Tax cuts key to Morrison economic plan

Malcolm Turnbull will go to a July 2 election promising lower company taxes to drive the economy while cutting superannuation tax breaks for the rich and giving middle-income earners an extra $6 a week.

The budget measures were announced as the Reserve Bank of Australia delivered an official cash interest rate cut to a record low 1.75 per cent, elevating fears the federal government isn't doing enough to lift jobs and growth.

In his first budget, Treasurer Scott Morrison set out a 10-year plan to take the company tax rate to 25 per cent to add a permanent one per cent to Australia's growth pace.

"This budget is an economic plan - it's not just another budget," Mr Morrison told parliament on Tuesday.

The budget forecasts a $37.1 billion deficit for 2016/17 - a blowout from the $33.7 billion anticipated in December.

However, a projected jobless rate of 5.5 per cent is an improvement.

A rise in the middle-income tax bracket from $80,000 to $87,000 a year will give some of those taxpayers an extra $315 a year, but there's no pay packet relief for people earning under that threshold.

Mr Morrison argued Australians had moved on from the days of seeing budgets as "winners and losers".

Generous superannuation tax breaks will be closed off from July 1, 2017, affecting about four per cent of Australians each year.

These will include the introduction of a transfer balance cap of $1.6 million on amounts moving into the tax-free retirement phase.

At the same time, about two million low earners would benefit from a superannuation tax offset.

Shadow treasurer Chris Bowen damned the budget saying it delivered a tax cut for big business and the rich at the expense of families.

A person earning $1 million a year would get a $16,715 tax cut - as the deficit levy is removed - while three-quarters of Australian taxpayers would get nothing.

Mr Bowen pledged to reinstate the two per cent deficit levy on high income earners if Labor wins government in July, when the federal election is expected to be held.

A couple with a single income of $65,000 with three children in primary school were $3034 worse off a year.

"The difference between Labor and Liberal could not be more stark - we'll put people first, while the 2016 budget has shown the Liberal party will look after high income earners and multinationals," Mr Bowen said.

To get more young people into the workforce, a new program called Youth Jobs PaTH (Prepare, Trial, Hire) will start next year to provide pre-employment skills training, internships and a business wage subsidy.

A 20-year defence industry plan, as well as $50 billion in infrastructure and $2 billion for new dams and pipelines would keep jobs flowing.

Tobacco taxes will be hiked by 12.5 per cent a year from September 1, 2017, to raise $4.7 billion over four years.

A so-called Google tax will be introduced while the Australian Taxation Office is given extra resources to crack down on multinational tax avoidance.

The budget reiterated a deal signed with the state and territory premiers to deliver an extra $2.9 billion over three years for health and a $1.2 billion school funding top-up.

Mr Morrison rejected concerns about the central bank rate cut, saying Reserve Bank and the government were pulling in the same direction to support jobs and growth.

The Australian Council of Social Service said the budget locked in $13 billion in cuts from family payments, income support for young people and paid parental leave, while trimming $3 billion from Medicare, dental health and disability support.

The Australian Chamber of Commerce and Industry said the budget rightly focused on the engine room of the economy - small and medium sized businesses.

Prime Minister Turnbull is expected to call an election for July 2 on Friday or Saturday.