"Australians are over this class warfare, they are over the us and them. They are over it." Treasurer Scott Morrison and Minister for Industry, Innovation and Science Christopher Pyne during question time on Wednesday. Credit:Alex Ellinghausen But the Labor leader Bill Shorten will reject that claim on Thursday night and is preparing to launch a ferocious attack on the Turnbull government in his budget reply speech. The Opposition Leader will make politically brave promises of billions of dollars in new spending cuts over a 10-year period in his speech, while also claiming tens of billions in savings by opposing the budget's centrepiece "10 year plan" to cut company tax to 25 per cent by 2026-27. Mr Shorten will argue in his budget reply the Turnbull budget is unfair and out of touch, and he will highlight the disparity between Coalition tax cuts for high income earners and big business while keeping former prime minister Tony Abbott's cuts to payments and support for working and middle class families.

Parliamentary Budget Office modelling seen by Fairfax Media and understood to be based on the company tax cut trajectory unveiled by the government on Tuesday showed cuts over 10 years to 2026-27 would cost the budget more than $50 billion. Prime Minister Malcolm Turnbull and Treasurer Scott Morrison during a feisty question time. Credit:Alex Ellinghausen In the final three years alone it would cost $37.6 billion: moving to 27 per cent for all companies in 2024-25 would cost Treasury coffers $8.7 billion; moving to 26 per cent in 2025-26 would cost $12.45 billion; and moving to 25 per cent in 2026-27 would cost $16.45 billion. And in a clear sign that class warfare will, in fact, feature prominently during the election campaign, Prime Minister Malcolm Turnbull told Parliament "this is a war, a political war, they [Labor] want to commence against aspiration, against ambition, against enterprise" as he sold his government's budget. Prime Minister Malcolm Turnbull faces down Opposition Leader Bill Shorten. Credit:Photo: Alex Ellinghausen

But the Treasurer struggled to explain how a new lifetime cap of $1.6 million on superannuation balances in the tax-free retirement phase would not have a retrospective effect on long-term savers who had been swelling their retirement nest eggs without such a cap, and who had been assured by the Coalition that no such rule changes were being considered. "We are not taxing the earnings out of retirement phase accounts. Full stop," Mr Morrison told the National Press Club. "What we have done is we have set a limit on what can go into those retirement accounts, that's a different position." Meanwhile Labor, in its search for new savings to announce in Mr Shorten's speech on Thursday night, looked closely at axing the diesel fuel rebate, which benefits farmers and miners and which environment groups claim could save the budget up to $6 billion a year, but that move has been ruled out. Fiscal responsibility will be at the heart of Mr Shorten's speech in a move designed to head off government claims that Labor avoids tough decisions in favour of a tax-and-spend approach to economic management.

It will also serve as a riposte to government claims of a $19.5 billion hole over 10 years in the opposition's plan – adopted by government – to hike tobacco excise by 12.5 per cent a year for four more years. The federal opposition targeted the government's plans to allow the temporary Deficit Repair Levy of 2 per cent to expire next year, housing affordability and the government's refusal to release the 10-year cost of its proposed company tax cuts. Mr Shorten is expected to use his budget reply – the last set-piece event before the election campaign commences this weekend – to portray Mr Morrison's budget as unfair and underwhelming. Among positions expected to be confirmed by the Labor leader is the continued opposition to removal of the 2 per cent "temporary" budget repair levy on high income earners, and the adoption of the government's measures to arrest bracket creep for upper-middle income earners. The conservative-aligned free-market Institute of Public Affairs director John Roskam branded Mr Morrison's claim about superannuation changes "obviously wrong" because the change was "clearly retrospective" in its effect.

Mr Roskam said the changes were also "diabolically complex" and represented a betrayal of long-term Liberal Party supporters such as self-funded retirees, and small business owners who have planned to roll their businesses into their super-accounts on retirement. "They feel taken for granted," said Mr Roskam, who claimed many had emailed him to complain. In a harsh critique of the Morrison super changes, Mr Roskam slammed the policy and said the cap was too low, as was another setting a $500,000 limit on post-tax deposits in the retirement phase account. Follow us on Twitter Follow James Massola on Facebook