The last time Treasury had to release an updated economic and fiscal outlook was in the wake of the Global Financial Crisis when the government pumped $12 billion into hand outs and infrastructure to stimulate a slumping economy, creating a $31 billion deficit.
The mini-budget would include changes to negative gearing, capital gains, and franking credits — delivering as much as a $7 billion a year in revenue. It would also be expected to deliver a surplus in 2019-20 for the first time since the GFC.
Mr Bowen said the changes meant Labor would be able to afford tax cuts beyond those expected to be announced on Tuesday. He left the door open to backing some of the government’s measures in a bid to get them passed before Parliament rises.
«If there’s sensible things which help the cost of living, we’ll support them,» he said on ABC’s Insiders.
Mr Bowen said January 1, 2020 was an appropriate start date for negative gearing and capital gains changes, which some economists, Treasury and the government believe could have a dampening effect on an already falling housing market.
«The housing market will move around for a whole range of issues,» he said. «[Treasurer] Josh Frydenberg warns of falling house prices under the Labor Party. But he seems to think that dramatically falling house prices under him are okay.»
Mr Bowen ruled out any grandfathering of changes to franking credit refundability. Labor’s $5 billion-a-year policy will strip retirees of tax refunds on their shareholdings if they have not paid any tax.
He also reaffirmed Labor’s position to review the rate of unemployment benefits on Newstart with a view to raising it.
Newstart has not risen in real terms since 1994. The base rate is $275 a week for a single person, a figure considered too low by former Liberal prime minister John Howard.
«We are not reviewing it with the idea to cutting it,» said Mr Bowen. «You have to consider the
interaction of Newstart payments and the minimum wage and consider the implications across-the-board.»
Mr Frydenberg said the budget would be an election setter as he revealed the government would repeat its one off power-bill supplement from the 2017-189 budget, giving out $75 for singles and $125 for couples.
«What this budget will do is make very clear the contrast at the next election,» Mr Fydenberg told Nine’s Weekend Today. «We are creating more jobs and delivering better services without increasing taxes.»
Eryk Bagshaw is an economics correspondent for The Sydney Morning Herald and The Age.