The 2017/18 budget projects a return to balance in 2020/21

Paul Osborne, AAP Senior Political Writer
(Australian Associated Press)

Most Australian workers will pay higher taxes from 2019, while the big banks are hit with a $6.2 billion levy, as the Turnbull government seeks to pay for disability insurance and balance the books.

Treasurer Scott Morrison has pitched his second budget delivered on Tuesday as making the right choices to take Australian families and businesses out of a “difficult period”.

The 2017/18 budget projects a return to balance in 2020/21, improving from a deficit of $29.4 billion to a projected surplus of $7.4 billion within four years.

“This budget is about making the right choices to secure the better days ahead,” Mr Morrison told parliament on Tuesday.

A 0.5 percentage point rise in the Medicare levy from mid-2019 will cost a worker on $80,000 about $400 extra a year to fund the national disability insurance scheme.

Labor immediately described it as a tax hit to workers, while the highest income earners were relieved of the deficit levy in the budget, but the opposition will consider supporting the rise.

The opposition will support a levy on big five banks, which will raise $6.2 billion over four years for budget repair.

Shadow treasurer Chris Bowen said the government was playing catch-up and trying to neutralise issues, rather than directly address problems.

“The only people who will see better days from this budget are big business and the well-off,” he said.

In a bid to reset the “Mediscare” debate, the coalition will gradually lift the freeze on the indexation of the Medicare Benefits Schedule and reverse the removal of the bulk-billing incentive for X-rays and and pathology services and the increase in the PBS co-payment and related changes.

This comes at a cost of $2.2 billion over four years.

Mr Morrison also announced new laws to “guarantee” Medicare and the PBS, with proceeds from the Medicare levy and a portion of income tax paid into a new Medicare Guarantee Fund.

A new schools funding plan announced last week was confirmed, costing an extra $18.6 billion over the next 10 years

Pensioners hit by an assets test change introduced earlier this year will get their concession cards back.

First home buyers will be able to save for a deposit by salary sacrificing into their superannuation account over and above their compulsory superannuation contribution from July 1.

Downsizers over the age of 65 will be able to make a non-concessional contribution of up to $300,000 into their super fund from selling the family home.

Economic growth of 2.75 per cent in 2017/18 is expected to be driven by a rise in household consumption, non-mining business investment and exports.

The jobless rate is set to ease from 5.75 per cent this year to 5.25 per cent in 2020/21.

Infrastructure received a boost with the government injecting up to $5.3 billion into the new Western Sydney airport and $8.4 billion for the 1700km Melbourne to Brisbane inland rail