Foreign property investors hit hard in Australian budget

He assured Australians the government had listened to their frustrations about cost of living pressures and promised a practical and fair budget.

Mr Turnbull said it was only fair the "most profitable banks in the world" were levied to help balance the nation's budget and similar measures were in place around the world. A hostile Senate blocked several key planks of that Budget.

"For many Australian families, they will feel it ... but there's a benefit", Mr Turnbull told Sky News.

To offset these goodies, the Medicare levy will be increased in two years to help fund the national disability insurance scheme while the big banks face a new levy to help fix the budget.

The Australian Competition and Consumer Commission (ACCC) would be watching the banks "very, very carefully indeed", he said. Diron added that the removal of the zombie measures "enhances the transparency and predictability of budget outcomes, a credit positive". This will cover nearly half of the "zombie" savings measures the Turnbull Government has been unable to get through the senate. This change is immediate (the budget papers specify that the changes take effect from 7.30pm on Tuesday, May 9).

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.

"This new tax is not a well thought-out policy response to a public interest issue, it is a political tax grab to cover a budget black hole".

"Plans to tax vacant homes, limit the share of foreign investment in new projects and increase foreign investor duties all send exactly the wrong signal to potential investors in Australia", he said in a statement.

Morrison repeated the government's stance that the main problem with housing affordability was that supply had not kept up with demand, and the government will be releasing some government land - starting with 127 hectares of surplus Defence land in Maribyrnong in Victoria (Bill Shorten's electorate), which the government estimates could support up to 6000 new homes. The Reserve Bank of Australia (RBA), anxious about tepid inflation and subdued domestic demand, has held off on lowering interest rates further after easing twice previous year, largely because it is loathe to encouraging further borrowing.

Now in what looks like a significantly more generous Budget than before from the Coalition government, Prime Minister Malcolm Turnbull appears to be trying to reverse that negative reputation and make a comeback from tepid polling and a near miss at the 2016 election which severely weakened his government.

For more from Deloitte on the Budget 2017-18, visit its dedicated page.

It sees the unemployment rate at 5.75% in 2017-18, easing from a 13 month high of 5.9% now while it pegged the consumer price index (CPI) at 2%, climbing to 2.5% by 2020-21. Underlying inflation is stuck below the RBA's target band of 2-3 percent with wages crawling at their slowest pace on record.

The $1.5 billion the levy raises each year would come out of corporate profits of $30 billion this year, he said.

Construction workers on Sydney's light rail infrastructure project are pictured behind a banner in Australia, May 9, 2017.

  • Zachary Reyes