Foreign property investors hit hard in Australian budget

The Treasurer has jettisoned decades of conservative fiscal orthodoxy around deficits and, particularly, debt. I welcome the fact that, yesterday, the Commonwealth Bank and the ANZ Bank took a breath, and I think they issued a very measured statement.

MR IAN VERRENDER, business commentator on the ABC News website.

The Federal Government has announced a $2 billion expansion of the Snowy Mountains hydro scheme, increasing the 4,000 megawatt output by 50 per cent - a plan that will power up to 500,000 homes.

He said pay packets were set to rise by three per cent over the next four years while the national economy would expand by three per cent in the coming two years.

"It is honest about our challenges and opportunities".

"While we wait for further information about how this tax is proposed to work, our focus at NAB remains on supporting our customers during what is a critical time in the Australian economy".

Running parallel to the Government's nation-building programs is the concentration on health, with a $10 billion spending increase over four years, in part to counter the risk of Labor again use the policy area to attack the Coalition.

For 2017/18 the deficit comes in at $29.4 billion, and $21.4 billion the following year, before making a remarkable step-down to just $2.5 billion in 2019/20 and then posting the first surplus in 13 years at $7.4 billion in 2020/21.

"We must live within our means and this is an honest budget", Morrison said, adding that a new six-basis point levy on big banks' liabilities, to kick in on July 1, would raise A$6.2 billion over the next four years.

The extra Medicare levy revenue will be directed into a new fund, which will be used to fund the National Disability Insurance Scheme (NDIS).

The 2017 Budget also seeks to entirely recover from Labor's Mediscare campaign that almost cost the Coalition the election while tackling the Opposition's main arguments on schools' funding, training and a calls for a Royal Commission into the banks. It will provide A$8.4 billion in equity into the planned Melbourne-Brisbane inland rail project.

There will also be additional taxes on foreigners who own properties.

Australia announced measures on Tuesday to boost the supply of homes and tighten the screws on foreign property investors in a bid to temper the soaring property prices in the country's major cities.

The Treasurer was unrepentant when speaking about the new tax, which he admits will be used for budget fix after he was forced to dump more than $13 billion of "zombie" savings measures from the 2014 federal budget that had failed to pass the parliament.

Commentators predicted that measures such as the banks' tax and extra spending on retirees and infrastructure were likely to prove popular.

Relations between the government and the banks are plummeting with Prime Minister Malcolm Turnbull dismissing as nonsense their claims that the new $6.2 billion tax and tough regulatory measures could destabilise the banking system.