Budget 2025: A Dose of Painkillers, but No Major Surgery—Experts Critique Federal Budget

Experts argue the budget fails to tackle critical structural issues such as productivity, inflation, and corporate tax policy.

Australia’s Treasurer Jim Chalmers delivers his budget speech at Parliament House in Canberra, Australia on March 25, 2025. Hilary Wardhaugh/Getty Images

News Analysis

Despite moves to appeal to the voting public, the 2025 federal budget has left economists and the business community sceptical.

While offering incentives such as energy rebates and student loan relief, the highlight of the budget was the Albanese government’s proposed tax cut “top-up.”

Touted as the centrepiece of its pre-election budget, the tax cut will provide an average worker with approximately $538 extra annually, starting in mid-2027.

However, experts argue the budget fails to tackle critical structural issues such as productivity, inflation, and corporate tax policy.

Graham Young, executive director from the Australian Institute for Progress, said the saving grace of the budget was it did not have anymore new major spending measures like climate change initiatives.

“Most of the budget measures are designed to convince voters either the [inflation] crisis isn’t happening, or that the government cares about them. Instead of fixing the problems, the government is handing out fiscal analgesics,” Young told The Epoch Times.

According to Young, the government’s approach has been largely driven by ideology, rather than empirical evidence, and played a role in satisfying trade union and environmental lobby groups.

Major Policy Change Left Wanting: Economist

Gigi Foster, an economist at the University of New South Wales, said the budget did not try to tackle major long term issues like productivity stagnation, inflation, housing stress, wealth inequality, corporate tax evasion, and corruption—some of these issues require major policy changes.

“I see a lot of cash splashes in various areas and to various groups that are wrapped in the flag of ‘cost of living relief’ or intended as a signal of esteem or importance (e.g. the targeting of aged care workers’ award rates, or the higher funding for urgent care clinics, hospitals, and public schools),” she told The Epoch Times.

She warned that many of these measures are directly inflationary and lack a thorough examination of whether publicly funded departments, such as healthcare and education, are delivering meaningful outcomes.

While Foster acknowledged some positives, such as tax and Medicare levy cuts, as well as moves to address childcare shortages in regional areas, she cautioned that continued subsidies for “green” energy and shared homeownership schemes were counterproductive.

How Will We Pay for Everything? Eslake

Saul Eslake, an independent economist said the budget was notable for how “little difference” it would make to the near- or medium-term outlook.

“The 2025-26 budget leaves unaddressed the critical issue which has been apparent since before the last election—which is that federal government spending is almost certain to be about 1 and a half to 2 percentage points of GDP higher, over the next 10 years (and in all likelihood beyond then), than the average between 1975  and 2019 (just before the onset of COVID-19),” he told The Epoch Times.

He urged both major parties to have an “adult conversation” with voters about the best and fairest way to raise extra revenue to fund the government’s spending.

Band-Aid Solutions

Young said the government was effectively engaging in “Whac-A-Mole” to deal with cost of living issues.

“When they put living costs up, they give a trivial tax cut in the hopes you won’t blame them.

“When they incentivise too much unreliable energy, they first subsidise existing power producers, like coal, to fill the holes this creates, and when that doesn’t stem the cost rises, they subsidise the domestic consumer and pretend the problem doesn’t exist.”

Business Council Backs Tax Cut, But Notes Private Sector Needs More Support

Business Council of Australia (BCA) Chief Executive Bran Black welcomed personal income tax cuts and the improved economic outlook but stressed the need for broader economic reform.

“The Budget forecasts slightly better days ahead for economic growth with GDP increasing to 2.25 per cent next year, which is welcome, however, we have not seen the policies or reform to drive investment and business-led growth now or for the years ahead,” Black told The Epoch Times.

BCA also criticised the budget for its lack of focus on private sector growth.

While acknowledging improvements in productivity, workforce skills, and education funding, the Council expressed concern about persistent deficits and rising inflation, which is projected to reach 3 percent next year.

“Across the Budget we still have significant spending with a projected deficit of $42.1 billion, not returning to balance for a decade, showing we are living beyond our means.”

Black noted that spending as a share of GDP will reach 27 percent next year, the highest since 1985-86, excluding the pandemic period.

Housing Industry Welcomes Support, But Shortfalls Present

The Housing Industry Association (HIA) also saw the budget as a missed opportunity. While recognising the emphasis on boosting housing supply, HIA Managing Director Jocelyn Martin said the measures failed to address structural challenges.

“Australia needs to be delivering a quarter of a million new homes each year to keep up with population growth and ease housing affordability pressures,” Martin said.

“Instead, we are facing a shortfall of over 70,000 new homes annually due to government-induced roadblocks, chronic skills shortages, and excessive taxes and regulatory barriers.”