What might be in the federal budget

The May 3 federal budget:

What we know:

– There won’t be a fistful of dollars as the government lives up to its promise of living within its means.

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– Prudence, fairness and responsibility will be the catchwords.

– Measures will be included to boost jobs and growth as the economy transitions from the mining investment boom.

– The much-touted tax reform package will be included.

Whate won’t be there

– Changes to tax breaks for property investors, aka negative gearing.

– Changes to the capital gains tax discount.

– A rise in the rate of GST, or broadening its base.

What will be there

– A reduction in the overall tax burden.

– Signs of modest improvement in the budget bottom line.

– Confirmation the budget repair levy on high-income earners will end on July 1, 2017.

– $5 billion over four years for a subsidised public dental scheme.

– $2.9 billion extra for public hospitals, stemming from COAG agreement.

– $230 million cyber security strategy.

– $100 million domestic violence campaign.

– $21 million in health care for chronic conditions.

– Brought-forward upgrade of Adelaide-Tarcoola rail line.

– New drugs on the Pharmaceutical Benefits Scheme.

– Extra aged-care places.

Hinted at:

– Modest personal income tax cuts to address wage inflation pushing middle-income earners into the second-highest tax bracket.

– Timetable for phased-in cut to the company tax rate of 30 per cent.

– Paring back superannuation tax concessions for high-income earners by lowering the 30 per cent tax on concessional contributions to $180,000 from $300,000, while helping those on low incomes.

– Further crackdown on welfare rorters.

– Incentives for state governments to get private sector involved in road, rail and port projects, and unlock land for housing.

– $1 billion for military role in Afghanistan, Iraq and Middle East, plus $1.4 billion in new defence spending.

What the economy is doing:

– Growing at its fastest pace in two years.

– Benign inflation outlook; unemployment rate remaining close to six per cent; wages growth at its slowest in almost two decades.

– Iron ore prices have soared to $US70 ($A90) per tonne compared to $US39 assumed in the mid-year budget review, a positive for national income.