Jim Chalmers has warned Australians not to get too excited about his fifth budget, which he describes as the “most responsible” yet - a phrase that historically translates to “sorry, no free stuff this time.” The treasurer ruled out an immediate extension of the 26-cent fuel excise cut and poured cold water on hopes for additional tax relief, because apparently the economy isn’t stressful enough already.
Speaking as the Reserve Bank’s monetary policy board began its two-day meeting - which most economists predict will end with a third straight interest rate hike on Tuesday - Chalmers promised the budget would play “a helpful, not a harmful, role in the fight against inflation.” He blamed the US-Israel war on Iran for turbocharging inflationary pressures, adding that Australians are already paying “a very hefty price for this war in the Middle East.”
The treasurer said the budget would not extend the temporary halving of the federal fuel excise, noting that petrol prices have come off “substantially” from their March highs - which is a bit like saying you’ve stopped being punched in the face as hard as before. However, he left the door open for a possible extension if the economy deteriorates quicker than expected, because nothing says “most responsible” like a contingency plan for disaster.
Labor is poised to announce changes to the capital gains tax discount and negative gearing rules, despite Anthony Albanese explicitly ruling out negative gearing changes before the election. Chalmers defended the backflip by saying the government’s responsibility is to “calibrate the budget to the conditions,” which is politician-speak for “we changed our minds, deal with it.” He argued that trust is built by taking the right decisions and explaining why you’ve come to a different view - a claim that will likely be tested by voters who remember the original promise.
The treasurer also flagged that the mooted changes to investor taxes won’t be used to pay for extra tax relief for workers, because that would make too much sense. Instead, Labor is relying on its already-announced tax cuts - reducing the lowest income tax rate from 16% to 15% from mid-2026, and then to 14% from mid-2027 - which will deliver at most $268 in relief next financial year and $538 the year after. That’s roughly enough to buy a bag of groceries, provided you skip the avocado toast.
Chalmers reminded everyone that the government is cutting taxes - it’s just doing so very slowly, like a tortoise that got stuck in traffic.