The Federal Budget is coming. Here’s what you need to know.

Tonight Treasurer Scott Morrison will stand up in the parliament and deliver the Federal Budget. It is a high pressure moment for the Turnbull Government, which will be hoping for some goodwill to carry into the election.

This all makes Morrison’s first budget, which could also be his last budget, a difficult proposition. The Government balance sheet is not looking particularly healthy and the Coalition’s economic responsibility message necessitates thriftiness.

But the looming election means there will need to be some sweeteners in the mix, in the hope that voters will only remember the good stuff come July.

So how is the Government planning to woo you?

So how is the Government planning to woo you? (Image via Getty)

Tax cuts for the not-so-average earner.

Morrison has indicated the budget will include tax cuts for Australians earning $80,000 or more.

In what might be a worrying sign for the Treasurer, the cuts have not been received with great enthusiasm, given only a quarter of Australians will benefit from the change.

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The reason the Government is targeting higher-income earners for tax cuts is because bracket creep will push hundreds of thousands of extra Australians into the second-highest tax bracket in coming years.

People earning over $80,000 are currently taxed 37 cents in the dollar on income over $80,000. As wages increase in coming years more and more Australians will join that group.

Even though it's a cut designed to address a looming problem, it is unlikely to help the Government too much with voters, as most Australians do not earn that much, and will see it as a concession for the rich.

Super top ups for low income earners

In a move that seems designed to specifically diffuse criticism of tax cuts for the rich, the Government looks set to retain some form of direct super contribution for low and middle income earners.

Will there be changes to super concessions? (Image: Tony Abbott via Getty)

While the Abbott Government intended to drop Labor's Low Income Super Contribution from June 30 2017, it now looks like instead they will use changes to super concessions for high income earners to keep some kind of superannuation assistance at the other end of the scale.

That's good news for low income earners, and in particular for women who typically have far less super than men, often because they are taking time out of work to have children.

Spending and savings roundabouts.

Just because it is an election year doesn't mean the Government won't cut spending or fiddle with programs to create budget savings.

For example, we know the Government's school funding package, announced earlier this year, won't fully fund the Gonski school reforms.

Expect though for that change to be touted as an increase in funding, because while it will deliver less than Labor promised on Gonski, it will deliver more than the Coalition promised at the last budget.

The Government has also foreshadowed possibly dropping the HECS repayment threshold to force more students to repay their HECS debts earlier.

The change would enable the Government to include savings on the balance sheet, but would also mean people who have a HECS debt - whether they are finished university or not - will be forced to start paying it back sooner.

There will be some more money in the budget for domestic violence prevention, but the $100 million package expected will not fully make up for cuts to domestic violence services that were made in previous years.

In health, expect funding for a public health dental scheme that will replace Labor's scheme and provide dental services for children and low-income earners.

Housing affordability and negative gearing.

What about the housing market? (Image via iStock)

The Prime Minister has made it pretty clear that he doesn't believe making changes to negative gearing rules is the way to fix Australia's growing housing affordability problem.

His argument has been there is a lack of supply and that getting rid of negative gearing, or making it less attractive would make the affordability problem worse. So while negative gearing is likely to be a key plank of Opposition Leader Bill Shorten's Budget Reply speech on Thursday, don't expect changes to the controversial tax break to be part of Morrison's first budget.

Changes to capital gains tax have also been ruled out by the Prime Minister.

Other areas to watch.

The PM has foreshadowed spending on "smart cities", billions in infrastructure projects - and not just roads, there will be money in there for public transport projects like the Melbourne Metro providing conditions are met - and an increase in hospital funding, although not as much as the states are after.

There will be money for French submarines, special guards to shield police from terrorists and, no doubt, the Government has held back something significant to announce when Morrison takes to the dispatch box.

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