Updated May 11, 2017 22:55:41

Federal Labor will not support the Medicare levy increase for Australians earning less than $87,000 a year, arguing high-income earners must pay a greater contribution.

The Coalition want to increase the Medicare levy by 0.5 percentage points for almost all Australians, which would equate to an extra $375 a year for those earning $75,000.

That money would go toward fully funding the National Disability Insurance Scheme (NDIS), which is facing a multi-million dollar funding black hole amid a political fight.

Opposition Leader Bill Shorten has used his budget reply speech to call for the tax to be limited to the top 20 per cent of Australian wage earners.

"Labor cannot support making people on modest incomes give up even more of their pay packet," he said.

"We'll back the Government's 0.5 per cent increase in the Medicare Levy … but only for Australians in the top two tax brackets."

Social Services Minister Christian Porter questioned why Labor would support increasing the Medicare levy at all, considering it claims the NDIS was fully funded by Labor.

"Why do you need to raise money to fill a funding gap you say doesn't exist?" he told Lateline.

Mr Shorten said Labor would not stop the levy on Australia's five largest banks, which is expected to generate $6.2 billion over the next four years.

See where every dollar is coming from and how it's being spent this year.

"Labor won't stop the Liberal's new tax on the banks, but we are deeply sceptical of a banking culture that takes every opportunity to hit customers with higher fees and charges," he said.

But he said Treasurer Scott Morrison and Prime Minister Malcolm Turnbull must bear the political consequences if banks pass the costs to customers.

"If the banks pass on a single dollar of this tax to Australian families, then that should be the end of this Treasurer, this Prime Minister, and this Government," he said.

Labor won't back housing affordability measures

The Labor leader also confirmed the Opposition would not support the Government's efforts to address housing affordability, deciding instead to continue to call for changes to negative gearing.

The Coalition wants to allow first home owners to salary sacrifice up to $30,000 into their superannuation account, which would allow them to save for a deposit faster.

It also wants to introduce a $5,000 penalty for foreign investors who leave their properties vacant for at least six months at a time.

"The sad lesson of first-home owner grants is that any extra cash in the pocket of people looking to buy is eaten-up by price rises," Mr Shorten said.

"When you study the detail, this program offers microscopic assistance for young people."

"'This isn't a solution — it is a false hope for people who do not have rich parents."

As expected, Mr Shorten committed to providing $22 billion more for schools than what the Coalition announced in the budget. That would be in line with Labor's initial Gonski vision.

If the federal budget is going to make a difference to housing affordability, you will need a microscope to see it writes Michael Janda.

"There's nothing fair about a $65 billion giveaway for big business while you're cutting $22 billion from schools," Mr Shorten said.

He also said he would close a loophole that has allowed 48 people in 2014/15 to pay no tax, despite earning more than $1 million a year.

Mr Shorten also dismissed claims the budget was "Labor lite", saying it was "devoid of values altogether".

Finance Minister Mathias Cormann said Mr Shorten should release the costings of his announcement, arguing they would only increase the deficit.

"He needs to come clean with people about how much bigger the deficit will be as a result of these announcements," Mr Cormann said.

Topics: government-and-politics, federal-government, budget, health, australia

First posted May 11, 2017 20:52:52