Federal Budget 2017: Scott Morrison targets banks, multi-nationals in dash for cash

The measures will raise almost $21 billion of new tax revenue over the next four years, and help give the Turnbull government a modest surplus by 2021.

In a budget that targets the Turnbull government's future election prospects as well as much-needed fiscal repair - finally putting to rest the ghosts of Joe Hockey's politically toxic "lifters and leaners" budget of 2014 - Treasurer Scott Morrison described the 2017 budget as a "reset", and emphasised this was a budget for "right choices" and "fairness". 

It all adds up to a better outlook for the economy, claims the Treasurer, with its much talked about "good debt" funding more than $75 billion of infrastructure spending over the next decade. That will include a potential buy-out of the Snowy Hydro scheme from Victoria and NSW, and a $20 billion "once in a generation" rail line upgrade.

Outside of infrastructure, the government has promised to greatly lift expenditure on health and education.

"There is clearly the potential for better days ahead," Mr Morrison said.

Mr Morrison finally drew a line through $13 million of "zombie measures" from the 2014 budget that have failed to pass through parliament, but in doing so needed to find revenue from other sources to plug the gap.

He did so by targeting key areas where the Opposition has been scoring political points, such as the future of Medicare, Labor's continuing push for a royal commission into the banking sector, and rising housing costs, especially in Sydney and Melbourne.

One of the key measures announced by Mr Morrison in his second budget was all but the lowest income earners will be slugged with a 0.5 per cent lift in the Medicare levy, which rises from  2 per cent to 2.5 per cent from July 1, 2019.

That measure alone is expected to raise an additional $8.2 billion of taxes in its first two and a half years in operation.

"Our decision to increase the levy reflects the fact that all Australians have a role to play," Mr Morrison said.

The extra Medicare levy revenue will be directed into a new fund, which will be used to fund the National Disability Insurance Scheme (NDIS). "This is good, common-sense financial management," Mr Morrison said. "It is all of our responsibility to fund the  NDIS. We could all potentially be recipients of this scheme."

The Treasurer also said the two-year delay in introducing the higher Medicare levy will give the government "further time to explain to Australians what the NDIS will deliver".

The biggest loser from Tuesday's budget was the nation's banking sector, which has already been subjected to a series of scandals and parliamentiary inquiries in recent months.

Now the  nation's top five banks - the Commonwealth, NAB, Wespac, ANZ and Macquarie - will be hit with a 0.06 per cent bank levy on their deposits, starting from July 1 this year.

That equates to $6.2 billion of new taxes from the banking sector over the next four years. In a clever political move, the Treasurer has exempted customer deposits of less than $250,000, as well as superannuation and insurance funds.

"This represents an additional and fair contribution from our major banks, is similar to measures imposed in other advanced countries, and will even up the playing field for smaller banks," Mr Morrison said.

"Unlike the previous bank deposit tax, this is specifically not a levy on pensioners' and others' ordinary deposit accounts, nor is it on home loans."

Bank executives will also face tougher penalities for misconduct under a tough new new Banking Executive Accountability Regime, which will require all executives to be registered with the regulator.

"If in breach, they can be deregistered and disqualified from holding executive positions, and be stripped of their significant bonuses," the Treasurer said. "Banks will also be held to account if they try and hide misconduct by executives with new mandatory reporting requirements."

The Treasurer also promised a "one-stop shop" for customer complaints aganst the banks called the Australian Financial Complaints Authority. "We are not sending lawyers around the country for three years, we are acting now," the Treasurer said, in reference to a royal commission.

As recommended by the Coleman committee, a permanent team will be established within the ACCC to investigate competition in the nation's banking and financial system. 

Mr Morrison also announced a further crackdown on large multi-nationals that avoid tax in Australia. 

The Treasurer said an extension of the rules involving foreign partnerships or trusts, plus new tax integrity measures recommended by the government's Black Economy Taskforce, would help raise a further $4 billion over the forward estimates.

"The only people paying more tax from July 1 this year are the banks and multi-nationals," Mr Morrison said, in a line that could have come directly from the ALP play book.

The government's much-spruiked plan to combat housing affordibility in the capital cities includes a tweak to negative gearing from July 1 that will disallow deductions for travel expenses, and limits to plant and equipment deductions, raising $2.1 billion of revenue over the next your years.

The government will also tackle supply issues, unlocking Defence land in Maribyrnong, in Melbourne's west, for 6000 new homes, and crack down on foreign buyers of new developments.

"There are no silver bullets to make housing more affordable," Mr Morrison said. "But we will work with the states and territories and local governments to get more homes built."