Ms Dugdale makes an appeal to Patrick Harvie, saying he has campaigned against austerity all his political life.

She calls on Mr Harvie to maintain his opposition to cuts to public services.

Ms Dugdale points to the Greens manifesto pledge of a 60p top rate of tax.

She says the Greens have settled to be "the fig leaf the nationalists so desperately want and so desperately need".

Mr Harvie says if every party in a minority government parliament says "our manifesto or nothing" the people will be failed.

Ms Dugdale says if the Greens back the budget it will be remembered as the day the Greens abandoned any claim to be on the progressive left.

Ms Dugdale says the SNP must invest in the greatest natural resource we have, Scotland's people.

The Scottish Labour leader says her party will not and cannot back any SNP plan to impose another independence referendum on the people of Scotland.

Ms Dugdale asks why the finance secretary does not use the 50p top rate of tax.

The Scottish Labour leader says her amendment would see the use of income tax powers to reverse the SNP cuts.

She says for Scotland's economy to thrive we need good well funded public services.

Scottish Labour leader Kezia Dugdale says the parliament has one of the most important decisions it has ever had to make.

Ms Dugdale says the cuts can be stopped or we can walk by on the other side.

She says she got into politics to stand up for people that will be hit the hardest by the SNP cuts.

Ms Dugdale says her conversations with Mr Mackay were cordial and constructive and she insists the price of her vote is no cuts to services.

She says the more Derek Mackay baits her she will be more inclined to reveal what he said in their discussions.

Ms Dugdale accuses the finance secretary of being completely duplicitous.

The Scottish Conservatives had said they would be willing to support the budget - but only if the SNP were willing to scrap most of their tax proposals.

Finance spokesman Murdo Fraser said Mr Mackay should not "side with other opposition parties in hiking taxes for workers and businesses". saying he should instead "prioritise growth ahead of left-wing student politics".

After the deal was confirmed, he called it a "lurch to the left", with the SNP choosing to "embrace the anti-business, anti-growth agenda of the Greens".

Scottish Labour has tabled an amendment for the debate calling for increases to income tax, and a new 50p rate for earnings above £150,000.

Leader Kezia Dugdale said her party would not back any budget that cut funding from local services, calling her amendment a "positive alternative".

If the budget passes stage one in the chamber, with the general principles of the bill approved, then it will be debated at committee level the following week.

Stage three would see separate votes on tax and spending proposals in the chamber in the week beginning 20 February. Mr Mackay confirmed a deal had been agreed for "all stages".

Here is the Scottish Labour amendment.

Image source, Scottish Parliament

Scottish Lib Dem leader Willie Rennie tries to intervene but Mr Macakay says he has spoken to Willie Rennie quite enough and it did not amount to much.

The finance secretary says he will provide an additional £35 million to Scottish Enterprise.

The finance secretary announces  further funding of £25 million within the “Police Reform and Change” budget to support a new phase of transformation, funded through a combination of capital and resource headroom I judge will be available in 2017/18.

Mr Mackay says: "I therefore propose, with the support of the Scottish Green party for all stages of this Budget and the Local Government Finance Order, together with agreement to allow the Scottish Rate Resolution to come into force, to allocate these additional resources, of £160 million, to Local Government – to be allocated through the normal formula distribution and to be spent at the discretion of individual authorities. Once again."

This is greeted with applause from some parts of the chamber.

Mr Mackay says he is asking the highest earners to forego a significant tax cut at a time of UK Government austerity. 

For the 10% of people covered by this higher rate the income foregone amounts to around £7.70 a week – less than the cost of a single prescription in England he says.

The minister says this is the best deal for tax payers in the whole of the UK.

Mr Mackays says this government does not think it would be right to increase tax rates.

He confirms confirm this government will lodge a Scottish Rate Resolution that sets the same tax rates as originally proposed but which applies a cash freeze on the higher rate threshold.

Tory MSP Murdo Fraser asks: "Why has he listened to the Green party before the voice of Scottish business?"

Mr Mackay says the government is not proposing higher tax rates.

He says 99% of taxpayers on the same income this financial year will not be paying any more income tax in the next financial year while generating an additional £29m of revenues in 2017/18.

Brian Taylor
BBC Scotland Political Editor

It depends, as ever, upon definitions. Should we talk about money for local government? Or money for local services?

If we consider cash for councils, then opposition parties can point to figures which indicate that the budget is down.

However, if we consider funding for services in the round, then ministers can point to figures which suggest that the level of financial support is up.

Image source, Scottish government/PA

To offer a little more detail. Please turn to Table 9.02 in the Draft Budget document, external. It is on Page 91 in the book version. I know, I know, I sound like that maths teacher you disliked but bear with me.

This table cites Level 2 expenditure upon local government. Combining local government cash with central government grant support produces a cut of £327m from 2016/17 to 2017/18. That is the figure cited by Labour.

But, says the Scottish government, those are stripped-down stats. More info is available at Level 3 (Table 9.12, Page 101). That includes other funding streams and generates a cut of £182m across the relevant years.

But, says the SG a second time, that neglects other methods of providing funding for local services, albeit not necessarily through local authorities.

According to Mr Mackay, the entire package added up to "an increase in spending power on local government services" of £240.6m. Note his precise use of language.

All of this, of course, with an eye to next May's local council elections - in addition to the immediate impact. Will voters heed the cry of "council cuts"? Or will they listen to "service delivery"? And which one will they believe?

Read more from Brian

Mr Mackay says the Budget provides a strong settlement proposal for local government, including the additional funding for Educational Attainment, increased capital resources and increased revenues from council tax.

The finance secretary says he welcomes the constructive approach taken by the Green party.

He says they asked him to consider changes to the proposals on income tax and to provide additional funding for local government.

Mr Mackay says on his latest assessment of the financial position this year and our pro for 2017/18 has enabled him to identify an additional £100m of resource funding and £30m of Capital funding that could be provided through central government resources. 

This will be funded through use of the budget exchange mechanism, updated projections of the Scottish government contribution required to bring the NDR pool into balance and a reduction in the anticipated cost of borrowing repayments next year, he says.