Roundup: "Substantial" changes to Aust'n tax system part of 2016 federal budget: PM

There will be "substantial" changes to the Australian taxation system when the federal budget is handed down on Tuesday night, Prime Minister Malcolm Turnbull said on Monday.

Over the weekend, Treasurer Scott Morrison flagged relief for Australians creeping into the higher income tax brackets due to inflation, while he also promised that wealthier Australians would pay more tax on their superannuation.

On Monday, Turnbull said the changes would be "critically important" to ensuring a fair tax system in the future, and denied allegations the changes would be minimal and benefit the higher income earners.

"We're not fiddling, this is going to be a critically important economic document," Turnbull told Sky News.

"There is substantial tax reform, or tax changes, in the budget."

Under the changes, those earning more than 80,000 Australian dollars (61,000 U.S. dollars) would no longer be taxed under the second-highest tax bracket, in an attempt to curb the effects of bracket creep which occurs with inflation.

Currently, those working full time and earning 61,000 U.S. dollars are taxed within the second-highest bracket despite their earnings being considered average (the average full-time wage in Australia is 60,100 U.S. dollars).

The Prime Minister said the changes would be "sustainable" so that all Australians are taxed fairly for what they earn.

"It is a plan to ensure jobs and growth and a sustainable tax system, and the restoration of the budget to balance, bringing those deficits down in a managed and measured way so that we live within our means," Turnbull said.

Meanwhile on Sunday, Education Minister Simon Birmingham announced a billion U.S. dollar investment into education, to be allocated to the states from 2018 until 2020.

"School funding will grow every year from current record levels of investment, but at an affordable rate of growth based on recent changes in the cost of delivering education," Birmingham told the press on Sunday.

Year 12 students would need to pass minimum standards in numeracy and literacy before leaving school, while teacher pay will be linked to performances rather than time served in order to ensure schools are getting quality teachers.

However the announcement has copped a backlash from the opposition which said the funding commitment fell well short of the Gonski report which recommended funding for education required at least 3.45 billion U.S dollars.

The Gonski report, commissioned in 2014, lamented a drastic shortfall in education funding throughout Australia. It warned too many children were missing out on quality education due to a lack of resources - including quality teaching.

Following the education funding announcement, the opposition said it would fully fund the Gonski recommendations if elected, but Birmingham said the billion-dollar investment would be targeted to areas of most concern, unlike Labor's money which would fund the "school sheds."

Also tipped to headline the budget is that up to 4 billion U.S. dollars will be allocated to major public transport infrastructure projects in major cities Melbourne and Sydney.

The 2016 federal budget will be formally announced by Prime Minister Malcolm Turnbull and Treasurer Scott Morrison in Canberra on Tuesday evening. Endit