I am not a happy bunny at the moment. The Australian Federal Budget was announced while I was on holiday and about to board a plane to Singapore. Just before I boarded, my team reminded me that I needed to write a blog on this.
So here I am, sitting at 30,000 feet, partially drunk, trying to write this. If it does not read quite like it should, you can blame my admin team and Singapore Airlines for letting me drink too much. Because of all this, you are probably getting this update a little later than I would have liked.
Why I Don’t Like Budget Night
Most of you know, I am not a fan of budget night. Unlike some finance people, I rarely watch it. Most of the announcements are already leaked, but occasionally something pops up that excites accountants, usually tax changes or tax cuts.
And since this is an election year, it was obvious that voters would be offered a sweetener (or a bribe). This year was no different.
So, what was this budget all about? And more importantly, will it really make a difference to you?
Election Year Means Tax Cuts
Yes, it’s an election year. That means one thing: tax cuts.
But here’s the problem:
- The Federal budget has no money in the kitty
- Australia looks like it’s growing, but that’s because of mass immigration
- Productivity per employed person is falling
This means that although more people are working, their output is less, which makes the country poorer per person, something the Government will never admit.
Treasurer Jim Chalmers announced that the 16% tax rate will be reduced:
- To 15% in 2026-27 (benefit starts in 15 months)
- To 14% in 2027-28 (benefit starts in 2 years)
In reality:
- Every taxpayer earning over $18,201 will get a maximum of $5 a week in 2026-27
- Another $5 a week in 2027-28
- Low-income earners on $30,000 get about $2 a week
Meanwhile, those earning under $18,201 get nothing. High-income earners on $500,000 still get their Twix bar.
And here’s the kicker: the tax cut will cost a whopping $17 billion by 2030 while pleasing no one.
Energy Bill Rebates
The Government has once again announced energy rebates. This time it’s $150 per household, split into two $75 payments.
But with energy prices rising three times faster than inflation, most of us won’t notice this rebate. Total cost: $1.8 billion.
HECS Debt Relief
University graduates get a win:
- 20% shaved off HECS debts (average $5,500 benefit)
- HECS repayment now starts only after income reaches $67,000
It’s clearly aimed at students and young votersz
Support for Tradies and Apprentices
- Apprentices in construction will get $10,000 to complete training
- Employers hiring in ‘priority occupations’ get a $5,000 incentive
But questions remain. For example, if apprentices leave construction later, they still keep the $10,000.
Medicare and Health Funding
The Government has promised:
- $8.5 billion to boost bulk billing rates by 18 million appointments
- Prescription costs capped at $25 for PBS medications until 2030
- $1.8 billion to reduce hospital wait lists
- Training for 400 more GPs and 400 nurses
- $1.6 billion for aged care wages
However, bulk billing is already declining, with most practices shifting to private billing. This makes the target unrealistic.
Childcare Funding
Parents will welcome:
- Subsidised childcare for families earning under $530,000
- $3.6 billion to increase wages for early educators, benefiting 200,000 workers
Small Business: The Forgotten Sector
Small businesses got very little:
- A $75 energy rebate
- The $20,000 instant asset write-off ends on 30 June 2025, so now may be the time to invest in equipment
The Government also plans to ban non-compete clauses in work contracts, expecting wages to rise by $2,500. But in practice, non-compete clauses were already difficult to enforce
Long-Term Concerns
Here’s my real worry: the Government is too focused on short-term bribes instead of long-term reforms.
- Budget deficit: $27 billion this year, $42 billion next year
- Falling productivity: A dangerous sign for any country
- Healthcare inefficiencies: Despite record funding, outcomes aren’t improving
- Weak decision-making: Like the UK, we risk becoming weaker if tough choices aren’t made
This is where I think Australia risks heading down the UK’s path. The UK became a basket case because its governments were too weak to make hard decisions. They relied on mass immigration, let productivity fall, and tried to please everyone while pleasing no one.
John Howard understood that governments sometimes need to make unpopular decisions for the long-term good. Recent governments Liberal and Labor alike just don’t have the guts.
Running deficits of $27- 42 billion a year, employing more public servants while becoming less efficient, and letting productivity slide is a recipe for decline. It’s like a skin infection itchy and annoying at first, but left untreated, it spreads until drastic action is needed.
Final Thoughts
This year’s Federal Budget is another short-term vote-buying exercise. Tax cuts, rebates, and incentives sound nice but fail to solve deeper structural problems: productivity, taxation reform, and sustainable healthcare.
Australia has the resources and talent to do better. But unless real, tough decisions are made, we may end up weaker, poorer, and more divided just like the UK.
I hope I’m wrong. But even at 30,000 feet, with a few too many drinks, I can’t help but feel this Budget is a missed opportunity.
Frequently Asked Questions
What is the Australian Federal Budget?
What do the new tax cuts mean for small business owners?
Do energy rebates really help businesses?
How does HECS debt relief affect financial planning?
What can businesses do about falling productivity while costs keep rising?
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