The good, bad and the uncertain: here’s our 2025 budget breakdown

The 2025 federal budget has landed during fractured times.  

We’re in the midst of a cost-of-living crisis, and with a federal election looming, both major parties are scrambling to gain ground. To quote Prime Minister Anthony Albanese the situation can, at times, feel “delulu with no solulu”. 

Research Fellow at the ANU Tax and Transfer Policy Institute, Kristen Sobeck, breaks down the budget for everyday Australians with Professor Mark Kenny and Dr Marija Taflaga on Democracy Sausage, a podcast from The Australian National University (ANU).  

“My budget summary would be encapsulated by one sentence,” said Sobeck.  

“And that was there were three pieces of really good news, one piece of really, really bad news, and then an X factor.” 

Starting with the good, Sobeck explains that domestically, we can expect a slight turnaround for Australians feeling the pinch of their hip pocket, with economic conditions predicted to strengthen. 

“We expect GDP to improve, we expect inflation to come down, and [un]employment to also remain low.  

“And this is good for workers because it means that we expect their real wages purchasing power to go up, which I think will be a very welcome change to many people who are living it tough at the moment with the cost-of-living crisis.” 

The good news continued to flow on to workers. The elimination of non-compete clauses for workers on salaries below $170,000 per annum, Sobeck says, will boost competition in workplaces and the Australian economy. 

“The Productivity Commission has recently estimated that this could also increase GDP by about 5 billion,” Sobeck explained.  

Then came the unexpected tax cuts. A move that was kept close to Labor’s chest, and at arm’s reach from the Coalition, who have branded it a “hoax” to entice voters. 

Podcast host Kenny was part of the budget lock-up. He recounts that someone asked Treasurer when the idea for the cuts was floated. Dr Chalmers responded, “for a little while … not for a long time”. 

While somewhat cryptic, the benefits for Sobeck are clear. 

“These unexpected tax cuts won’t come into effect until the first of July 2026, and then again in the first of July 2027. All of those things will contribute to improvements in the quality of life, but also a boost in people’s disposable incomes.”  

Despite these positive promises, questions continue to circulate as to how the public will respond to these changes, and whether it will draw a clear line in the sand between the two major parties. 

“The data seems to suggest that support for either party is soft,” Taflaga said.  

“That is the reason why I think that people are angry, but there is no villain that this anger is 100 per cent attached to. 

“If you don’t have anyone you are white hot angry against, then you actually do have to work out which one of these arseholes is doing the least-worst job.” 

As far as arseholes go, expenditure emerged as a strong contender – with the Labor government staring down the barrel of a billion-dollar deficit, creating doubts on how to fund future spending.  

The Coalition similarly has proposed spending on measures such as tax-reduced cheap petrol that would put pressure on the budget’s bottom line. 

“When you scratch beneath the surface, working-age Australians that are paying the bulk of income tax,” Sobeck said.

“At the same time, our population is getting older, and more people are exiting the income tax system. That means people who are little toddlers now are going to have to shoulder a lot more income tax if we keep the same structure – that’s not sustainable.” 

Taflaga said this raises an even deeper question: “What is the good life in Australia?” 

“I think everyone had a settled view of what the good life was when John Howard was prime minister. It was something that if you worked hard, you could get ahead. Luck wasn’t part of that conversation. But now luck is part of that conversation. 

“Australia is actually at a kind of crux. The fundamentals of the budget are cooked.”  

As Australians try to understand the budget and imagine their future, we’re also bombarded with news of trouble beyond our shores. Perhaps the best way to cut through the confusion is to think of it as a song – Sobeck suggested the hokey pokey.  

“It’s all good and well to pretend Australia is a closed economy and carry on – but that’s not the reality in which we live. 

“I was watching some of the budget analysis last night, and I think the X factor was best described by a fellow colleague, Chris Richardson, and he said, ‘You have to think about the Trumps and tariffs, but you also have to sing the hokey pokey while you do it’. 

“You put your tariffs in, put your tariffs out, you put your tariffs in, and then you shake it all about. You do the hokey pokey, and you turn yourself around. And that’s where I add, and that’s what economic uncertainty is really all about.” 

Kenny added that Australian leaders can’t dance around uncertainty in the global economy. It’s not something that anyone predicted. And in any case, nobody seems that interested in making a concrete plan for all that. They’re too busy getting ready for the election.  

It may sound delulu, but therein lies the best solulu?