Morrison will squib cuts: Leyonhjelm

Liberal Democrats senator David Leyonhjelm says he expects the government to "squib" the hard decisions in the mid-year budget review.

Treasurer Scott Morrison will release the mid-year economic and fiscal outlook on Tuesday.

The review is expected to show a budget deficit, weaker economic growth forecasts and savings of between $5 billion and $7 billion to pay for Syrian refugees and innovation statement measures.

But Senator Leyonhjelm said the government lacked a narrative about how bad debt and deficit had grown and where structural savings could be found.

"They will squib it," Senator Leyonhjelm said.

"They just don't want to make hard decisions, certainly not before the election."

He nominated childcare, middle class welfare, hospitals, schools and the age pension as areas ripe for budget savings.

School vouchers and health savings accounts modelled on Singapore's system would be a good first step.

The key crossbench senator said the work should begin on winding down the corporate tax rate to 20 per cent, not throwing incentives around via an innovation statement.

"The best innovation is done by allowing businesses to keep more of their own money and let them identify the opportunities, not dangling deductions in front of them," he said.