Net debt will be equal to 19.5 per cent of the country's gross domestic product in 2018/19, according to the federal budget handed down by Treasurer Scott Morrison tonight.
To offset these goodies, the Medicare levy will be increased in two years to help fund the national disability insurance scheme while the big banks face a new levy to help fix the budget.
Nearly all Australians will pay more tax under changes announced in the country's annual budget by Treasurer Scott Morrison tonight.
You might remember 2014 as the disastrous budget in which Mr Hockey sought to deal with the government's deficit by introducing savings measures like the four-week waiting period for Newstart payments for school leavers and a $7 GP co-payment, among other unpopular policies that never made it past a hostile Senate.
To do so, Mr Morrison is banking on what we'll call ambitious growth forecasts, bumping up the Medicare Levy, and asking the country's five biggest banks to chip in an extra $6.2 billion through a liabilities levy.
An ANU survey released last week found that one-fifth of Australians are struggling to meet mortgage or rent payments, with 2 per cent having fallen behind, and almost 90 per cent were concerned that future generations would be unable to afford to buy a house.
While the government has a keen eye on the electorate, with the popularity of Prime Minister Malcolm Turnbull waning, it is also wary of a possible cut to its coveted AAA credit rating.
"We've been listening", he said.
Standard & Poor's did not immediately comment on the budget.
"Contrary to the government's claim that the tax will only be levied on banking liabilities, the reality is that it will affect the entire banking system", Bligh said in a statement.
"It's a responsible budget", he told the Coalition party room.
The center-left opposition Labor Party accused the conservative government of delivering a tax cut for millionaires and a tax hike for every working Australian.
The government has foreshadowed extra spending on health and education, tax breaks for first home buyers, infrastructure investment and more money for defense and national security.
A hot topic heading into Tuesday evening's budget has been an overheating property market, fuelled by interest rates being slashed to record lows to boost growth as the economy shifts from a dependence on mining-driven expansion. Another A$4 billion will come from taxes on multinationals as the government expands its anti-tax avoidance laws to include trusts and foreign partnerships.
This will be supplemented by non-taxation dividend revenue growing from $29 billion in 2016-17 to $37 billion by 2020-21 and a range of new levies that are expected to raise $17 billion over the next four years ranging from the bank levy, increases to the Medicare levy, the Skilled Australians levy and new restrictions on deductions available to housing investors. That compares with the RBA's estimates of 2.75-3.75 percent by mid-2018 through to June 2019.
It sees the unemployment rate at 5.75 percent in 2017/18, easing from a 13-month high of 5.9 percent now while it pegged the consumer price index (CPI) at 2 percent, climbing to 2.5 percent by 2020/21.
Morrison said that Australia's states and territories will only be able to draw on this fund when they deliver on their commitments to train new apprentices. The flagship project is an A$8.4 billion Melbourne to Brisbane inland railway to begin construction next financial year.