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Budget 2025 has been handed down by Treasurer Jim Chalmers on the eve of the federal election, and he’s startled some Aussies with inclusions they didn’t see coming.
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Now first, the good news is tax cuts for all, the economy is rebounding, and we’re on the verge of declaring victory over inflation.
Now for the reality check — the new tax cuts represent about $10 a week on average for Aussie punters and the full impact won’t be felt until another two years away. So just hold back on the extra cup of coffee per week; this is the budget that puts the Labor government in full pre-election mode.
There’s $1.8 billion in spending for households and school businesses on the power bills.
To widen bulk billing for GPs, the Treasurer also plans to expand bulk billing incentives and introduce a new incentive payment for practices that bulk bill every patient. This move aims to increase the number of bulk-billed GP visits and reduce patients’ out-of-pocket expenses, though it won’t happen ‘til the end of the decade.
Aged care nurses are in line for a pay rise, and few should dispute the move. The same can be said for the cutting of student debt by 20%, which has also been budgeted.
Overall, Chalmers’ fourth budget puts an optimistic lens on the economy, with growth recovery to 2.5% next year, and on inflation, inflation too is now expected to be bang at the midpoint with RPA’s target ban.
Now for the sobering news: This fiscal deficit is out as far as we can see. This year’s budget deficit is set to come in at a massive $42 billion and is it about $180 billion of deficit in the next few years as revenue growth fails to match all the spending growth baked in. Gross debt is set to break the trillion-dollar barrier this year, while debt jumps to 37% of GDP towards the end of the 2020s.
While that’s relatively low compared to other countries, it still gives us less room to move in the inevitable global economic shock to come, and it’s really coming with Trump and threatening his tariffs against his major trading partners, including Australia.
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This is an Australian budget that’s big on laying the groundwork for the election, but it’s light on reform or promises to cut spending.
At least there’s an extra cup of coffee coming your way in a few years.
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