00:14I'm Miriam Webber. I'm a politics and public sector reporter at the Canberra Times and I'm
00:19here with Mark Kenney, our political analyst. We're in the 2026 budget lockup. We're not far
00:25from the Treasurer standing up to reveal this budget. He wants to talk about reform, tax reform,
00:31productivity and investment and savings. Mark, what do you make of what you've seen in the budget
00:36papers so far? Well, it's an interesting budget. I mean, it's crafted in a time of great international
00:42turbulence. And I think that's the, you know, very much the story of this budget, trying to pin down
00:48the normal kind of economic indicators. You know, what will inflation do? What will debt do? What
00:53will revenue be like? What will employment be like? These sorts of things, they're difficult.
00:57They're always projections, but doing it at a time when the international oil prices shot up,
01:02Donald Trump's uncertainty, you know, this is a really difficult thing. So I think that's actually
01:07the kind of most dynamic aspect of this budget. But also, I think you'd say that the government
01:13is alive to changes in the political mood in the country, right? And it's now starting to respond
01:20to this idea that there are younger voters. It's not just about baby boomers and investments.
01:26It's actually about how baby boomers and investments are working against younger voters.
01:30And the government's starting to really respond to that.
01:33And around that issue of intergenerational equality, we're hearing a lot about negative
01:37gearing and changes to the capital gains tax discount. So what do we know now?
01:42Well, what we know now is that there are changes to negative gearing. It's going to be wound back
01:47considerably, and that is going to essentially remove it as a function, except for new bills.
01:56So this is really important, I think, in terms of reshaping the agenda. I mean, I think what's
02:04really important here and is often missed in a lot of these discussions, particularly when
02:08economists talk about them, they say, oh, this or that, it doesn't add to supply. It's about
02:14the signal that it sends. And at the moment, up until now, the policy signals that have been sent
02:19by having investment tax breaks is that you should invest in additional housing, housing you don't
02:27need, housing that in fact might cost more than you can make a profit out of. And you write those
02:32losses off effectively to other taxpayers by renting the house out of the loss and claiming that as a
02:37tax deduction. And there's been some commentary about this as a broken promise. And I did hear
02:43you asking the finance minister earlier about whether they learned something from their changes
02:48to the stage three tax overhaul. What did you get out of that? What do you make of that all?
02:53Yeah, I think that's really interesting. We saw a little bit of this with Jim Chalmers in the
02:58sort of pre-budget press conference that he does in the lockup each year, the treasurer and the
03:04finance minister do. And it's interesting that they don't want to call it a tax backflip or a
03:09broken promise. You won't hear those words, I don't think, said by them, at least not initially.
03:14They're talking about coming to a new view. It was only a year ago that the prime minister and
03:19the treasurer and others were insisting they were not going to touch these tax breaks for
03:23wealthier Australians. And now they've decided to do it. And I think they learned from backflipping on
03:30the stage three tax cuts to which they were already committed in the last term, they learned
03:35that if they could just walk away from that, and as long as there were winners out of it,
03:40more winners than losers, they could wear the friction that they would get for having broken
03:44a promise. And I think that's what they've done here. Now, whether it actually plays out that way,
03:49I think that that remains to be seen. So I think the Libs are going to be incandescent about it.
03:53But good policy can win in the end.
03:56I think so. I think that, look, I've long been of the view that this is a policy change that
04:02should have happened. The reason that, I mean, Albanese got really exasperated during the last
04:07election campaign when people kept asking him, were they going to change these tax breaks? And
04:11he said, no, we're not going to do it. How many times do I have to say it? Well, now
04:16they are doing
04:16it. So there was a logic in why reporters were asking, why reporters were actually saying to the
04:22Prime Minister, are you going to change this? Because it needed to change. And everyone could
04:26see it needed to change. Now the government concedes it needed to change. And they're just
04:31going to, I guess they've got a huge majority, they've got two years to go to the next election,
04:35and they feel that they're better off making, as you say, making good policy, even if it involves
04:41wearing a bit of friction for breaking a promise.
04:44Quite a different budget from last year, where we were right before an election.
04:48I mentioned some of those savings earlier. Some of them are coming from the public service,
04:52actually. What are you seeing there?
04:54Yeah. So they've actually, the savings, they've extended a program where they're trying to cut
04:58back on contractors and consultants. They've got another 2.7 billion savings planned for down the
05:06line, not until I believe it's 29, 2030. But overall, a bit of a mixed bag for the public service.
05:16It
05:16seems to now be a little bit more pressure on the departmental secretaries and agency heads not to
05:22be overhiring. We're seeing a little bit of a revision to the previous year's numbers. And I
05:28think going forward, there'll be a lot more pressure on the public service to find those
05:32And that has implications. I mean, it's interesting that you describe it in terms of the public service,
05:37you know, overall numbers and whether that's a win. But probably the real import of all of that is the
05:41implications for the ACT economy, for Canva itself. Because I mean, this is the biggest employer in
05:48town, right? Yeah, definitely. And we see a bit of shuffling around with some departments will be
05:52big winners. Defence, of course, with the release of National Defence Strategy. But there's some other
05:57surprising things like home affairs falling in numbers too. So I guess there'll be a lot of public
06:03servants pouring over these budget papers too this year. And shifting departments possibly.
06:08Yeah, that's right. To new growth opportunities. That's right. Well, thanks very much, Mark.
06:12Thanks, Miriam.
Comments