NAB economists led by David de Garis said there was more doubt than normal around next week’s budget, partly because of opinion polls showing Mr Shorten in a winning position and because of economic headwinds.
«We broadly think the market will discount budget forecasts more heavily than usual,» he said.
«This is all the more so given ingrained scepticism that the Coalition will be in position to deliver on its budget plans following the May election.»
NAB, which believes the Reserve Bank will cut official interest rates twice this year because of the troubled local economy, argues there is a case for Mr Frydenberg to deliver a budget boost to consumers.
Mr de Garis said some fiscal stimulus, such as tax cuts or handouts, was «justified» given the slowdown. He added Labor under Mr Shorten may consider an even larger stimulus if it was to take office.
On Tuesday, the Reserve Bank said the amount of tax being collected «had grown solidly in recent years» at a rate of two-to-one compared to income.
«What is noteworthy is that for all of the past six years, growth in tax paid has exceeded income growth by an above average margin, at a time when income growth itself has been slow,» said the RBA’s assistant governor Luci Ellis.
She said this was a drag on disposable income, giving both parties the imprimatur to promise further tax cuts in May.
Commonwealth Bank economists Michael Blythe and Kristina Clifton, who believe Mr Frydenberg could deliver a $14.8 billion surplus if not for election spending and other handouts, said there were substantial doubts over whether the budget and its measures would ever come to pass.
«All budgets in recent years have struggled to get through Parliament intact,» they said.
«And this should be true for next week’s offerings as well. The uncertainty this time is, of course, accentuated by the prospects of a change in government at the May election.»
The government is expected to deliver extra tax cuts in the budget with the Commonwealth Bank estimating between $3 billion and $6 billion could be spent while still delivering a «respectable» surplus.
One option is to pull forward tax cuts locked-in for 2022 that were part of last year’s budget. But those tax cuts would deliver just $10 a year to the several million Australians who earn between $50,000 and $90,000.
Labor is offering larger tax cuts to low and middle income earners in the coming financial year however it has not committed to the government’s longer term plans.
Shadow treasurer Chris Bowen on Wednesday suggested Labor was open to future tax cuts depending on the state of the budget.
«As if a future Labor government would never look to return bracket creep or provide further income tax cuts when it is fair and sustainable to do so,» he said.
Shane is a senior economics correspondent for The Age and The Sydney Morning Herald.
Eryk Bagshaw is an economics correspondent for The Sydney Morning Herald and The Age.