Scott Morrison must raise tax revenue and dump the government's $50 billion, 10-year company tax cut plan to save Australia's AAA credit rating, Labor's treasury spokesman Chris Bowen says.
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Amid growing fears that ratings agency Standard & Poor's could downgrade Australia's credit rating from AAA to AA+, which would raise the cost of borrowing in Australia, and following the agency's move in July to revise Australia's credit outlook from stable to negative, Mr Bowen said it was time for the federal government to dump its "$50 billion ram raid on the budget".
Mr Morrison, meanwhile, on Thursday indicated the government could be willing to negotiate down its company tax cut plan – which is supposed to cut taxes to 25 per cent for all companies by 2025-26 – and limit the tax cut to companies with a revenue of less than $50 million.
"In this term of Parliament, what we had hoped to be in place would be that change for companies up to $50 million," he told Radio National, "we'll continue to pursue that."
Labor supports cutting the company tax cut for businesses with a turnover of no more than $2 million, while the Nick Xenophon team supports some of the cut for businesses with turnover of up to $10 million.
Mr Bowen seized on a report on Thursday that suggested the mid-year budget update could be the catalyst for S&P to cut Australia's rating, with the agency's director Craig Michaels confirming it continued to closely monitor the "government's ability to pass revenue and expenditure measures through both houses of parliament".
"S&P, again today, is saying very clearly that revenue measures need to be in the mix in budget repair. We have, almost on loop now, the global credit ratings telling the Turnbull government to consider implementing further revenue measures in the interests of retaining our AAA credit ratings," Mr Bowen said.
"Scott Morrison's inability to push revenue measures through the cabinet and backbench – we know he has been rolled before – heightens the risk of us losing a AAA credit rating," he said, referring reports the Turnbull government had considered curbing negative gearing and capital gains tax concessions.
The Coalition did not proceed with those measures, but Labor announced curbs to both months out from the last election to raise additional revenue.
"It really is sheer madness for the government to be pursuing a $50 billion tax cut for big business at this time, particularly given we have a revenue problem," Mr Bowen added.
"It's nothing more than a $50 billion ram raid on the budget, which grows over time, reaching $13 billion a year by the end of the medium-term. Malcolm Turnbull and Scott Morrison need to put aside their egos and accept that their election centrepiece has to go for the greater good."
The Treasurer played down suggestions the danger of a cut by S&P had increased, highlighting the government's success in, for example, passing the $6.3 billion omnibus savings bill in recent weeks.
"There's no real change here," he told ABC radio, as he responded to suggestions S&P Global Ratings could downgrade the country's rating.
"I stress all three [agencies] have actually confirmed Australia's AAA credit rating since the election," Mr Morrison said.
He acknowledged S&P had Australia on a negative watch and that the agency would be closely watching budget performance over the next six to 12 months.
Mr Morrison said Labor's plan to repair the budget was "the lazy way" and that they were "suggesting don't worry about getting your spending under control, just jack up taxes".
But opposition finance spokesman Jim Chalmers said Labor had "heaps of savings on the table that the government could pick up and run with", again referring to Labor's capital gains and negative gearing policies.
The government believes it's on track for a small narrowing in the deficit, from the $37.1 billion forecast in May, especially in light of soaring coal prices.
