In his speech on Tuesday night, the Treasurer outlined the government's key priorities while also painting a sombre picture of the global environment.
"The global economy is volatile and unpredictable. The 2020s have already seen a global pandemic, global inflation and the threat of a global trade war," Chalmers said.
"The whole world has changed as a consequence. Tariffs and tensions abroad have been accompanied by storms at home.
"Trade disruptions are rising, China’s growth is slowing, war is still raging in Europe, and a ceasefire in the Middle East is breaking down."
As a result, Treasury, Chalmers said, the government expects the global economy to grow 3.25 per cent for the next three years – its slowest since the 1990s.
He underlined: "Australia is neither uniquely impacted nor immune from these pressures, but we are among the best placed to navigate them."
What's in the budget for financial services industry
As rightly pointed out by the FSC, there were "no surprises" in the budget for the financial services industry.
One key measure that was included is the clarification of arrangements for managed investment trusts, ensuring that legitimate investors can continue to access concessional withholding tax rates in Australia.
Namely, according to the budget, the government will amend the tax laws to clarify arrangements for managed investment trusts, to ensure legitimate investors can continue to access concessional withholding tax rates in Australia complementing the Australian Taxation Office’s strengthened guidelines to prevent misuse. This measure will apply to fund payments from 13 March 2025.
Additionally, the budget promised $50 million over three years to extend the Tax Integrity Program to enable the ATO to ensure timely payment of superannuation liabilities by Australian businesses.
Superannuation
The government revealed that superannuation tax receipts were a major factor behind the $9.4 billion upward revision in tax receipts (excluding GST and policy decisions) over the five years from 2024–25 to 2028–29.
Specifically, the superannuation revenue windfall amounted to an additional $9.7 billion, driven by stronger projected investment returns from super funds.
The budget's sole superannuation measure, actually printed in the Women's Budget document, was the payday super reform, set to begin on 1 July 2026, with the government having earlier confirmed $404.1 million over four years from 2024–25 to support the reform.
Future Made in Australia
According to the budget papers, the government is counting on its "Future Made in Australia" agenda to drive economic transformation, focusing on cleaner, cheaper energy and creating new job opportunities across the country.
In the 2024–25 budget, $22.7 billion was allocated over a decade to support innovation, clean energy manufacturing, and attract investment. This includes funding for hydrogen, critical minerals, and clean energy tech, alongside a $2 billion boost to the Clean Energy Finance Corporation.
In this budget, over $3 billion is aimed to support the production of Australian-made green metals such as aluminium and iron. This builds on recently legislated tax incentives for critical minerals and green hydrogen.
The government is also backing clean technologies through its Future Made in Australia Innovation Fund and a recapitalisation of the Clean Energy Finance Corporation. These initiatives aim to develop clean energy manufacturing, green metals, and low-carbon liquid fuels, while unlocking private investment.
“Our future growth prospects lie at the intersection of our industrial, resources, skills, and energy bases, and our attractiveness as an investment destination,” the government said. “So we can grasp the jobs and opportunities of the net zero transformation," it continued.
Tax cuts
A standout element of the budget was tax cuts, with the government announcing it will deliver new tax cuts to every Australian taxpayer from 1 July 2026.
These tax cuts are in addition to the first round of tax cuts for every taxpayer that the government legislated last year, which have been rolling out since 1 July 2024.
"The new tax cuts will provide more cost-of-living relief and return bracket creep. They will also boost labour supply, particularly for women," the budget papers read.
Under the government’s new tax cuts:
• From 1 July 2026, the 16 per cent rate will be reduced to 15 per cent.
• From 1 July 2027, the 15 per cent rate will be reduced further to 14 per cent.
This measure is estimated to decrease receipts by $17.1 billion over five years from 2024–25.
Boost to housing
In addition to tax cuts, housing emerged as a key feature of the budget, with Labor pledging to increase total housing commitments to $33 billion. This includes measures designed to simplify homebuying and accelerate house construction.
Among those is a commitment of $1.5 billion through the Housing Support Program for planning, infrastructure, and social housing, plus $3 billion in incentive payments under the New Homes Bonus, totalling $4.5 billion to address infrastructure backlogs and deliver new housing.
The government is also expanding the Help to Buy scheme with an $800 million commitment to raise property price and income caps, enabling around 40,000 Australians to purchase homes with lower deposits and smaller mortgages.
Moreover, foreign buyers will be banned from purchasing existing homes for two years from April 2025, with the government allocating $5.7 million to the ATO for enforcement and $8.9 million for an audit program to target land banking by foreign buyers.
Reactions flow in
Krishna Bhimavarapu, APAC economist at State Street Global Advisors, called the budget on Tuesday night "surprisingly more than a plain vanilla offering".
"The icing is the surprise tax cuts, which means private consumption could get a minor shot in the arm that will further accelerate the economic recovery. The government not only delivered healthcare relief, and cost-of-living subsidies, but also is seriously thinking about productivity, clean-energy, housing, defence, and infrastructure spending. It is impressive that the government aims to deliver this stimulus with a modest rise in the deficit," Bhimavarapu said.
"Still, we think the government could do more in the manufacturing sector, whose share in GDP and employment have structurally fallen to a third around 5 per cent over 40 years. At least we expect that discussion to dominate debates ahead of the upcoming elections."
Similarly, Financial Services Council chief executive, Blake Briggs, congratulated the Treasurer for focusing on cost-of-living challenges facing Australians, and "delivering stability and certainty for the financial services industry in advance of the federal election".
"As one of the largest contributors to the domestic economy, this continued fine tuning of the financial services framework is welcome, however there remains significant opportunity for the next parliament to refocus on economic growth and regulatory simplification opportunities to grow the economy."
The Super Members Council (SMC), however, criticised the government for not going far enough with its superannuation reforms, particularly highlighting the failure to address the outdated law that denies most teen workers up to $10,000 from their retirement savings.
“Australians strongly support universal super – and know it’s a workplace right. Super should be for everyone, paid from the first hour of your first job. Fixing this outdated exclusion is long overdue," CEO Misha Schubert said.
“As every smart investor knows, it’s the dollars you invest earliest that work hardest to grow your compound returns. Every Australian worker, at every age, deserves the right to set themselves on the path to a dignified retirement.
“Super is Australia’s economic stabiliser – the investment of the savings of millions of everyday Australians powers Australian business and creates new jobs. Securing the system’s fundamentals and making super even stronger and fairer is key to Australian prosperity.”
