Australia plans major spending plus surplus in 3 years

Australia's government announced Tuesday plans for major infrastructure spending including a new Sydney airport and an inland railway linking two major cities, while sticking to its goal of restoring a budget surplus in three years through higher taxes.

Treasurer Scott Morrison said more than 75 billion Australian dollars ($56 billion) would be spent on infrastructure in the next decade.

"It is important to invest in infrastructure, but we have to make the right choices on projects as part of a broader economic growth strategy," he told Parliament.

The government plans to spend AU$5.3 billion ($3.9 billion) on building a second international airport in Sydney due to open in 2026. The government also plans an AU$8.4 billion ($6.2 billion), 1,700 kilometer (1,000 mile) new railway corridor between Melbourne, Australia's second largest city, and the third largest city, Brisbane. Work on both projects is to begin in the fiscal year which starts July 1.

The government also plans to increase taxes and charges.

A new levy on Australia's five largest banks was expected to raise about AU$1.5 billion ($1.1 billion) a year.

The Australian Bankers Association described the new tax as "inherently risky," blaming speculation that the measure might be included the budget for banks losing AU$14 billion ($10 billion) in value on the Australian stock market earlier Tuesday.

The levy that Australians pay for their universal health care system would increase from 2 percent of their income to 2.5 percent to help pay for a newly established disability insurance scheme.

The center-left opposition Labor Party accused the conservative government of delivering a tax cut for millionaires and a tax hike for every working Australian. A 2 percent so-called Temporary Budget Repair Levy paid on incomes exceeding AU$180,000 ($133,000) over three years ends in July.

Universities will get 2.5 percent less government funding over the next two years and students will have to pay more for their degrees.

Employers will pay an annual levy of up to AU$1,800 ($1,322) for every foreign worker they employ on a temporary visa.

The government estimated the deficit for the current fiscal year ending June 30 will be AU$37.6 billion ($27.6 billion), AU$500 million ($367 million) worse than was forecast a year ago.

Revenue is expected to grow 7.8 percent next year to AU$444.4 billion ($326 billion), and the deficit to shrink to AU$29.4 billion ($21.6 billion).

The government expects growth will increase from 1.75 percent in the current fiscal year to 2.75 percent next year. Unemployment is expected to stay steady at 5.75 percent.

The government gave up on making cuts in health and education spending that the Senate has been rejecting as unfair to the poor since the ruling coalition's first budget in 2014.

Major ratings agencies have warned that Australia risks losing its coveted triple-A credit rating unless the government can cut spending.

Morrison said he expected the agencies would be impressed that his latest budget maintained its trajectory toward a surplus in three years.

The government plans to increase defense spending to 2 percent of GDP by 2020-21 — three years ahead of its initial target. That may please U.S. President Donald Trump, who has urged America's allies to increase their military spending.