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Hi Allegra,
Last night, the Treasurer delivered the final budget of this Parliament.
Economic indicators are improving, and the budget included welcome support for areas like health, public education, and childcare.
As part of my Tax Green Paper, I’ve been pushing hard to lower income taxes on working people, and the budget included a welcome but small income tax cut.
However, we didn’t see the long-term economic reform that is needed to secure our future prosperity, address intergenerational equity, or accelerate business productivity.
A single tax cut isn’t tax reform, and it is not the indexation of income tax brackets that I’ve called for.
I also have deep concerns about the many years of forecast deficits, which are driven by spending growing faster than the economy.
My team and I have been poring over the budget papers. Below is our initial take on the budget “hits” and “misses”:
You can watch my first take on ABC News here.
There will be more analysis over the coming days as we get a clearer view of what the budget means for Wentworth and our country. Stay tuned on my social media for updates.
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Whilst the 'Budget Tree' isn't quite at its most vibrant red, it is still looking absolutely beautiful. |
The economy is improving after a tough few years, but the budget lacked the long-term reforms needed to set us up for future success. |
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Hits:
- Headline inflation expected to remain within target of 2-3%
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Unemployment to remain low for the foreseeable future (around 4.25%)
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Real GDP growth expected to rise to 2.25%, up from 1.5% in 2024-25
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Real wages and GDP per capita are now rising, albeit too slowly
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Misses:
- $42 billion deficit in 2025-26, and large deficits every year in the future
- Record high levels of spending, which have increased since the last budget
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No meaningful commitment to broader tax reform, addressing intergenerational equity, raising business productivity, or dealing with structural budget deficits
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I’ve been calling for lower taxes on working Australians and the budget headline was a small new tax cut for every taxpayer. But there was no permanent power bill relief, just more temporary cash hand-outs. |
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Hits:
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Further income tax cuts for every taxpayer, with a reduction in the bottom rate of tax from 16% to 14% by July 2027. This means a worker on average earnings will get an extra tax cut of $268 in 2026–27 and $536 in 2027–28
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Expansion of the Help to Buy Scheme, a $1 billion fund for crisis and transitional accommodation, and support for modern construction methods
- $2.6 billion to increase wages for aged care nurses
- Several measures have already been announced, including lower costs on PBS medications
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Misses:
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Income tax cuts will be eroded by bracket creep within a couple of years. This is why I’ll continue to push to index tax brackets to inflation, and put an end to bracket creep
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No support for permanent power bill relief through solar, batteries, and home energy upgrades. Instead, the government spent a further $1.8 billion on rebates. My Permanent Energy Bill Relief Plan would deliver lower bills for good for 800,000 households through measures like zero-interest loans for energy upgrades
- No increase in JobSeeker or Rent Assistance
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Building a smarter economy
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There were some welcome changes in the budget, but there was nowhere near enough to make it easier to do business, rein-in big infrastructure projects, or address intergenerational equity that is hurting young people. |
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Hits:
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New National Competition Policy measures, including a ban on most non-compete clauses and a new national licensing scheme for electrical trades
- New measures to promote prompt 20-day payment times for contractors and subcontractors in the construction industry
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$1 billion Building Early Education Fund to build early childhood education and care centres where they’re needed most
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Misses:
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Not enough to make it easier to do business: e.g. simplifying industrial awards, improving our environmental laws, or simplifying rules around homebuilding
- Over $17 billion in new infrastructure spending, despite no requirements to publish business cases or learn from past mistakes. My Better Value for Taxpayers Bill would put much-needed discipline around this spending.
- No big ideas to address intergenerational equity
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Action on climate and environment
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Whilst we’ve made progress on climate action, this budget was light on new measures to reduce emissions and accelerate the energy transition. |
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Hits:
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$212 million investment in nature protection over the next four years to help meet our commitment to protect 30% of our land and water by 2030
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Foundational support for green iron and green aluminium (Although further analysis is required on the details of these measures)
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Misses:
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The government passed legislation on Budget Day to weaken our environmental laws, and investment in nature still falls well short of what experts say we need
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Continued increase in spending on the diesel fuel rebate, reaching over $13 billion by 2028-29
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An estimated $13.5 billion must be spent dealing with natural disasters like Cyclone Alfred, but no big investment in disaster resilience
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Creating a kinder community
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The budget included several measures I’ve been advocating for, including more support for refugee sponsorship and aid programs in the Middle East. But more support for mental health and preventative healthcare was lacking. |
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Hits:
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Permanent funding for the Community Refugee Integration and Settlement program, which enables communities to support refugees arriving in Australia
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$4 million for Project Rozana, which addresses critical gaps in healthcare in the Palestinian territories
- $1.6 million for mental health support for Australians impacted by the conflict in the Middle East
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Continued investment in HIV prevention, testing, and treatment measures
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Misses:
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No transformative funding for mental health care and reform. Mental health accounts for 15% of the burden of disease in Australia yet has historically received only 7% of funding
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No transparency over taxpayer funding provided to Nauru to resettle people released from immigration detention
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No new money to provide a safety net for people seeking asylum, or those failed by Tony Abbott’s Fast Track process
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Measures already announced
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The budget confirmed several announcements the government had already made, including hugely welcome investments in women’s health, cheaper medicines, pay rises for early childhood educators, and more funding for public schools.
Cost-of-living
- Reduction in the cost of PBS medicines to a maximum of $25
- 20% cut to existing student debts
Health
- $793 million to deliver lower costs, more choice and better healthcare for women
- $7.9 billion to increase GP bulk billing, more funding for public hospitals and new urgent care clinics
Housing
- Banning foreign buyers from purchasing existing dwellings for two years
- Bonus incentives for new housing apprentices
Education
- Guaranteed eligibility for at least 3 days a week of subsidised early childhood education
- 15% pay rise for early educators, with eligible providers limiting fee growth for families
- Path to full and fair funding for public schools
While there were some welcome announcements in this budget, it was also a real missed opportunity for a blueprint for a bold vision for Australia. Read more about my plans to lower living costs and build a smarter and stronger economy.
I will continue to provide analysis of these announcements over the next few days via my socials. Stay tuned.
Best,
Allegra Spender MP
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Allegra Spender MP Federal Member for Wentworth
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