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Howard era an example of budget repair: PM

AAP logoAAP 31/08/2016 Colin Brinsden, AAP Economics Correspondent

Malcolm Turnbull says Australia must take a leaf out of the Howard-Costello era of government and maintain a disciplined approach to budget repair.

Only then will the country be able to respond to significant global shocks.

"Like the household budget, we have to balance our books by ensuring we don't spend more than we earn," Mr Turnbull told parliament on Thursday.

"Only then can we afford the standard of living that Australians expect."

His comments came as former Liberal treasurer Peter Costello said Australia, along with the US and Europe, had forgotten budget policy, instead leaning too heavily on monetary policy to support the economy.

"Interest rates are practically zero ... we are running out of shots and it's time to move on to other areas of policy," Mr Costello told reporters in Melbourne at a briefing of the Future Fund, which he now chairs.

Back in parliament, Treasurer Scott Morrison unleashed another stage of his economic plan, introducing tax cuts for both business and average-earning workers.

He introduced his 10-year plan to cut the company tax rate incrementally from 30 per cent to 25 per cent, with an immediate reduction to 27.5 per cent for all businesses with an annual turnover of up to $10 million.

Australian Small Business and Family Enterprise Ombudsman Kate Carnell believes it's important the tax breaks for small business come to fruition as soon as possible.

"An important element of this budget repair is empowering small businesses to generate much needed economic growth through tax breaks that allow them to re-invest and grow their business," she said.

Separately, Mr Morrison introduced legislation to increase the upper limit for the middle-income tax bracket from $80,000 to $87,000, another promise from the budget.

This will help those on average wages remain in that bracket and prevent about 500,000 taxpayers from facing the second highest tax rate of 37 per cent through wage inflation, otherwise known as bracket creep.

The personal income tax cuts came into effect from July 1.

Shadow assistant treasurer Andrew Leigh points out the benefits of the tax cut from July to September won't come to Australians until after the end the 2016/17 tax year.

"They can't run a census, they can't deliver an omnibus savings bill ... and now they have shown the can't deliver a bi-partisan tax cut," Dr Leigh told parliament, adding the government could have introduced the bill before the parliament was dissolved in May.

On Wednesday, Mr Morrison introduced his omnibus bill, containing 24 measures supported by Labor during the election campaign.

Originally said to save $6.1 billion, it was later corrected by Treasury to $5.996.6 billion because the value of one of the measures had been incorrectly stated.

"The omnibus savings package has become an omni-shambles," opposition finance spokesman Jim Chalmers said.

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