The weekly savings from the tax cuts might not buy an extra cup of coffee, but Labor’s pitch lands the Coalition in a tricky positionFederal budget 2025 LIVE updates: Australia government budget announcement and speech – latest newsLabor bets big with $17.1bn in tax cuts to win over middle AustraliaExplore all of our 2025 Australia federal budget coverageGet our morning and afternoon news emails, free app or daily news podcastOn Tuesday morning, Angus Taylor laughed when asked whether the Coalition might introduce “stage-four” tax cuts beyond the three-stage package legislated under the Morrison government (and then remixed under Labor).The shadow treasurer might have responded with a different emotion after cracking open the budget papers to find Labor, on the eve of an election, promising Australians an extra $17bn in tax cuts over the next four years. Continue reading…The weekly savings from the tax cuts might not buy an extra cup of coffee, but Labor’s pitch lands the Coalition in a tricky positionFederal budget 2025 LIVE updates: Australia government budget announcement and speech – latest newsLabor bets big with $17.1bn in tax cuts to win over middle AustraliaExplore all of our 2025 Australia federal budget coverageGet our morning and afternoon news emails, free app or daily news podcastOn Tuesday morning, Angus Taylor laughed when asked whether the Coalition might introduce “stage-four” tax cuts beyond the three-stage package legislated under the Morrison government (and then remixed under Labor).The shadow treasurer might have responded with a different emotion after cracking open the budget papers to find Labor, on the eve of an election, promising Australians an extra $17bn in tax cuts over the next four years. Continue reading…
On Tuesday morning, Angus Taylor laughed when asked whether the Coalition might introduce “stage-four” tax cuts beyond the three-stage package legislated under the Morrison government (and then remixed under Labor).
The shadow treasurer might have responded with a different emotion after cracking open the budget papers to find Labor, on the eve of an election, promising Australians an extra $17bn in tax cuts over the next four years.
Jim Chalmers had managed to keep the “modest” changes under his hat for some time, despite being asked constantly whether Labor would have more budget sweeteners in a cost-of-living crisis. As late as Tuesday afternoon – after the government strategically dropped out details of the Medicare bulk-billing incentives, the cheaper medicines plan and energy bill rebates in the lead-up – chatter in Parliament House focused on “well, what will actually be left in the budget to announce?”
The treasurer grinned like a parent on Christmas morning watching their kid unwrap an unexpected shiny new toy when reporters noted that he had been able to keep the tax cuts quiet.
“Yeah, you noticed that?” Chalmers asked with a chuckle.
It was hard to miss it – not only because it was plastered all over the budget in the most prominent places in the documents, but because there wasn’t much to wade through to find it. Budget paper No 2, the new spending measures, came to just 80 pages this year (plus a few pages of contents and the index) – a full 100 pages fewer than last year and less than half the size of most recent years.
This is Labor’s election manifesto: tax cuts, boosts to Medicare and cost-of-living support around the edges.
“Modest but meaningful” was how Chalmers later described the tax cuts. Let’s be honest: an average $5.15 a week in new relief isn’t going to make much difference to families. In a press conference, News Corp’s Sam Maiden pointed out it was the same quantum promised by the Liberal treasurer Peter Costello years ago, lampooned at the time as being barely enough for a sandwich and a milkshake. Today it would barely buy a coffee from the Parliament House cafe.
It also won’t come into force for another 16 months, from the 2026-27 financial year. Chalmers says that’s to help dampen the inflationary impact of dumping more cash into the economy just as the RBA is taking its foot off the neck of mortgage holders.
And despite talk focusing on people “doing it tough”, Chalmers gave no indication that a further general increase to welfare payments such as jobseeker was even in the reckoning – even though it’s been a constant plea of the government’s economic inclusion advisory committee.
But packaged up with the stage-three tax cuts (Albo’s version), Labor wants people to think about a different set of numbers: $50 a week, or $30,000 over the decade. That’s how much Labor says people are better off than before their version of stage three came in.
It’s a decent whack of money for voters to be thinking about on the eve of an election.
Chalmers and Albanese had already faced the predictable retorts from opponents in parliament and critics in the media that the early 2025 spending blitz was a vote-buying exercise: billions in a pre-budget spendathon for infrastructure, highways and health. The extension of the energy bill rebates – $150 to the end of the year – was slammed as blatant electioneering.
Cutting average tax rates by $268 next year, then an ongoing $536 from 2027, might be smashed even harder by deficit hawks and the austere cardigan-wearing commentariat.
But it puts Taylor and Peter Dutton in a pickle. Do they go to an election promising to unwind or oppose Labor’s new tax cuts, as they initially positioned themselves on Labor’s reimagined stage-three changes? Or do they again, as they’ve done with the bulk-billing policy and cheaper medicines, immediately match the government’s pledge – then have to find another $17bn of headroom in their own economic plan, already groaning under the weight of needing to finance seven nuclear power stations?
Coalition MPs, short on actual policy, have long boasted that taxes would be lower under Dutton than under Labor (despite offering no concrete ideas, let alone a pledge to cut taxes), so it would be hard to imagine at this stage how the opposition could stand against these changes to help those on the lowest incomes. But without some new revenue measures or tax reform of their own, it’s similarly hard to see how the Coalition could afford to match every Labor policy, as well as do what they’re promising.
We wait in anticipation for Dutton’s budget reply on Thursday night, where he has already promised a “big announcement”. So back to the government.
How will Chalmers pay for the tax cuts? He and finance minister Katy Gallagher point to $95bn in “budget repair” over their three years in office, cutting some spending and reprioritising other elements, but some of the secret sauce is that each budget simply keeps panning out a bit better than they had initially projected. While the budget papers point out a $7.2bn cost for decisions taken since last year’s mid-year financial update, they have also been blessed with a budget position $12bn more positive than they’d planned for.
There are some easy reasons: over the next five years, $4.6bn in delayed spending on infrastructure projects; $3.9bn in lower spending on the NDIS; $424m in lower debt repayments; $616m less on jobseeker because of a better-than-expected jobs market and lower unemployment.
Beyond the budget’s key themes – cost-of-living relief, including the tax cuts, Medicare, housing, education – there are a few key undercurrents in Chalmers’ budget speech and rhetoric. “Turning a corner” was how he describes the Australian economy; more than a dozen times in his speech he mentions “global uncertainty”, “storm clouds”, “risks”, “seismic changes”.
The treasurer talks about the “threat of a global trade war”. The word “Trump” doesn’t appear in the pages, but it may as well be there in bold, flashing red, buzzing neon.
He tried to tell the press gallery that the budget wasn’t overly informed by electoral maths (despite the infrastructure spending breakdown looking like a hit list of marginal and key seats) but, by extension, Chalmers is also talking about Dutton.
For nearly this entire term of parliament, Labor has tried painting Dutton as a risk: “reckless” is a current favourite word. A guy who shoots from the hip without doing the policy work, looking for a quick headline or a distraction.
The clear line from Chalmers’ budget is that while it’s been a hard slog, Labor wants voters to believe we’re back in business (even though we’re back in deficit too) and better days are ahead, with just a sprinkling of help coming too – so don’t change horses mid-race.
It’s a positive message. It’ll be over the next five weeks that Australians decide whether they’re feeling similarly optimistic, or whether they want to try another tack.