The New Politics verdict: A slightly progressive budget that doesn’t go far enough
Housing tax reform is welcome, but the cuts to the NDIS and timid welfare measures reveal Labor’s continuing ideological caution.
Treasurer Jim Chalmers had delivered his fifth budget – but the first for this term which commenced over a year ago – and it’s a mixed but ideologically revealing budget: it contains some redistributive reforms, especially on housing tax concessions, but it also preserves the deeper neoliberal framework that has afflicted most economies in the Western world for far too long – there’s the typical material about budget repair, productivity, business incentives, expanding the defence, means-testing and restraint on social spending, especially within the National Disability Insurance Scheme.
The most prominent changes relate to negative gearing and the capital gains tax discount. New investors won’t be able to use negative gearing on existing homes – applying to new builds only – while the 50 per cent CGT discount will be replaced by inflation indexation and a 30 per cent minimum tax rate from July 2027. This change directly targets those tax concessions that have helped turn housing into an investment portfolio and a tax minimisation scheme, rather than a social necessity, and it’s a change that’s well overdue.
We’ve long argued that housing should be about providing homes and shelter and building up communities, not as a tradable commodities linked to wealth creation, and it would have better to have a staged reduction of negative gearing benefits on existing properties, rather than grandfathering them completely, but for a cautious government that’s been suffering from post-traumatic stress disorder after their 2019 election loss, this might the best that it can deliver and will go some way in exorcising those demons.
There are some modest benefits for workers: a $250 Working Australians Tax Offset, a simplified deduction process for $1,000 in work-expenses, and an increase in Medicare/public hospital funding, including an extra $25 billion for public hospitals and $1.8 billion in urgent care clinics.
The huge issue is the cutbacks to the NDIS, which is harsh and immediate. This budget aims reduce the growth in the scheme from around 10 per cent per year to 5 per cent, with massive reductions in funding over the next four years. The NDIS has been used as a punching bag by the right-wing media and conservative interests, running lengthy and exaggerated stories on waste and provider profiteering and, once again, people with disabilities are treated as a budget problem to be cut, rather that citizens who are entitled to public support. Yet another win for the neoliberalists in our midst.
The budget also provides the usual largesse to business – absolutely no budgetary problems there or a need to look at waste – there’s regulatory “productivity” measures, expanded venture capital tax incentives, permanent loss carry-back for companies with a turnover of up to $1 billion, and a permanent $20,000 instant asset write-off for small business.
Some of these measures might help genuine small operators, but the ideological language of the Labor government still favours the business class and worships the gods of capitalism. For sure, we can have an existential argument about who came first – the capitalist or the worker – as well as the argument that without capitalism there would be no modern economy, but without workers there would be no capitalism in the first place.
Defence is another big concern. Just like the business sector, there seems to be an endless supply of funding available for defence, and there’s never any question of finding waste or “provider profiteering”. It might be a case of needing to be careful with those that control the guns and tanks, lest they be used against a government, but an extra $53 billion over a decade is going into defence, while social programs such as the NDIS are facing severe cutbacks – it’s robbing carers to pay for the colonels and it’s totally unacceptable.
Does this Budget reverse the neoliberal ideology that was fast-tracked by the Howard government in the mid-1990s? Not by a long shot, but at least it’s a tiny start, without knowing what the next steps might be. The housing tax reforms challenge the idea that investor wealth-building should dominate housing policy, and that is a significant change. But this is a Labor government that we’re talking about; it’s the least they could do.
But it doesn’t break that connection with those policies of the Howard government, and still accepts the core features of Howardism: fiscal discipline, productivity through business incentives, private markets as the main provider of social services, targeted rather than universal welfare, and “sustainability” as the rationale for cutting social programs such as the NDIS. Not much has been announced to change the massive imbalance between public and private education. The higher education sector has been a mess for some time, and there’s little in there that suggests anything will change.
A more progressive budget would have included stronger welfare support – there are still no changes to JobSeeker or youth allowance – there should be more funding for large-scale public housing construction, serious reforms to mining and gas taxation, public ownership or public investment in energy, stronger national renters’ rights, and less funding for defence and business concessions.
And the support that is being provided for working people, much of it is delayed or modest. The $250 tax offset won’t arrive immediately, and the $1,000 deduction will save workers an average of about $205. For sure, that is useful and better than receiving nothing at all, but these are not transformative changes during a cost-of-living crisis, and feels more like the leftovers scraps after the mining, business and defence sectors have already had their banquet and left the scene.
For underprivileged people within the community, the result is weak. Medicare and hospitals help, but the NDIS changes, lack of major welfare spend, and no obvious large-scale public housing build mean the poorest – as usual – will be the hardest hit.
For big business and mining, the budget is not aggressive enough. Gas companies face a domestic reservation requirement, but the PRRT take is only revised up by $400 million despite windfall conditions caused by the Israel/United States war on Iran, and there is no major super-profits tax or serious mining rent reform.
The New Politics verdict
The 2026 budget is:
A good start on housing tax fairness, but it’s still nowhere what’s needed to truly transform the idea of housing in the future.
Weak on poverty issues, social services, public housing, mining taxation and disability support.
Still far too generous to the business, mining and defence sectors.
Gives working people something, but not enough and not now.
Removes one picket from that long white fence of Howard government neoliberal orthodoxy, but mainly keeps it intact, and is tinkering at the edges.
Generally, it moves away from the cautious Labor budgets that we’ve seen since 2022, but it’s still too timid on the scale of inequality, housing stress, and standing up to corporate power and vested interests in Australia.
An excellent assessment of this timid , spineless budget. Albanese appears determined to continue with the John Howard
agenda , and “no discussion will be entered into !” . Do as little as possible for those you were elected to serve , while bowing and scraping to corporate donors and mining overlords . The very notion of a Labor Government has been tossed aside when endless billions of taxpayer funds are happily given away for ( unregulated ) “Defence” and the catastrophic
insult to Australians of the AUKUS scam . Apparently giving away billions of dollars to the American war mongering regime
Is far more important to Albanese than the basic human right of homeless Australians to have a roof over their heads .
What a monumental betrayal by Mr “I grew up in Public housing “. Unforgivable.