One thing’s for sure about Anthony Albanese and Peter Dutton is that they really want the PM job, and they’re prepared to spend our money to get it!
Yep, they’ve been promising big, with serious budget deficit implications. So, who we vote for should factor in who’s more like to be able to pay for their potentially pernicious pledges.
Let’s look at these ‘promises’ by starting with Albo’s offerings:
- Every worker gets a $1,000 standard tax deduction of work-related expenses at a cost of $2.4 billion.
- As of 2026, all first home buyers will be able to buy a property with a 5% deposit.
Now to the Dutton giveaways:
- A one-off tax cut for those earning up to $144,000 to be received as a one-off income tax refund, up to $1,200 for the 2025-26 tax year end. This will come at a total cost of $10 billion.
- This Cost of Living Tax Offset is not receivable until after June 30 next year.
- The AFR’s Phillip Coorey gave us the detail of this offset: “The new offset will provide the full rebate of $1,200 to those with annual taxable incomes between $48,000 and $104,000. Those earning below $48,000 and between $104,000 and $144,000 will receive a smaller offset.” (Low incomers and high incomes get less of an offset.)
- There’ll be a tax deduction for mortgage repayments for first home buyers, but it will have to be on a new home.
- And the deduction will last for five years.
- But it will only apply to the interest on the first $650,000 of a mortgage, so it helps lower income buyers purchasing a cheaper new property.
- It will cost the budget $1.25 billion over the first four years.
Coorey checked out the view of the people trained to understand the budget implications of these pre-election giveaways. This is what he found: “Economists roundly condemned both sides for what they called increasingly reckless spending and embracing housing measures that would do little to improve affordability.”
For the record, Treasurer Jim Chalmers’ 4th Federal Budget sees last year’s $15.8 billion surplus turn into a forecast deficit of $27.6 billion in 2024-25, and $42.1 billion for 2025-26.
To be fair, Dutton’s vote-catching giveaways will come with some offsetting savings. “The new $10 billion tax cut, as well as the $1.25 billion mortgage tax deductibility promise and the already announced $6 billion halving of fuel excise for a year, would be paid for by axing Labor’s $17 billion top-up tax cut announced in the March 25 budget,” Coorey pointed out.
So, the would-be PM is cancelling a tax cut that we haven’t got but was dangled before us last month in the pre-election Budget.
Out of all this, the big question is this: what does RBA boss Michele Bullock think about these promises and will they reduce the number of rate cuts ahead? I think the answer is yes!
As both leaders make undertakings to hopefully give them the keys to the lodge, a lot of economists would agree with former US President Ronald Reagan who once told us: “The nine most terrifying words in the English language are “I’m from the government and I’m here to help.”
