Michelle Grattan, University of Canberra

The Albanese government’s fourth budget is a pitch for the votes of a sour and alienated electorate, framed against a background of extraordinary international uncertainty.

US President Donald Trump isn’t mentioned by name. But he is the colossus in the background of this budget and indeed the imminent election campaign.

While the opinion polls and the public mood have been turning marginally in Labor’s direction in recent weeks, voters still feel (and are) financially under the pump.

Interest rates have fallen slightly and inflation has declined. But public sentiment is still in a relatively dark place. The government for months has been desperately trying to lift it.

It started behind the eight-ball. It had let people’s anger about rising living costs get away from it, even as a per capita recession (from which we’ve just emerged) baked itself in. Why? Largely because Prime Minister Anthony Albanese was over-occupied with the Voice referendum.

Battling to catch up, a plethora of announcements has come in recent months and weeks that have been sold as responses to the cost-of-living crisis – evidence the government understands and cares.

They have been concentrated in Labor’s core areas of health and education, with initiatives to boost bulk billing and improved access to childcare. The government was willing to “sell” these in the pre-budget period, rather than leave them for the night.

At the end, there was the expected and inevitable promise to extend energy bill relief – a bandaid on the continuing sore produced by the necessary transition to a clean economy.

But people want more and the government knew it. The default answer? Tax cuts.

These go to all taxpayers but they will proportionately most benefit lower-to-middle income earners.

Chalmers admits the tax relief is “modest” – although it costs A$17 billion across the forward estimates.

And it doesn’t start for another year – and isn’t fully delivered until the second year.

That’s the government being cautious, with an eye to the Reserve Bank. If it threw out too much money, too quickly, that could undermine the prospect of future interest rate cuts.

Still, the promised tax cuts represent money in the hand – the government hopes the reward will be voter gratitude.

The tax initiative put the onus squarely on the opposition. So far it has refused for months to detail its tax policy.

Immediately after the budget the Coalition declared it would oppose the government’s tax changes. Shadow treasurer Angus Taylor derided the “seventy cent a day” tax cuts, saying they were a “hoax” and would do nothing to restore household budgets.

The Coalition may be setting up a battle of competing tax packages. If, on the other hand, it says the budget can’t afford any tax cuts, that would be a bold call.

Opposition Leader Peter Dutton will have to make the opposition’s position clear quickly, before or in his Thursday budget reply, which is critically important for him. Some would argue this budget week is actually more important for Dutton than for the government.

It’s been years since a budget has been delivered in such a time of disruption and confusion in the world.

Chalmers spelled it out. The global economy is volatile, storm clouds are gathering.

Even this week, Trump has been muddying the messages about what his big April 2 tariff announcement will bring. Australia could be hit, or treated leniently. No one knows.

Chalmers says the Australian economy has turned the corner, that the soft landing “is looking more and more likely”.

But everything could be turned upside down by Trump – more by the flow-through effects of what he might do to the international economy than to Australia directly.

Commentators often tend to question budget assumptions, but in this case the Trump factor could toss those assumptions aside.

His April 2 announcement on tariffs will play directly into the election campaign. But the real challenges his actions bring will be a matter for whoever is in power next term.

Despite what the government might like us to believe, this budget is devoid of serious economic reform, let alone hard decisions.

Predictably, the savings are chicken feed – something over $2 billion. The first budget of the next term is likely to be harsher, all things being equal. That’s so even with a Labor government. It would certainly be much nastier if there were a change of government.

Given it comes on the cusp of the election, the bland, unambitious nature of this budget is not surprising. But when we consider the extent of the challenges Australia faces – on needed tax reform, sagging productivity and much else – it is depressing.

There is not much sign these issues will be more robustly addressed in the campaign.

Michelle Grattan, Professorial Fellow, University of Canberra

This article is republished from The Conversation under a Creative Commons license. Read the original article.

John Quiggin, The University of Queensland

The most striking feature of the Australian economy in the 21st century has been the exceptionally long period of fairly steady, though not rapid, economic growth.

The deep recession of 1989–91, and the painfully slow recovery that followed, led most observers to assume another recession was inevitable sooner or later.

And nearly everywhere in the developed world, the Global Financial Crisis of 2007–08 did lead to recessions comparable in length and severity to the Great Depression of the 1930s.

Through a combination of good luck and good management, Australia avoided recession, at least as measured by the commonly used criterion of two successive quarters of negative GDP growth.

Recessions cause unemployment to rise in the short run. Even after recessions end, the economy often remains on a permanently lower growth path.

Good management – and good luck

The crucial example of good management was the use of expansionary fiscal policy in response to both the financial crisis and the COVID pandemic. Governments supported households with cash payments as well as increasing their own spending.

The most important piece of good luck was the rise of China and its appetite for Australian mineral exports, most notably iron ore.

This demand removed the concerns about trade deficits that had driven policy in the 1990s, and has continued to provide an important source of export income. Mining is also an important source of government revenue, though this is often overstated.

Still more fortunately, the Chinese response to the Global Financial Crisis, like that in Australia, was one of massive fiscal stimulus. The result was that both domestic demand and export demand were sustained through the crisis.

The shift to an information economy

The other big change, shared with other developed countries, has been the replacement of the 20th century industrial economy with an economy dominated by information and information-intensive services.

The change in the industrial makeup of the economy can be seen in occupational data.

In the 20th century, professional and managerial workers were a rarefied elite. Now they are the largest single occupational group at nearly 40% of all workers. Clerical, sales and other service workers account for 33% and manual workers (trades, labourers, drivers and so on) for only 28%.

The results are evident in the labour market. First, the decline in the relative share of the male-dominated manual occupations has been reflected in a gradual convergence in the labour force participation rates of men (declining) and women (increasing).

Suddenly, work from home was possible

Much more striking than this gradual trend was the (literally) overnight shift to remote work that took place with the arrival of COVID lockdowns.

Despite the absence of any preparation, it turned out the great majority of information work could be done anywhere workers could find a desk and an internet connection.

The result was a massive benefit to workers. They were freed from their daily commute, which has been estimated as equivalent to an 8–10% increase in wages, and better able to juggle work and family commitments.

Despite strenuous efforts by managers, remote or hybrid work has remained common among information workers.

CEOs regularly demand a return to full-time office work. But few if any have been prepared to pay the wage premium that would be required to retain their most valuable (and mobile) employees without the flexibility of hybrid or remote work.

The employment miracle

The confluence of all these trends has produced an outcome that seemed unimaginable in the year 2000: a sustained period of near-full employment. That is defined by a situation in which almost anyone who wants a job can get one.

The unemployment rate has dropped from 6.8% in 2000 to around 4%. While this is higher than in the post-war boom of the 1950s and 1960s, this is probably inevitable given the greater diversity of both the workforce and the range of jobs available.

Matching workers to jobs was relatively easy in an industrial economy where large factories employed thousands of workers. It’s much harder in an information economy where job categories include “Instagram influencer” and “search engine optimiser”.

As we progress through 2025, it is possible all this may change rapidly, for better or for worse.

The chaos injected into the global economy by the Trump Administration will radically reshape patterns of trade.

Meanwhile the rise of artificial intelligence holds out the promise of greatly increased productivity – but also the threat of massive job destruction. Economists, at least, will be busy for quite a while to come.

This piece is part of a series on how Australia has changed since the year 2000. You can read other pieces in the series here.

John Quiggin, Professor, School of Economics, The University of Queensland

This article is republished from The Conversation under a Creative Commons license. Read the original article.