Treasurer Scott Morrison delivers the 2017-18 federal budget. Credit:Dean Lewins It accepts the repeated urgings of the Reserve Bank, the International Monetary Fund and the Organisation for Economic Co-operation and Development that the government distinguish between borrowing for worthwhile infrastructure – which raises the economy's productivity – and continuing to borrow to cover recurrent deficits long after the downturn has passed. It abandons the Coalition's smaller government ideology and accepts economists' advice that all successful attempts to return the budget to surplus involve a combination of spending cuts and tax increases. In short, it's a big spending, big taxing, big borrowing budget. Smarties may call it "Labor lite" but, in truth, it contains measures Labor wouldn't have dared to take: increasing the Medicare levy, imposing a much bigger tax on the big banks, and standing up to the Catholics schools' demand to continue their special treatment compared with other private and government schools.

Scott Morrison is right to say the budget is a fair and responsible path back to surplus. It better aligns government policy with the voters' wishes, does a better job of managing the economy and puts the budget on a sounder basis – but all without bringing closer the time when Morrison expects the budget to return to surplus. In truth, whether his prediction this will happen in 2020-21 proves accurate turns on economic forces beyond his ability to forecast, let alone control. Without doubt, the budget measure that will do most to increase economic efficiency – not to mention fairness – is the government's belated embrace of needs-based school funding. Getting funding right is the first step towards raising the poor academic performance of the nation's schools and narrowing the achievement gap between students from advantaged and disadvantaged families.

David Gonski's new inquiry will guide us in the second step: improving what happens in the classroom. The success of Labor's "Mediscare" at last year's election has prompted the government to abandon its claim that healthcare spending is growing "unsustainably". It is phasing out its freeze on Medicare rebates to doctors and adding expensive drugs to the pharmaceutical benefits scheme, while searching out efficiencies to slow the rate at which spending is growing. The budget relies far more on tax increases than spending cuts to offset its higher spending. The main tax increases are a (delayed) 0.5 percentage point increase in the Medicare levy, a big new tax on big banks and crackdowns on the black economy and multinational tax avoiders.