Labor leader Bill Shorten has called on the Coalition to “go further” with its small business tax cut and develop a bipartisan plan to bring the rate down by five per cent.

Mr Shorten said he would go a step further in supporting small business, proposing to slash the tax rate by five per cent instead of the government’s 1.5 per cent.

In his budget reply speech to Parliament on Thursday night, Mr Shorten said that was not enough to generate long-term confidence and growth.

• ANALYSIS: Nice speech Mr Shorten, but how will you pay for it?

“So tonight I say let’s go further. Let’s give small businesses the sustainable boost to confidence that they deserve,” he said.

“I invite you to work with me on a fair and fiscally responsible plan to reduce the tax rate for Australian small business from 30 to 25 per cent – not a 1.5 per cent cut – a five per cent cut.”

The $3.3 billion tax cut, coupled with a $1.8 billion small business asset write-off, is the bedrock of the Coalition’s “have a go” budget.

Mr Shorten said he knew reducing the tax rate to 25 per cent “will not be easy”.

“And it may take longer than the life of one Parliament – that’s why it must be bipartisan and it has to be fair,” he said.

The Labor leader also announced a $500 million “smart investment fund” to back startup companies.

“I want ideas born here, to grow up here and create jobs here,” he said.

And in the speech Mr Shorten set a goal of spending three per cent of GDP on research and development by the end of next decade.

“Australia must get smarter or we will get poorer. I believe Australia can be the science startup and technology capital of our region,” he said.

Mr Shorten’s speech was regularly punctuated by cheers and applause from public in the galleries, to the frustration of Speaker Bronwyn Bishop who also regularly called for silence.

In his speech he said he would support the government’s budget measures on national security, drought relief for farmers and small business, but called on the government to support Labor’s plan to take the tax cuts further.

“Labor would improve the budget bottom line by more than $21 billion over the next decade, by making foreign multinationals pay their fair share of tax and tightening superannuation tax concessions,” Mr Shorten said.

He slammed the budget as a missed opportunity for the nation, while flagging support for some government savings measures, and revealing his own initiatives.

Bill promises tax cuts without spending reductions. More debt and deficits under Labor. #budget2015 #showusthemoneybill

— Mathias Cormann (@MathiasCormann) May 14, 2015

“The 2015 budget has neither the qualities, nor the priorities of the Australian people,” Mr Shorten told Parliament. “The test for this budget was to plan for the future: to lift productivity, to create jobs, to boost investment, to turbo-charge confidence for the years and decades ahead – to restore hope.

“But this budget fails every test – it is a hoax, a mirage, a smokescreen.”

Mr Shorten’s harshest jabs were directed at Prime Minister Tony Abbott after he ditched his “Rolls Royce” paid parental leave scheme, and then moved to reduce entitlements currently available to new mothers. 

“In just one year, this Prime Minister has gone from the staunchest defender of paid parental leave to vilifying tens of thousands of women who rely upon it,” Mr Shorten said.

“From praising ‘women of calibre’ to demonising ‘rorters’ and ‘frauds’ – that’s how quickly and viciously this Prime Minister’s reverts to type on women in the workplace.”

Under Mr Shorten’s plan, university degrees in maths, engineering, science, and technology, would become free for 100,000 students.

This would also include computer coding in the national school curriculum, half-a-billion dollars for a new “smart investment fund”, and create a new body called “Start-Up” to ease loan applications for new and prospective businesses struggling for capital.

University graduates of STEM courses, which include science and technology, engineering and mathematics, would receive fees back but and have access to 25,000 teacher scholarships to encourage them to become STEM teachers.

The Opposition leader also outlined “unfair government cuts which should be reversed” in this year’s budget, which included a federal scheme to provide seatbelts for school buses in rural and regional areas which was dumped to save $1 million.

The Seatbelts on Regional School Buses program was created by the former Labor government in 2007 to improve safety on long-distance bus rides.

‘Magic Pudding economics’: Frydenberg

In response to Mr Shorten’s speech, Assistant Treasurer Josh Frydenberg said the Government was “comfortable” with its own plan. 

“Labor, since 2010, has been promising to cut the small business tax rate to 25 per cent and in six years they did nothing. Look what Labor does, not what Labor says,” he said.

Mr Frydenberg called on the Opposition to show how it would pay for such a large tax cut.

“This is magic pudding economics. Bill Shorten is all politics. He has no plan for Australia, and if he is ever elected there will be a very high price for Australian families.”

Earlier on Thursday, Treasurer Joe Hockey said that he wanted Mr Shorten to explain how he would fix the budget – when everything the Labor leader had said so far was going to make it worse.

As far as Mr Hockey was concerned, the Opposition leader talked about budget repair while also wanting to spend more, have bigger deficits and create more government debt.

“Frankly there is no magic pudding here,” the Treasurer said
.

Cabinet colleague Malcolm Turnbull agreed, saying Mr Shorten was in some sort of “blissful la la land”.

“Some people have compared this building to Hogwarts but it’s not a magical place,” he told reporters in Canberra referring to the fictional school of Harry Potter.

For the half hour that Bill Shorten is speaking, we will be paying $622,000 in interest on Labor’s debt #Budget2015 #auspol — Liberal Party (@LiberalAus) May 14, 2015

BREAKING: $2 billion in hidden cuts to health and aged care have been revealed. RT the facts today. pic.twitter.com/csiBOh7r5Z — Australian Labor (@AustralianLabor) May 14, 2015

Ed Husic has been doing a stack on work on start ups behind the scenes for Labor. This is easily the best part of Shorten’s speech. — Latika M Bourke (@latikambourke) May 14, 2015

The girl who took the selfie with @JoeHockey is in the gallery — Rob Harris (@rharris334) May 14, 2015

HECS write-offs. More women in science. Nice double whammy, Bill. #BudgetReply — Melissa Singer (@melsingerhack) May 14, 2015

Zinger alert!!!!! #BudgetInReply #auspol — Francis Leach (@SaintFrankly) May 14, 2015

‘Whatever this Budget brings, we are ready. We are ready to offer remedies rather than reactions.’ #BudgetReply — Sky News Australia (@SkyNewsAust) May 14, 2015

Opposition Leader Bill Shorten embraces his wife Chloe after his Budget-in-Reply speech pic.twitter.com/P1YZqhDIy8 — andrew meares (@mearesy) May 14, 2015

– with AAP/ABC