Listen: Modest budget full of sweeteners, no ‘grand message’

Jim Chalmers has targeted the cost of services – such as GP visits and pharmaceutical drugs – offered another energy rebate, and served a surprising tax cut in his pre-election budget.

In a special episode of The Age and Sydney Morning Herald’s Morning Edition podcast, senior economics correspondent Shane Wright dissects Tuesday night’s federal budget and whether the treasurer managed to ease financial pain without fuelling inflation.

To listen, click on the player below, or scroll down for an edited extract of the conversation.

Selinger-Morris: Let’s get stuck into what the government is giving us or not. So, of course, this is a pre-election budget. We knew it was going to be focused on cost-of-living relief. The biggest news out of it is a surprise tax cut. So what is it and who’s going to benefit?

Wright: Everyone, which is even more startling. So, the bottom tax rate of 16 per cent, which this government reduced, will be cut from next year over two years. So by the middle of 2027, the bottom tax rate will be 14 per cent, which is exceedingly low by Australian standards.

Every person gets access to a cut in the bottom tax rate.

It’ll ultimately work out to be about $7 billion a year for this, and it’s tiny. Let’s not get too excited. It’s $5 a week.

Modest is too modest a term to describe what’s going on here.

Selinger-Morris: Okay, so what are the other standout cost-of-living relief measures in the budget then?

Wright: These are the things we actually knew were coming. So say, the change around bulk billing, which will directly help people. The $150 energy rebate, which is again going to everyone. There’s changes around the pharmaceutical benefits scheme listings, bringing down the cost of a standard script to $25.

Rather than throwing money into the economy, this one is trying to put it into services you buy, and you can see the price of every day.

Selinger-Morris: And just to wrap up, what does this budget say about where we’re at as a nation?

Wright: It’s not a grand message budget. But then again, pre-election budgets never are because, ultimately, this is about helping Anthony Albanese get re-elected. But this one is so modest, and that’s why it stands out.

But that’s Anthony Albanese. He’s making a deliberate decision to focus on a few key issues for the next five, six weeks – offering people a tax cut on top of a $150 rebate, on top of the bulk-billing incentives and cheaper scripts. You can see this is about cost of living, right?

There are other problems. For instance, this budget shows that another $14 billion has just disappeared from the tax take on cigarettes. There’s a problem that’s going to come down the line for petrol and diesel-powered vehicles. They are later problems – they need to be dealt with now – but you don’t look to a pre-election budget for dealing with long-term problems.

Hear the story behind the headlines on The Morning Edition podcast, every weekday from 5am on Apple, Spotify or your favourite podcast platform.