On Tuesday, Jim Chalmers, the Australian Treasurer, handed down the Albanese Government’s fourth Budget. Given that the deadline to call an election is looming, this Budget gives the Australian Labor Party (ALP) a chance to remind voters of the recent tax cuts and rebates they’ve enjoyed thanks to the government, whilst also setting out clear objectives for the future. With necessary emphasis on easing the cost-of-living struggles for Australians, the Treasurer optimistically summarised that “the plan at the core of this budget is about more than putting the worst behind us. It’s about seizing the best of what’s ahead of us.”
Overall, the Budget shows promise for Chalmers and Labor with growth forecast to pick up from 1.5% this year to 2.5% in 2026/27, unemployment projected to peak lower at 4.25% and inflation falling faster with Treasury expecting it to be back in the Reserve Bank’s target 2-3% band six months earlier than expected. In a bid to appeal to middle Australia in the imminent election, Labor has “bet a blockbuster $17.1 billion [on] tax cuts” but will it be enough to win them a second term in government?
The Appropriation Bill (No.1) 2025-2026 presented to Canberra’s House of Representatives was split into the Albanese Government’s five main priorities:
Much like the rest of the world, one of the major problems facing Australians is the soaring cost-of-living. In order to combat this, the Government announced two tax cuts in July last year and further supplemented this with two more in Tuesday’s Budget bill. These cuts will “take the first tax rate down to its lowest level in more than half a century…the average earner will have an extra $536 in their pockets each year.”[3] Combining this figure with July’s cuts will see average tax per capita fall by $2,548. Whilst Chalmers acknowledges that this a modest amount, he recognises that this will make a huge difference to the currently struggling middle Australia. The introduction of energy rebates in 2024 has also helped to ease people’s cost-of-living struggles; measures taken saw electricity prices go down by 25% last year and will continue to lessen with the government’s extra $1.8 billion in energy bill relief for families and small businesses. The protection and encouragement of SMEs is paramount to Labor’s mission with “around 25,000 new businesses created each month on average” since they have been in office. The Australian Labor Party (ALP) know full well that elections are won and lost on whether people feel as though they have more money in their pockets, so focus on tax cuts, higher wages and SME support is key.
Founded in 1975 by the Whitlam Labor government, Medicare is Australia’s public funded universal health care insurance scheme. Providing citizens and select visitors with either full or partial cost coverage of health care, state and territory governments oversee services. This Budget cemented Labor’s commitment to protecting Medicare with an $8.5 billion lift on bulk-billing rates in GPs across the country, a $793 million investment into women’s health clinics and the channelling of $644 million into establishing another 50 urgent care clinics, resulting in every 4 in 5 Australians living within 20 minutes of emergency medical assistance. The ALP media team are putting Medicare and its protection at the forefront of their pre-election campaign communications, reminding voters that “only Labor governments can strengthen [the scheme]”. This is a smart move, as they know their opponents across the House floor cannot promise the same; under the Abbott government, Medicare was privatised, leaving thousands of Australians with soaring medical bills and thousands without jobs.
With more and more people moving to Australia, the government are having to tackle the struggles of the housing supply chain at every level. Following on from the pandemic, there is a severe shortage of skilled workers ; but with the protection of 100,000 fee-free TAFE (tertiary education training institutions, primarily offering vocational courses) places annually from 2027 and up to $10,000 incentives to train up in housing construction, Labor are ensuring that they are able to provide their promised 1.2 million new homes by 2030 and an additional 18,000 social and affordable homes . With the Budget announcement to expand the Help to Buy scheme, property price and income caps will be updated “so more first home buyers are eligible for the scheme, [allowing] 40,000 Australians to buy their first home in the next four years.” However, what is notably missing from this Budget that was present in the government’s last two, is any rent assistance payments to low-income earners. In a time when rent affordability is at a high and rental availability is at a low, this exclusion leaves about 30% of the population still struggling.
Key context to the Budget’s education announcements is that “the regulation, operation and funding of education is the responsibility of the states and territories”. However, recent announcements with state Premiers and Education Ministers have seen the Albanese government promising full funding for public schools by 2034. With major disparities experienced at all levels of education from early years childcare to universities depending on a state or territory’s demographics and finances, the government have committed to helping kids attending public schools reach their full potential. This new funding will work hard to tackle the disparity between rural-regional and inner-city educational standards and achievements.
In his speech, Chalmers reminded the House and all watching of the unique global socio-economic circumstances. Whether this be the ongoing effects of the Covid-19 pandemic, the capricious nature of the Trump administration or the war in Ukraine, the Treasurer reminded Australians that they must be prepared to respond as a key player on the global stage.
This is recognised within the Budget through the addition of “an extra $50.3 billion in defence” promised by the mid-2030s. This will take Australia’s defence spending to 2.3% of GDP by the early 2030s. Looking through a wider lens, Chalmers recounted the federal financial situation: “Tonight’s budget is $207 billion better than we inherited…in our first two years, we posted the first back-to-back surpluses in nearly two decades. We have found around $94 billion of savings since coming to government, including another $2 billion in this budget”. The Guardian’s Patrick Commins reminds us, however, that there are still deep-rooted issues plaguing the Treasury. He summarised that, “The budget showed an estimated underlying cash deficit of $27.6 billion in 2024-25, versus the December midyear forecast of $26.9 billion. The deficit will then blow out to $42.1 billion in the next financial year before hovering around $36 billion in each of the following three.” Whilst the government being in a ‘structural deficit’ is not a shock, the budget has been in one for the best part of twenty years, Labor have chosen to allow both the deficit and debts to rise in order to deliver everyday cost reliefs to Australians. A decision loudly criticised by Dutton’s Opposition.
In his response, Dutton highlighted the Opposition’s election commitments of cheaper energy, lower immigration, building more affordable houses, and scrapping Labor’s tax cuts. A major policy that the Opposition have already committed to is the construction of nuclear reactors at the site of coal-fired power stations across the country in New South Wales, Queensland and Victoria. Dylan McConnell, an energy systems expert at the University of New South Wales, found that the plan “would lead to an extra 1.7bn tonnes of CO2 being emitted by 2050” or “the equivalent to about four years’ worth of emissions released across the entire Australian economy”.
This is in complete contradiction to the “ambitious and achievable 2035 emissions reduction target” from Labor, posing a big question to voters on their priorities, whether they be environmental or economic, as they head to the polls.
It is undeniable that the timing of the Budget has influenced and possibly altered its contents; now is not the time for the Albanese government to be taking tough decisions like the UK’s Labour government are currently forced to do. The ALP must remain focused on their core values by supporting low- and middle-income earners in an internationally uncertain socio-economic period. If Prime Minister Anthony Albanese, Treasurer Jim Chalmers and Finance Minister Katy Gallagher have their eyes on going bolder and tougher to tackle the “distortions and hurt that still remain in [their] economy”, they must prove themselves to voters and quickly.
For more on social democrats around the world see, Should Labour take Spanish Lessons on Growth?
