The federal budget battle lines have been drawn as the major parties prepare to establish their economic management credentials ahead of a likely July election.
The Turnbull government wants the May 3 budget to show it’s living within its means, accounting for every cent of spending, and not increasing the overall tax burden.
At the same time, it’s keen for Labor to be seen as “taxing in a bad way” to pay for what it says is $100 billion in promises.
Labor, for its part, wants to depict Treasurer Scott Morrison’s first budget as a “messy sort of proposition” that threatens Australia’s AAA credit rating.
Mr Morrison on Friday was doing his best to extricate himself from that perception, having the day before sent the hares running on the need for “revenue measures”.
That was taken to mean tax increases, including a hike in the tobacco excise – mimicking a Labor plan – and a crackdown on superannuation tax concessions on high-income earners.
The treasurer insisted his comments were “entirely unremarkable”.
“I think the response to those comments have been feverish but a little too enthusiastic which you normally see in the lead up to the budget,” he told reporters in Sydney.
Prime Minister Malcolm Turnbull, speaking in Beijing where he is holding high-level talks with Chinese officials, said the budget would “plainly set” out how every dollar spent is funded.
Concerns by global ratings agency Moody’s that more than spending cuts were needed to bring the budget back into balance by 2021 confirmed his view the government had to live within its means.
Labor’s spending promises were “utterly unfunded” and would result in more debt and higher taxes, Mr Turnbull told reporters.
Earlier Finance Minister Mathias Cormann all but confirmed the budget would contain tax increases.
But he insisted the government would be focussed on “taxing better” than Labor which was proposing to tax “in a bad way”.
Like the treasurer, Senator Cormann said the government’s focus was on making the tax system more growth friendly, but not increase the overall burden.
Opposition Leader Bill Shorten jumped on Mr Morrison’s latest comments about what or may not be in the budget, telling reporters: “I’ve given up trying to guess what’s going to be in it, I don’t think Mr Morrison knows what’s going to be in it.”
Shadow treasurer Chris Bowen said the Moody’s advice vindicated Labor’s approach to the budget.
“The difference of approach between Scott Morrison and myself is that I say revenue and spending measures need to be part of budget repair,” he said.
Budget preparations are being finalised against the backdrop of Chinese growth at its slowest pace in seven years.
But the good news for Australia is that other indicators show the slowdown in the world’s second-largest economy may be bottoming out.