Labor’s budget will benefit the young – but does little to woo voters drawn to One Nation

Labor’s fifth budget will do what it says on the tin: it will benefit the young and the poor at the expense of the older and the rich.

This is the most obvious takeaway from distributional analysis conducted by Ben Phillips, an associate professor at the ANU’s Centre for Social Policy Research.

But lift the lid on what Jim Chalmers has called his most ambitious reform package to date, and it becomes evident there is little inside for the many middle-aged, middle-income Australians who are increasingly drawn to the populist politics of parties like One Nation.

Scaling back the capital gains tax discount, getting rid of negative gearing for landlords, and a minimum 30% tax rate on income from discretionary trusts – which are a favourite tax minimisation vehicle for the well-off – were all part of a suite of measures framed as striking a blow against intergenerational inequity.

And as part of an effort to ease the growing tax burden on workers, taxpayers will receive a $250 offset on earned income and an instant $1000 tax deduction.

These policies have staggered start dates, but to get a sense of their combined effect, Phillips modelled a world where all of the policy changes applied in the 2026-27 financial year.

Starting by age, the research shows what you would expect.

Gen Z and millennials enjoy the lion’s share of the benefits with an average annual income boost of $300 to $400.

Boomer households lose out, with over 65s suffering a $500 to $1,000 hit thanks to the changes in Tuesday’s budget.

It’s a similar story by wealth and income.

The richest 20% of households suffer a reduction in their average earnings of about $1,500 a year, while the poorest are better off by a few hundred dollars.

Perhaps the most stark difference is between those who rely mainly on “other” income – from dividends, interest, rents and capital gains – and everybody else.

The tax changes in the budget reduce their annual income by nearly $2,400, while there are only negligible changes for households generating income in other ways.

So far, so good for a budget aimed at tipping the scales back towards younger Australians and making the system fairer.

But there are two other important points.

The first is the most obvious.

While Labor’s “ambitious” budget tips the scales in the favour of younger and less well-off households, it doesn’t tip it very far.

“The budget has been reasonably progressive, but not transformative,” Phillips says. “Overall, the impacts are not wild.”

Here’s where we see Chalmers’ ambition and rhetoric meet Anthony Albanese’s caution.

Because, besides some wealthier households, the impact on living standards for the vast bulk of Australians will be “pretty small” – in the order of 1% to 1.5%, Phillips says.