Outgoing NAB Group Chief Economist Alan Oster shares his final Federal Budget analysis

Key measures announced

Key measures of this pre-election Federal Budget unveiled by Treasurer Jim Chalmers include:

• Tax cuts: a modest tax cut for all taxpayers, reducing the lowest marginal tax rate from 16 per cent rate to 15 per cent on 1 July 2026, and a further reduction to 14 per cent from 1 July 2027.
• Cost of living relief: the current electricity subsidy will be extended, with the $75 quarterly rebate remaining until the end of 2025, at a cost of $1.8 billion.
• Health: strengthening of Medicare via increased incentives for GP bulk-billing, which was pre-announced.
• Childcare: parents will be guaranteed a minimum of three days of subsidised childcare regardless of how much they work or study — provided they don’t earn more than $533,280 per annum. This is to take effect from January next year and abolishes the activity test established in 2018.
• Student loans: The Government will reduce all outstanding Higher Education Loan Program (HELP) and other student debts by 20 per cent, subject to the passage of legislation.
• First home buyers: Labor’s proposed Help to Buy scheme for first home buyers will be expanded, increasing the property price and income caps under the scheme
• Productivity: a proposed ban on non-compete clauses for those earning up to $175,000 a year, with the intention of allowing them to move employers or establish their own business. This is based on analysis suggesting these clauses are reducing productivity and capping wage growth for affected employees.

Global uncertainty remains

Speaking to the economic outlook and implications, Mr Oster said that the global economy is still weak and geopolitical uncertainty is very high.

“Globally the big risks are geopolitical – Trump, tariffs. What we’re really seeing here is we don’t know. A lot in terms of Australia will depend on how the consumer and business reacts to the scary environment we’re in.”

Incoming NAB Chief Economist Sally Auld said that the Budget addressed domestic cost of living pressures and will support efforts to bring down inflation.

“We’re only six weeks or so away from election, a very domestically focused budget. And so, you know, the initiatives all centered around those things that are very familiar to Labor. So health, education, cost of living,” Dr Auld said.

Inflation and interest rates

With wage growth slowing to 3.2 per cent and inflation “coming down quite quickly”, Mr Oster said the critical variables in determining future cuts to the cash rate will be core inflation and the impact of geopolitical concerns on consumer and business behaviour.

“To me, I look at this and I say to, it’s not helping the Reserve Bank in rate cuts, but it’s not probably going to stop them either. But they’re in no hurry.”

Farewell and thank you

Reflecting on his 32 years at NAB as Chief Economist, Mr Oster said he thinks the state of the country is “overall, pretty good.”

“It’s been a pleasure to work in NAB. We’ve got some really good customers…and in Sally I think we have a great replacement. I’m leaving on a good note, I think the Australian economy in the medium term is actually going to be pretty good but we’re still going through some tough times,” he said.

Speaking previously about the rewarding nature of a lifelong career in economics, Mr Oster said the reasons he did it were a lot closer to home.

“The reason I did it is, as an economist, I want my kids to have a job. And if as economists we can help keep people employed, I think that’s a really good job,” Alan said.

Want more detailed budget insights? Read in-depth NAB Economics Federal Budget commentary on the NAB Business Research & Insights website, opens in new window.