Dr “Sunny” Jim Chalmers has brought down a responsible budget vowing not to slow the pace of reform due to the Iran War and subsequent global fuel crisis.
However, the budget is not without its risks with an attack on the baby boomer holy trinity of negative gearing, capital gains tax (CGT) and family trusts.
The Treasurer hopes the benefits to younger first home buyers looking to enter the housing market will make the budget popular and drown out the boomer concerns.
Here’s a few highlights:
- Do mention the war. The Treasurer naturally made much of the global economic uncertainty due to the Iran war but said that it made him more determined to undertake reform and build resilience in the Australian economy.
- Take a walk on the (fuel) supply side – the Treasurer had introduced measures to help provide relief to motorists and business adversely impacted by higher fuel costs. This includes abolition of road user charges.
- Future Made in Australia. The Government will continue an activist industry policy particularly in critical minerals and renewable energy under Industry Minister Tim Ayres.
- Health wins. The effective Health Minister Mark Butler had big wins in the budget in terms of Medicare office expansions and more pharmaceuticals on the PBS.
- Housing wins. The Treasurer has made home builds a major focus of the budget along with the tax changes, following on from the example of NSW Premier Chris Minns to dramatically increase housing supply.
- Tax Reform – Tax cuts to 13.3 million workers tax offsets paid for by adjustments the baby boomer holy trinity of negative gearing, capital gains tax (CGT) and family trusts. The Treasurer basically said “ok boomer the jig is up”.
- Productivity is not the only thing, but in the long run it’s everything. The Treasurer introduced a major productivity package, simplifying regulation, cutting red tape, expanding national competition policy (so Australia acts as one single market not eight) and supporting investments in renewable energy, including solar power and batteries, AI and allowing superannuation funds to invest in energy and housing.
- Responsible Savings – $36 billion cuts to NDIS – to streamline the scheme and have it better targeted, abolishing private health insurance rebates to the over 65s and trimming the public sector.
- Defending the nation. A $53 billion boost in defence in response to a changing geopolitical environment.
- The bottom line – a responsible budget curbing spendings but still preserving tax cuts. The budget papers offered some ‘brave’ forecasts on inflation and unemployment (assuming an end to the Iran war soon) that could easily come unstuck. The big political sell will be to the younger first home buyers and all whose derive income from labour not assets. However, the claims of inter-generational fairness will be criticised for denying the younger generations the chance to accumulate capital as the baby boomers and (some) gen Xers have done.
