Labor’s fifth budget will benefit the young and the poor at the expense of the older and the rich, according to distributional analysis by Ben Phillips, an associate professor at the ANU’s Centre for Social Policy Research. However, the analysis reveals that the budget offers little for middle-aged, middle-income Australians increasingly drawn to populist parties like One Nation.
Key Budget Measures
The budget includes scaling back the capital gains tax discount, removing negative gearing for landlords, and imposing a minimum 30% tax rate on income from discretionary trusts. Additionally, taxpayers will receive a $250 offset on earned income and an instant $1,000 tax deduction. These measures aim to address intergenerational inequity.
Impact by Age Group
Phillips modelled the combined effect of all policy changes as if applied in the 2026-27 financial year. Gen Z and millennials see an average annual income boost of $300 to $400, while households over 65 suffer a $500 to $1,000 reduction.
Impact by Wealth and Income
The richest 20% of households experience a $1,500 reduction in average earnings, while the poorest gain a few hundred dollars. Households relying on dividends, interest, rents, and capital gains lose nearly $2,400 annually, with negligible changes for other income sources.
Limitations of the Budget
Despite being described as ambitious, the budget’s overall impact is modest. Phillips notes that most Australians do not use negative gearing, capital gains discounts, or trusts, so the effects are limited to about 1% to 1.5% of living standards for the majority.
The ANU modelling also shows that middle-class Gen X, who are increasingly supporting One Nation, will feel squeezed as millennials benefit at boomers’ expense. This suggests that broader income tax cuts for middle-income, middle-age mortgage holders may be needed before the next election.
Regional Disparities
Residents in wealthier Sydney and Perth suburbs face the biggest hits, while low-income areas like western Sydney see little benefit. Phillips highlights that these areas have high rates of housing stress and poverty, yet the budget offers them little relief.
