The federal budget has been announced, and as always, there are winners and losers. Jason Featherby from Leeuwin Wealth joined Doug on Table Talk to break it all down.

Winners

Taxpayers

From July 1 next year, the tax rate on wages between $18,201 and $45,000 will drop from 16% to 15%, with a further reduction to 14% in 2027. A worker earning an average wage could save $268 per year from next year and $536 from 2027-28. While this provides modest relief, it will cost the government $17.1 billion. The changes are automatic, meaning taxpayers don’t need to take any action. However, some argue that the tax cuts could contribute to inflation.

Cheaper Medicines

Starting January 1, 2026, the government will lower the Pharmaceutical Benefits Scheme (PBS) general patient co-payment from $31.60 to $25.00. Concession cardholders will continue to pay $7.70 for PBS-listed medicines.

Power Bills

A $75 quarterly energy rebate is being extended for two more quarters, providing households with an additional $150 in savings.

Families with Kids in Childcare

A $427 million package over four years will scrap the activity test and guarantee three days of subsidised childcare for families earning up to $530,000. If re-elected, the government also plans to create a $1 billion fund to build new childcare services, particularly co-located at schools. An additional $3.6 billion will go toward increasing wages for early educators, benefiting up to 200,000 childcare workers and teachers.

First Homebuyers and Renters

An expanded Help to Buy scheme will receive an $800 million boost, increasing the property price and income caps. Under this initiative, the government will contribute equity of up to 40% to support eligible homebuyers. Additionally, rent assistance will increase by 45% for about one million households.

Those Who Enjoy a Pint at the Local Pub

The alcohol excise for draught beer will be frozen for two years, meaning a pause on tax increases that typically raise the price of a mid-strength pint by about one cent per excise hike. Since the tax is indexed twice a year, this effectively delays four tax increases on beer.

Australians with Poor Internet Coverage

Upgrades will be made to 622,000 premises, ensuring more Australians can access the fibre-to-the-node (FTTN) network.

Green Economy

Grants of up to $25,000 will be available for energy efficiency upgrades, including replacing inefficient appliances and water heating systems.

Losers

Reserve Bank of Australia (RBA)

The budget introduces new stimulus measures and shifts from a surplus to a deficit, increasing government spending and boosting economic demand. This could make the RBA’s job of controlling inflation harder, potentially leading to higher interest rates for a longer period.

Government Balance Sheet

The budget projects a deficit of $180 billion by 2028-29, with gross debt exceeding $1.2 trillion. The Reserve Bank cash rate is expected to peak at 3.35% in the first half of next year.

Small Businesses and Tradies

Small businesses will miss out on an extension of the $20,000 instant asset write-off, which was temporarily revived in last May’s budget but will now be discontinued.

Foreign Home Buyers

Overseas citizens will be banned from buying existing houses in Australia for two years, a move aimed at easing pressure on the housing market.

Smokers

Illegal cigarette sales have surged due to past increases in tobacco excise, leading to black-market turf wars. The government is allocating $156 million to combat the illicit tobacco trade, which was largely created by previous tax hikes forcing some smokers to seek cheaper, illegal alternatives.

Final Thoughts

While the budget provides relief for many Australians through tax cuts, childcare support, and energy rebates, others, including small businesses, foreign property investors, and smokers, face new challenges. With a growing deficit and inflation concerns, the long-term impact remains to be seen.