Budget puts squeeze on people on modest incomes while wages growth at record lows, shadow treasurer to tell press club

Ordinary workers have had no tax relief since Julia Gillard was PM, Chris Bowen says

Chris Bowen will on Wednesday dig in behind Labor’s decision to reject the government’s increase in the Medicare levy for low-income earners, telling the National Press Club that ordinary workers have not had any tax relief since Julia Gillard was prime minister.

Bowen will use the shadow treasurer’s traditional post-budget address to argue that last week’s budget imposes a squeeze on people on modest incomes at a time when wages growth remains at record lows.

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He will argue that university graduates on a starting salary of $50,000 will be $1,250 worse off as a consequence of the proposed increase in student debt and the increase in the Medicare levy.

Bowen will say every Australian earning more than $80,000 was given a tax cut in last year’s budget, and high-income earners will get more relief courtesy of the decision in last week’s budget to end the deficit levy imposed on income over $180,000 – but people on lower incomes have missed out.

“We say this is not the time to be increasing the tax burden on people on $30, $40 and $50 thousand dollars,” Bowen will tell the press club.

The Turnbull government wants to increase the Medicare levy by 0.5% to fund the national disability insurance scheme.

The government says the tax rise is necessary because Labor left the scheme underfunded but Bowen rejects this characterisation, and will on Wednesday accuse the government of “lying” about NDIS funding.

You can only flick so many policy switches before the Australian people themselves flick the switch and stop listening Chris Bowen

Labor has proposed an alternative to the government proposal. It wants to keep the 2% deficit levy and apply the Medicare levy increase to the top two tax brackets.

The opposition says its proposition would raise $400m less over the forward estimates than the government’s proposal but would improve the budget position over the medium term by more than $4bn – and, in the process, make the tax system more progressive.

The shadow treasurer says Labor gives the Turnbull government full credit for embracing the NDIS in last week’s budget but he says the government is attempting to blame Labor for its own budget “failures” by arguing that the Medicare levy increase is essential to fund the NDIS.

He insists Labor fully funded the NDIS, with necessary budget savings. “[Ministers] are essentially holding the NDIS to ransom for their failures,” Bowen will say on Wednesday.

“Four years of Liberal budgets have seen the budget worsen, and the economy stuck in neutral. These failures are now projected on to the NDIS.”

Bowen says the rolling argument about funding uncertainty for the scheme unsettles people with disabilities and their carers. “I have a very important request of the government. Please stop lying about NDIS funding.”

The shadow treasurer will argue that the government’s claims of fiscal responsibility in the 2017 budget are diminished by its determination to legislate company tax cuts that will cost the budget $15bn a year in 10 years’ time.

He will contrast the proposed company tax cut with Labor’s proposed reforms to negative gearing and capital gains tax, which would boost the budget by $8bn a year – changes the government has resisted.

Bowen will contend last Tuesday’s budget “was about survival, not values”.

“It was about the prime minister’s internal viability, not the long-term prosperity of the nation. It was about the next Newspoll, not the next decade.

“You can only flick so many policy switches before the Australian people themselves flick the switch and stop listening.”

Bowen’s pitch at the press club comes as the government has used the beginning of the week to launch a budget roadshow, selling its key measures.

The prime minister, Malcolm Turnbull, was in Adelaide on Tuesday and will be in Brisbane on Wednesday.

The Medicare levy increase, which is the budget’s biggest revenue measure, is facing roadblocks in the Senate.

The proposed $6.2bn big bank levy also looks likely to face a Senate inquiry after Labor on Tuesday endorsed a call by the former Treasury secretary and current chairman of the National Australia Bank, Ken Henry, for greater scrutiny of the new tax.

University leaders also met in Sydney and resolved to oppose the government’s proposed 7.5% fee increase for students and the two-year 5% efficiency dividend for universities – measures worth $3.8bn over five years.

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The early cut of post-budget opinion polling suggests the government has not achieved any immediate political dividend from last week’s economic statement.

Consistent with polling undertaken by Newspoll, ReachTel and Ipsos, voting intentions post-budget have remained fixed in the latest Guardian Essential poll, and Labor remains well ahead of the government on the two-party-preferred measure, 54% to 46%.

While several individual budget measures have won a thumbs up from voters, the proposal to raise the Medicare levy was less warmly welcomed in this week’s Guardian Essential poll. Forty-nine per cent of those polled in this week’s survey approved of the idea while 39% disapproved.

A majority of voters (56%) also felt that higher income earners should bear a greater share of the cost of funding the NDIS than lower income earners – which is the proposition being advanced by Labor, the Greens and the Nick Xenophon Team.