Greg Jericho
Chief Economist

This pre-election budget is designed to annoy the least number of people. It has modest sweeteners in the form of tax cuts, electricity rebates, cheaper medicines, and incentives to increase bulk billing.

To paraphrase Douglas Adams, this budget is mostly harmless.

Good things

The modest tax cuts are well targeted, with those on the lowest incomes getting the benefit. This is a welcome change from previous income tax cuts that have mainly benefited high income earners.

The measures for strengthening Medicare are also welcome. Healthcare is a human right and this will help more people have access to visit their doctor and cost them less to buy medicine.

This budget is not inflationary. There is nothing in this budget that should stop the Reserve Bank from further cutting interest rates. The budget predicts that the inflation rate will remain in the RBA’s target band.

Missed opportunities

Being mostly harmless, this budget also does little to combat some of Australia’s biggest problems.

There is funding to help with climate related disasters but no additional funding to reduce emissions. Australia is unlikely to hit its emissions reduction targets and there is nothing in this budget that will stop that.

There is nothing meaningful on housing. The government has expanded the eligibility for its help to buy scheme. This is a tiny scheme that would have made little to no difference, and the expansion will mean it will continue to make little to no difference. There will be no changes to negative gearing of the capital gains tax discount, which are driving up house prices and pushing down home ownership rates. There is also no expansion of public housing.

This budget does nothing substantial for inequality which will continue to get worse. Those in the top 10% will continue to collect $40 billion a year in super tax concessions, negative gearing, and the capital gains tax discount.

Gas companies will continue to avoid paying their fair share of tax. This budget shows PRRT revenue will continues to fall. The Prime Minister has paused beer excise, but gas companies don’t need such measures. By 2028-29 twice as much excise will be collected from beer as from the PRRT.

The Budget also failed to properly address the need to respond to climate change and also the ongoing environmental harm from the salmon industry. Shamelessly while passing legislation that will critically hurt the survival of the Maugean Skate, the government has allocated $2.4m for a breeding program that is only to start in 2026-27. Talk about being a day late and a dollar short.