Chalmers charms
Treasurer Jim Chalmers handed down the 2025-2026 Budget tonight in a markedly confident fashion.
There wasn't anything too surprising included, with many of the key measures already released or leaked over recent days.
Inflation is expected to be back in the target band in the middle of this year, and with GDP growth expected to be 2½ per cent over the coming financial year, it is hoped that the private sector will soon be driving the economy again.
Electricity bill relief has been once again extended with a new $150 discount for each household, which will mechanically reduce headline inflation (but will also in turn reduce inflation expectations, and of course many price increases in the economy are indexed to the headline inflation figure too).
It appears that are to be Budget deficits out as far as the eye can see, with the NDIS standing out as a large driver of expenditure growth over recent years, growing yet further from $47 billion to $63 billion by FY2029...a larger spending line than the defence budget.
When taking into account the significant off-balance sheet measures, the deficits do look a bit ugly, and government debt is expected to increase as a percentage of GDP over the course of the decade (although at the same time it's true that resources-rich Australia is far better placed than most peer economies).
Dwelling investment (i.e. the construction of homes) is expected to pick up very sharply over the next two years, although there was nothing new in the Federal Budget that will contribute to this, so it must be mostly driven by the market cycle and lower interest rates.
Net overseas migration is forecast to fall from immigration of 435,000 to 225,000 by FY2027, though whether that actually comes to pass given ongoing skills shortages - or mismatches - and the booming international students sector is a whole other question.
Probably not, is my guess.
The government will extend the scope of the Help to Buy scheme, so that 40,000 first homebuyers should access the scheme over 4 years, and with higher price thresholds than previously announced.
Foreign buyers will still be largely locked out of the housing market in Australia, by tax surcharges for new dwellings and legal restrictions on the purchase established housing.
Student HECS debt relief and modest tax cuts will be gratefully received by many consumers.
The proposed taxing of unrealised gains in superannuation funds will be less popular, if not unworkable for many investors and business owners.
This was an election Budget with little contained within to spook the horses.
The Federal election due to be called imminently and the incumbent ALP government is now moving in to be slight favourites with the bookies.
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