You can’t help but cynically view a Federal Budget which is being delivered a few weeks ahead of an election as something of a political marketing exercise.
That said, I think this fiscal plan is balanced & responsible. It clearly targets those with the greatest need. It hasn’t attacked retiree savings, and there’s no change to CGT concessions or gearing allowances on property. However there is little in the way of incentives to business and investment.
The Winners
The lowest tax band between $18,200 – $45,000 will be reduced by 1% from 1 July 2026 and a further 1% the following year.
I applaud the continued relief for those with student debts which will be reduced by 20% from 1 June 2025.
There is a major focus on funding a very strained public health system. Bulk billing is receiving significant funding as is training to boost the number of doctors and nurses into the system where the plan is to create 2,000 new trainee positions each year from 2028. But that’s a long time to wait if you’re in a community where the GP has closed because the Practice was no longer financially viable.
There is increased public hospital funding & provision for the opening of 50 new Urgent Care Clinics.
There are a wide range of funding incentives for different groups, the specifics of these can be found in the detailed Federal Budget Overview which has been prepared by the Institute of Chartered Accountants: Federal Budget 2025-26 Overview
Mid-Year Economic Update
In my opinion last night’s budget will prove to be a stop gap. It will satisfy many voters but shouldn’t ostracise important interest groups like the Property Council or self-funded retirees. We should expect a mid-year economic update around September when further policy announcements of greater impact will be made. That will happen regardless of who wins the election.
Future Challenges
I remain concerned with the state of the economy. Inflation has fallen and so too have interest rates. Business investment is extremely soft having fallen from 6% in 2023/24, to 1% in 2024/25, and then only 1.5% (projected) in 2025/26 – these figures are contained in the Budget Papers. Given these projections I ask why more isn’t done to arrest this downward trend.
Compounding the private sector’s investment malaise, is the cumulative impact of geopolitical uncertainty – from trade & tariff conflicts to the tragedy of war in Israel/Gaza and Ukraine.
Economies and societies function best in a setting of relative stability. Sadly, that stability will be a pipedream until the administration in the USA acts as a global leader who moderates its behaviour.
I hope you find this helpful, and if you have any queries, please feel free to contact any of us at Edney Ryan on (02) 9908 9888.