The Australian federal government will release its new budget tonight, with Labor describing it as a fiscal plan that takes the “hard road of reform”, focusing on cost-of-living pressures, housing supply, and persistently rising inflation.
Treasurer Jim Chalmers said that although the budget does not forecast a return to surplus over the next four years, deficits are expected to narrow each year compared with the December update, indicating an improvement in the fiscal position. The earlier forecast projected a cumulative deficit of about A$143 billion between 2025/26 and 2028/29.
Prime Minister Anthony Albanese stressed that the budget will use tax adjustments and measures to boost housing supply to create a fairer environment for young Australians. He described it as a “major reform budget” aimed at strengthening economic resilience while addressing long-delayed structural issues.
The government is also expected to introduce tax changes, including higher taxes on property investors and trust income, to help fund major spending in defence, healthcare, and rail infrastructure. At the same time, a one-off tax cut of A$200–A$300 will be delayed until 2027 to avoid adding to short-term inflationary pressure.
On the spending side, the Treasury has identified about A$63.8 billion in savings, with the largest component being a planned A$35 billion reduction in the cost of the National Disability Insurance Scheme (NDIS). The government also emphasised that overall spending growth will remain subdued, at one of the lowest levels in nearly 35 years.
Commentary:
Labor’s earlier proposals to cut NDIS spending and adjust parts of the tax system have already drawn significant public criticism and scrutiny. It remains open to question whether this can truly be described as a “major reform budget”, or whether it is simply a limited fiscal tightening framed as structural reform.
Against the backdrop of rising support for One Nation following its victory in the Farrer by-election, growing voter polarisation, and increasing dissatisfaction with mainstream parties, Labor is facing mounting political pressure. The details announced in tonight’s budget will therefore be closely watched by both markets and the political sphere, shaping not only economic expectations but also public judgment of Labor’s governing competence and its future electoral prospects.