13/05/2026
Last night’s Federal Budget was presented as a “tax reform” Budget, which was quite the stretch and some major massaging from the spin doctors. After analysing the measures in detail, we believe the deeper story is something quite different.
This budget was/is a furthering of the political divide and intended to continue the lazy ‘State of Origin’ style politicking that has weakened our country immeasurably over the last 30 years.
This Budget reflects a broader shift in Australian politics toward:
• structurally larger government,
• higher ongoing spending,
• continued deficits,
• and increasing reliance on taxing capital, investment and accumulated wealth.
Importantly, this is no longer just a Labor story. This is not a tale of good guys and bad guys anymore – this is a tale of bad guys and bad guys. Both sides are addicted so deeply to the suckling the teat of the tax payer that they don’t know how to get out of it… and I mean it. Both sides are pathetic.
One of the most striking features of this Budget is how little meaningful resistance exists politically to the expanding size of government itself. Take this from a semi-reformed fatty… this budget is the equivalent of trying to get an obese person to lose weight through the consumption of Mars Bars* (*No commercial endorsement of Mars Bars nor their nutritional content was sought for the construction of this article).
No situps… no calorie control… no jogging… just more consumption.
The Coalition has largely abandoned the aggressive fiscal restraint and smaller-government positioning that previously shaped Australian economic debate and provided the much needed antithesis to big spending expansive Labor governments and we are now so fat – our vital organs are shutting down.
As a result, the national conversation is increasingly becoming:
“Who should pay for bigger government?”
rather than:
“How do we improve productivity, economic growth and fiscal sustainability?”
That distinction matters enormously and the numbers tell the story.
The Budget still projects deficits across the forward estimates:
• $31.5 billion deficit in 2026–27
• gross debt exceeding $1 trillion next year (and not by a ‘little bit’)
• net debt projected to rise to almost $770 billion by 2029–30
At the same time, the economy is forecast to slow:
• GDP growth falls to 1.75%
• inflation spikes to 5%
• unemployment edges higher
• and interest rate pressure remains elevated.
Yet despite this environment, the Budget still contains approximately $18 billion in additional spending measures, which many economists argue risks making inflation harder to control with none of those expansive spendings in areas that promote innovation and economic growth in the country.
The Centre for Independent Studies described the broader issue bluntly:
Australia has abandoned meaningful fiscal discipline and increasingly relies on deficits, off-budget spending and expanding taxation rather than structural reform.
And this is where the Budget becomes politically interesting.
The Government has clearly targeted visible relief toward younger and working Australians:
• a new $250 Working Australians Tax Offset,
• a $1,000 instant deduction without receipts,
• expanded parental leave benefits,
• LISTO increases,
• and housing policies framed around “intergenerational equity.”
These measures are politically effective because they are:
• simple,
• immediate,
• easy to understand,
• and highly visible to voters.
But how are they funded?
Largely through increased taxation or reduced concessions applying to:
• investors,
• discretionary trusts,
• accumulated capital gains,
• higher-balance superannuation,
• and private wealth structures.
Examples include:
• replacing the 50% CGT discount with an indexed regime plus a 30% minimum tax,
• limiting negative gearing on established properties,
• introducing a 30% minimum tax on discretionary trusts,
• and expanding taxation pressure on superannuation balances.
This is why we view the Budget as more redistributive than reformist.
There is relatively little here that materially lifts:
• productivity,
• private-sector competitiveness,
• business investment,
• energy efficiency,
• or long-term GDP per capita growth.
Even the housing measures are unlikely to materially improve affordability according to many economists.
The CIS roundtable noted that changes to negative gearing and CGT may reduce house prices by only around 2% while potentially increasing rents.
The core housing problem remains supply.
Australia still faces:
• restrictive planning systems,
• insufficient housing construction,
• infrastructure bottlenecks,
• and weak productivity growth in development.
Tax changes alone do not solve those structural constraints.
Meanwhile, governments continue expanding through both direct and off-budget spending.
One of the more concerning trends is the increasing use of off-budget financing vehicles:
• Snowy Hydro,
• the National Reconstruction Fund,
• clean energy financing structures,
• and other government-backed investment programs.
Critics argue this obscures the true size of deficits and government expansion.
In fact, the CIS analysis notes that while the Government highlights the “underlying cash deficit,” broader fiscal measures paint a much weaker position once off-budget spending is included.
The deeper concern for investors and business owners is not simply one Budget.
It is the policy direction.
Read that again. Slowly… and don’t discount the importance.
Australia increasingly appears to be moving toward an economic model where:
• government spending remains structurally elevated,
• deficits persist,
• private capital is relied upon more heavily to fund public obligations,
• and investment concessions become politically easier to target.
That has significant implications over the next decade for:
• investment structuring,
• asset allocation,
• superannuation strategy,
• trust usage,
• capital management,
• and global diversification.
We suspect sophisticated investors will increasingly focus on:
• international diversification,
• income-producing assets,
• franking-credit efficiency,
• asset protection structures,
• and jurisdictions with stronger long-term policy certainty.
All of these things that sophisticated investors will increasingly focus on falls right in our wheelhouse. Those who are clients of ours and understand what we do, this budget is the perfect driver for growth for our business because it makes what we do extremely lucrative and attractive to investors with respect to our investment approach but I’m not made happy by this… because it comes at a significant social cost.
Just because it’s good for us and our clients doesn’t mean that Joe and Jane Public are going to be better off in the long run… and it is the distinct lack of vision from all sides of the political spectrum which is being exacerbated.
Ultimately, the key issue with this Budget is not any individual measure.
It is that Australia still lacks a compelling national vision around:
• productivity,
• fiscal restraint,
• private-sector growth,
• and long-term wealth creation.
Until that changes, we expect governments of both sides to continue searching for revenue from the same places:
capital, investment and accumulated wealth.
They will keep putting their foot on the throats of everyday Aussies, squeezing the working class and attempting to buy votes by convincing you that your enemy is those who have more than you… distracting you from the fact that the real enemy are the visionless grubs that have been elected (from all parties) to feather their own nests at the expense of you.
If you think that this budget is going to level the playing field and improve the lot for ordinary Australians… go back and read it again.
Feel free to use my words against me in 18-24 months when the real impacts are felt… I hate to be this guy… but I won’t be wrong about this. The data is compelling.
“A long habit of not thinking a thing wrong, gives it a superficial appearance of being right, and raises at first a formidable outcry in defense of custom. But the tumult soon subsides. Time makes more converts than reason.” – Thomas Paine.
