The budget that nobody wanted ... and nobody might get

Forget Paul Keating’s famous invocation of the “recession we had to have”.

This is the budget we had to have when we really didn’t expect to have a budget at all.

Prime Minister Anthony Albanese visited the Gallipoli Barracks in Brisbane during ex-tropical cyclone Alfred, a disaster event that pushed back a likely election announcement.Credit: Getty Images

All federal budgets require some suspension of disbelief. They are based on projections that may never come to be. They contain oodles of measures that may never pass parliament.

But the March 2025 budget plays even more “pretendsies” than usual – few people (including many in the government) bet on it happening.

It was widely presumed Anthony Albanese would call an election, and go into caretaker mode, before the budget was due on the 25th. But Cyclone Alfred forced the prime minister to delay the election to deal with the crisis.

And so here we are.

In truth, and with no offence whatsoever to all involved in its production, it all feels a little contingent. Contingent on who wins the election, contingent on what happens to inflation and interest rates, and mostly (and ominously) contingent on whatever destruction US President Donald Trump ends up wreaking on the global economy.

For the Trumpian turbulence juddering across the world is yet to fully play out.

It is referenced obliquely in the budget papers with allusions to “global risks” or “the evolving security environment”, and the catch-all euphemism of “against a backdrop of heightened global uncertainty …”

It sounds a bit like the opening line of a penny dreadful.

Donald Trump’s economic plans will impact the Australian economy in ways as yet unknown.Credit: Bloomberg

Reading between the lines, “heightened global uncertainty” seems code for “whatever the f--- Trump does next”.

The US president’s name is not mentioned in any of the budget papers, but he looms over the budget as an omnipresent, unnamed threat. He is what former US secretary of defence Donald Rumsfeld might have called “a known unknown”.

Or, as it is expressed in the Treasury-ese of Budget Statement 8: Statement of Risks, “events that could affect fiscal outcomes include … matters not included in the fiscal forecasts because of uncertainty about their timing, magnitude or likelihood”.

The budget doesn’t contain much that hasn’t already been announced.

That’s the problem with not expecting to have to deliver a budget – by the time it comes around, you’ve already used up your best material.

In the treasurer’s back pocket were some modest tax cuts.

We long for the days when a tax cut equalled a once-derided milkshake ′n’ burger per week.

Sadly, the inflation crisis means the tax cut – about $5 a week and still 15 months away – will buy us little in this economy. Perhaps a cappuccino, but not a large one.

Plus, the tax cuts will cost the economy $17.1 billion in forgone revenue over the forward estimates.

Still, we will take it, and it gives the government a sellable to take to the election.

We will also get ongoing energy bill relief, which is really just an admission that the government can’t cut us off now from the last lot they gave us.

Serious tax reform? We don’t talk about serious tax reform. Well, there is one person in parliament talking about it – teal independent Allegra Spender, the member for Wentworth, and a few of her crossbench pals.

Australia’s best shot at major fiscal reform might well be a hung parliament, in which the economic desires of the teals are more likely to be heeded.

The structural deficit remains unaddressed – with the worst figures extending into the outer reaches of the estimates.

Table 1.2: Budget aggregates reveals the federal budget with its pants down, so to speak.

Over all four years of the forward estimates, the federal deficit adds up to an unseemly $179.5 billion. And that’s not including the “off-budget” measure so popular with governments these days – a sort of fiscal hidey-hole increasingly made use of by state and federal treasurers.

This government has repeated the form of so many before it, by pushing off the structural deficit to our children, or at the very least, until after the election.

To be fair, the government is reducing outstanding student debts by 20 per cent, lifting about $16 billion in debt from young people. It has already legislated a cap on HELP indexation.

All of which will hopefully provide some comfort to upcoming generations as they navigate crushing property prices, a warming globe (risks associated with climate change are also mentioned in Budget Statement 8), and the aforementioned “heightened global uncertainty” that stands for He Who Must Not Be Named.

The government’s announcement on non-compete clauses is a clever reform that the ostensibly pro-free market Liberal Party will find hard to argue with.

There is also a plan (pre-announced) for cheaper medicines – the maximum general co-payment under the Pharmaceutical Benefits Scheme will be decreased from $31.60 to $25 as of January 1 next year.

Unmentioned, of course, is the threat that Trump 2.0 poses to the PBS – his administration believes the Australian government’s subsidisation of some medicines is socialistic meddling that reduces the competitive advantage of American pharmaceutical companies.

In his budget speech, Treasurer Jim Chalmers talks a lot about how the economy is “turning a corner”.

The metaphor is clearly intended to inspire hope, but the problem with turning corners is you never know what is around them.

Credit: Matt Golding

The only thing we know, for sure, is that Australians will be going to the polls in a matter of weeks. And that with a deficit of that size, someone will have to pay.

Beyond that, everything is up for grabs – including this budget and all its contents.

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