The right budget for these economic times?
by Kate Griffiths
This is not an irresponsible budget, but it fails to fully reckon with the times.
It is a classic pre-election budget, with giveaways for middle Australia including tax cuts, energy bill relief, cheaper GP visits, and cheaper medicines. The budget partially calibrates for the times by delaying the biggest measure – the tax cuts – recognising that giving away too much too soon could risk reigniting inflation.
Carefully staged, broad cost of living measures are appropriate in these times because cost of living pressures have been widely felt in recent years. But this budget misses many opportunities to do it better.
It is particularly disappointing to see another tranche of tax cuts without tax reform. Tax reform remains one of the big thorny issues awaiting whoever wins the 2025 election. Tax cuts can be a way to soften necessary but difficult reforms. The government has just made the task harder by doing the easy bit with no strings attached.
Australia has made substantial progress in the fight against inflation, and the economy has reached a turning point, but globally turbulent times threaten this progress. Most of the risks from heightened global uncertainty are on the downside.
And while the global outlook is almost impossible to predict, Australia’s structural budget problem remains clear: government spending will be higher than revenue for the foreseeable future. Whether this is a budget that buys time for the hard conversations on tax and spending, or simply kicks the can down the road, is still to be seen.
