Budget bling as election looms

Tuesday night’s Federal Budget reaffirmed what most people already knew – the state of the nation’s public finances is rapidly deteriorating.

After two years of surplus, courtesy of a windfall in mining-related revenues, the budget is now projected to swing sharply into deficit – $27.6B in the current financial year and $42.1B for 2025-26.

Of more concern is the longer-term projection for fiscal deficits every year for the next decade.

The blowout comes notwithstanding stronger income tax receipts in forward estimates and reflects, among other things, a string of pre-election commitments including funding for the Bruce Hwy and the expansion of Medicare bulk-billing.

It now also reflects a shiny new personal income tax cut expected to add more than $17B to the deficit over the next three years.

The tax cut will be given effect primarily by dropping the lowest marginal tax rate from 16 cents in the dollar to 15 cents from July 1 and then to 14 cents from July 2027.

The Government also committed to another $150 energy rebate to households at a cost of $1.8B to taxpayers.

Another sweetener was a promise, if re-elected, to reduce student debt by another 20 per cent.

Opposition Treasurer Angus Taylor slammed the budget, and specifically the tax cuts, as irresponsible and an “election bribe” and said the LNP would not support them.

Some commentators described the budget as a “horror show” for small business with a proposed ban on non-compete clauses for workers, an abrupt end to the instant asset write-off benefit from July 1 and the complete absence of any incentives or support for small-businesses facing a global tariff war.

So far, the Opposition has stopped short of setting out details of how it would address the structural fiscal deterioration.

Indeed, to date, it has continued to match most of the government’s pledges and had earlier agreed not to stand in the way of the energy bill rebate.

One of these pledges last week was to lower the cost of most medicines on Australia’s Pharmaceutical Benefits Scheme (PBS) with both parties standing up firmly against pressure from the Trump administration (and big US pharmaceutical companies) to drop the PBS in the latest round of tariff negotiations.

It should be noted Tuesday’s budget was a budget the ALP probably did not expect it would need to deliver until a few weeks ago when cyclone Alfred squashed any chance of an early election, so maybe we shouldn’t be too surprised it seemed a little slapped together.

The Opposition too appears to have been in a state of limbo in recent weeks, waiting for the formal election campaign to commence.

This was reflected in some seemingly loose statements from opposition leader Peter Dutton, including his plan to pursue a referendum to empower politicians to deport Australians who hold citizenship in other countries and commit serious crimes.

We can only presume that, armed with lots of ammunition from the budget, Dutton and his colleagues will pick up the pace, starting with the budget reply speech later this week.

Expect cost of living, cuts to the public sector and work-from-home policies for public service workers to be on the agenda.

It is likely pressure will mount from households and business alike for the LNP to provide more colour on its plans for the Safeguard Mechanism and any revisions to Australia’s greenhouse gas emissions reduction commitments.

Locally, the LNP has stepped up its pledges for a range of community projects, including $10M to expand and resurface the airstrip at Warnervale Airport, $3.9M for a full upgrade of Nioka Ave in Point Clare, $544,000 to upgrade the home of the Berkeley Vale Panthers and over $90,000 to upgrade the facilities of The Bikers Hand.

Ross Barry