifted to $41,000.

And in 2024/25 – which is six years away, and assuming the coalition is still in power – the government will abolish the 37 per cent rate entirely.

That means everyone earning $41,000 to $200,000 will pay the same 32.5 per cent of their income.

Laws to cement the plan in place will be introduced to parliament on Wednesday, putting immediate pressure on the federal opposition to support them.

Labor is backing the first set of cuts, but says the others are a “hoax”.

“Most of this package is off in the Never Never – it’s a hoax for Mr Turnbull to tell people they have to vote for him at least two more times before they (get) tax relief in 2024,” shadow treasurer Chris Bowen said.

To pay for the cuts – and a $75 billion roads and rail plan set to ease congestion in major cities – the coalition is banking on rising revenue from more people in work.

Record jobs growth means the proportion of working-age Australians relying on welfare has fallen to 15.1 per cent – the lowest level in more than 25 years.

A crackdown on multinational corporations, which has already brought in $7 billion a year, will go further and include ways to make sure digital companies pay tax in Australia.

The budget deficit will be $14.5 billion in 2018/19 – the best result since Peter Costello’s last budget – before narrowing to a $2.2 billion surplus in 2019/20.

That’s a year earlier than expected, and means whoever wins the next election will get to deliver the first budget surplus since before the global financial crisis.

Australian Chamber of Commerce and Industry boss James Pearson says the budget is a positive one.

“But it leaves Australia more exposed than we would like to any deterioration in the global economic environment,” he said.

ACTU secretary Sally McManus says the budget relies on “failed trickle-down economics to trick Australians into giving a failed government another term in power”.

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The 2018 federal budget at a glance

(Australian Associated Press)

 

The 2018 Federal Budget at a glance.

KEY THEMES

Tax relief; support for business, guaranteeing essential services, keeping Australia safe.

KEY FIGURES

Budget deficit – $14.5 billion

Economic growth (GDP) – 3.0 per cent

Inflation – 2.25 per cent

Unemployment rate – 5.25 per cent

INCOME TAX

Multi-year plan to make personal income tax lower, fairer and simpler.

Top tax threshold will increase from $87,000 to $90,000.

Those earning more than $37,000 up to $90,000 will save up to $530 on tax.

Tax changes to cost $13.4 billion.

SUPER AND PENSIONS

Pensions Loan Scheme opened to all older Australians without impact on pension or benefits.

Expanded Pension Work Bonus will allow pensioners to earn an extra $1300 a year.

Wage subsidies of up to $10,000 for employers who take on older workers.

AGED CARE

Increase in the number of home care places by 14,000 over four years at a cost of $1.6 billion.

$146 million to improve access to aged care services in rural, regional and remote areas.

Local sporting programs to encourage older Australians to remain physically active.

BUSINESS

Instant asset write off for business with a turnover up to $10 million extended to purchases up to $20,000.

Extra $250 million for the Skilling Australians Fund.

Black Economy Taskforce recommendations will bring in $5.3 billion over the next four years.

MEDICAL AND HEALTH

New five year hospitals agreement with States and Territories will deliver $30 billion in additional funding.

$500 million over 10 years for the Medical Research Fund.

Extra $1.4 billion for listings on the PBS.

$154 million to promote healthy living.

TECHNOLOGY

$2.4 billion to be invested in technology infrastructure including super computers and satellites.

Additional funding to protect farmers from pests, disease and weeds.

ENERGY

National energy guarantee to see annual power bills fall by an average of $400 a year.

Emission reduction target to remain at 26-28 per cent.

INFRASTRUCTURE

10-year $75 billion infrastructure projects already announced.

$1 billion Urban Congestion Fund to improve traffic flow and safety at state level.

$3.5 billion for a Roads of Strategic Importance initiative upgrading key freight routes.

EDUCATION

Needs based funding for schools to deliver $24.5 billion more over the next 10 years.

Schools to receive $18.7 billion, with a legislated rise to around $30 billion in 2027.

Universal access to early childhood education extended for a year costing $440 million.

BORDER CONTROL

$122 million to enhance screening of inbound air cargo and international mail.

$122 million to increase border force capability at nine airports.

$160 million to help agencies fight crime and prevent terrorism

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2018 Federal Budget – Winners and Losers

(Australian Associated Press)

 

Winners and losers in the 2018/19 Federal Budget.

WINNERS

Average income earners – 94 per cent of Australians will be on a tax rate of 32.5 per cent or less in 2024, with those on the average wage of $84,600 saving $530 a year.

Seniors – will be able to keep more of what they earn on the side, access equity in their homes for retirement and face a shorter waiting list if they are seeking care at home.

Small business – will get an injection of life from a corporate tax cut and a year-long extension of the instant asset write-off.

The sick – a new public hospitals agreement will deliver an extra $30 billion to 2024, while medicines to treat breast cancer and multiple sclerosis will be made cheaper.

Schools – set to benefit from an extra $24.5 billion under the so-called Gonski 2.0 needs-based funding package.

States – 10-year $75 billion infrastructure package for projects in various states and territories and a $1 billion Urban Congestion Fund to improve traffic flow and safety at state level.

Expectant parents – Hard copy baby book on a child’s health record will go digital, vaccine for whooping cough will be free for pregnant women, and $3 million has been set aside for a new simple guide for would-be parent to stay healthy and active during pregnancy.

LOSERS

The rich – not much tax relief for those earning over $125,000 until 2024/25 when the 37 per cent tax bracket is abolished.

Banking and financial sector – major bank levy to continue, executive accountability regime to start on July 1 and stronger penalties and enforcement against misconduct in the sector.

Multi-nationals – tax changes to remove loopholes that gives foreign companies a tax break over Australian companies and allow them to fiddle with debt to reduce their tax liabilities.

Digital giants – Discussion paper to come that will explore options for taxing digital business in Australia.

Terrorists and pedophiles – $160 million to help agencies fight crime and prevent terrorism, including $68.6 million to prevent child exploitation and abuse.

Visa overstayers – $122 million to increase border force capability at nine domestic and international airports.

Tax cheats – Black Economy Taskforce recommendations to bring in $5.3 billion over the next four years by targeting sectors that under report income.

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Budget has tax cuts, surplus a year early

Angus Livingston, AAP Senior Political Writer
(Australian Associated Press)

 

Workers will get immediate tax relief with the promise of more to come if the coalition wins the election, as a booming economy sends the budget back to surplus a year early.

Treasurer Scott Morrison is riding record job growth and company tax revenue to support his $140 billion plan to put hundreds of dollars a year back in taxpayers’ pockets.

“This is not spending or a giveaway. We are simply enabling Australians to keep more of what they have earned,” he said in his budget speech in Canberra on Tuesday.

The tax cuts start at $200 a year for those in the lowest bracket, rising to $530 a year for those earning up to $90,000, from July 1 this year.

“Anyone who thinks that doesn’t matter clearly is not in touch,” Mr Morrison told reporters.

That $90,000 figure is the new threshold for the 32.5 per cent tax bracket, while in four years time the $37,000 tax threshold for the 19 per cent rate will be lifted to $41,000.

And in 2024/25 – which is six years away, and assuming the coalition is still in power – the government will abolish the 37 per cent rate entirely.

That means everyone earning $41,000 to $200,000 will pay the same 32.5 per cent of their income.

Laws to cement the plan in place will be introduced to parliament on Wednesday, putting immediate pressure on the federal opposition to support them.

Labor is backing the first set of cuts, but says the others are a “hoax”.

“Most of this package is off in the Never Never – it’s a hoax for Mr Turnbull to tell people they have to vote for him at least two more times before they (get) tax relief in 2024,” shadow treasurer Chris Bowen said.

To pay for the cuts – and a $75 billion roads and rail plan set to ease congestion in major cities – the coalition is banking on rising revenue from more people in work.

Record jobs growth means the proportion of working-age Australians relying on welfare has fallen to 15.1 per cent – the lowest level in more than 25 years.

A crackdown on multinational corporations, which has already brought in $7 billion a year, will go further and include ways to make sure digital companies pay tax in Australia.

The budget deficit will be $14.5 billion in 2018/19 – the best result since Peter Costello’s last budget – before narrowing to a $2.2 billion surplus in 2019/20.

That’s a year earlier than expected, and means whoever wins the next election will get to deliver the first budget surplus since before the global financial crisis.

Australian Chamber of Commerce and Industry boss James Pearson says the budget is a positive one.

“But it leaves Australia more exposed than we would like to any deterioration in the global economic environment,” he said.

ACTU secretary Sally McManus says the budget relies on “failed trickle-down economics to trick Australians into giving a failed government another term in power”.

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Living cost, health preferred over tax cut

Colin Brinsden and Paul Osborne
(Australian Associated Press)

 

Personal income tax cuts are meant to be a centrepiece of this year’s federal budget, but a new poll shows Australians view the cost of living, health and job creation as higher priorities.

The latest Essential poll published on Tuesday showed 51 per cent of voters rated addressing the cost of living as the number one priority for the federal government, with only 15 per cent mentioning income tax cuts.

Next priorities on the list were improving the health system, creating jobs and addressing housing affordability.

Reducing the budget deficit was a priority for 14 per cent of people, while cutting corporate tax was preferred by six per cent.

Asked about the main problem for cities, two-thirds of voters cited housing affordability, while 62 per cent said a lack of spending on roads and rail and a shortage of job opportunities.

Infrastructure is expected to be a focus of the May 8 budget.

Prime Minister Malcolm Turnbull is expected to unveil hundreds of millions of dollars in spending on road and rail projects during a visit next week to Western Australia.

WA has loudly complained about being short-changed over its share of GST revenues.

Opposition Leader Bill Shorten recently committed a Labor federal government to a $1.6 billion “Fair Share for WA” fund, pumping money into Perth and regional infrastructure.

Labor transport spokesman Anthony Albanese said government spending on infrastructure was due to halve as a proportion of GDP, from 0.4 per cent to 0.2 per cent over the next decade.

“They simply haven’t done the work to create a pipeline of projects,” he said.

However, the government says its program includes about $50 billion in spending between 2013/14 and 2020/21, including a recently announced $5 billion for a Melbourne airport rail line and $1 billion for Queensland’s M1 motorway.

Liberal frontbencher Angus Taylor said what Australians wanted above all was economic leadership.

“(Voters) want a government that is wanting to drive jobs, helping to drive investment, at the same time living within our means,” Mr Taylor told Sky News.

The Australian Industry Group says cutting business taxes must remain a high priority for this budget.

Releasing a survey of large and small businesses, they put corporate tax cuts ahead of infrastructure spending, bringing the budget back to balance and measures to address current and future skilled shortages.

Ai Group’s chief executive Innes Willox said these priorities have been consistent over the past five years.

The survey found most industries rank the reduction of the business tax burden as either top or the second highest priority.

“This is an unambiguous expression of support for the government to stay on course with the proposed phase-down in the corporate tax rate over the coming decade,” Mr Willox said in a statement.

He said this should be the centrepiece of a program of far-reaching and comprehensive tax measures, including personal tax reform targeted to lower and middle-income households.

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