Tomorrow night, Treasurer Jim Chalmers will hand down a budget already heavily pre-announced through a carefully managed stream of leaks. As always, the government wants the headlines written before the actual numbers arrive. The problem for Anthony Albanese and Labor is that no amount of political choreography can hide the underlying reality: the Australian economy is in deep trouble, and much of the damage is self-inflicted.
For nearly three years Australians have been told that every economic pain they experience is somebody else’s fault. Inflation? Global conditions. Housing crisis? Investors. Energy prices? International markets. Interest rates? The Reserve Bank. Young Australians unable to buy homes? Apparently their parents and grandparents.
Never the government.
Yet the pattern is unmistakable. Labor inherited an economy recovering strongly after COVID, with unemployment low and commodity exports booming. Instead of using that position to rebuild productivity and economic resilience, they embarked on one of the biggest expansions of government spending and bureaucracy in modern Australian history.
Government’s share of the economy has ballooned from roughly 24% of GDP to around 27%. The public service has exploded in size. Billions have been poured into programs, subsidies, consultants, climate schemes and administrative empires, often with little evidence of competence or measurable return.
At the same time productivity — the real engine of long-term prosperity — has been sliding backwards. Australians are working harder to stand still.
And when the economy started slowing, Labor reached for the easiest short-term fix imaginable: mass immigration.
Record immigration numbers temporarily inflate headline GDP figures and create the illusion of economic growth. Politicians then boast the economy is “still growing,” while ordinary Australians experience the exact opposite in their daily lives. GDP per capita stagnates or falls, wages struggle to keep pace, and infrastructure groans under the pressure.
Housing has become the clearest example of this failure.
Australia simply has not built enough homes, roads, transport systems, hospitals or utilities to cope with the unprecedented population surge. The result has been devastating, particularly for younger Australians trying to enter the property market.
Rents have exploded. House prices remain detached from reality. Home ownership — once an achievable aspiration for ordinary working Australians — is increasingly becoming a fantasy.
Now, having helped create the crisis, Labor is trying to redirect public anger into a narrative of “generational inequity.” Suddenly the problem is not government policy, uncontrolled migration, inflationary spending or planning failures. No, apparently the real villains are older Australians who managed to buy homes decades ago under very different economic conditions.
It is a deeply cynical strategy.
Young Australians are right to be angry. But they should be angry at governments that flooded the country with population growth while failing to build the infrastructure to support it. Angry at reckless spending that fuelled inflation and drove interest rates higher. Angry at energy policies that have increased costs across the economy. Angry at governments that talk endlessly about “equity” while making life objectively harder for the next generation.
The emerging leaks suggest tomorrow’s budget may go even further down this dangerous path.
Labor appears ready to break previous assurances regarding capital gains tax settings and trust arrangements — another example of a government discovering that economic reality eventually catches up with political spin. Investors and small businesses are once again being positioned as convenient revenue sources to fund ever-expanding government spending.
Of course, the rhetoric will be wrapped in fairness, sustainability and “responsible reform.” It always is.
But Australians are becoming increasingly sceptical of a government that never seems to accept responsibility for any failure while constantly searching for new groups to blame.
The deeper concern is that Australia is drifting into a low-productivity, high-tax, high-spending economic model where governments attempt to manage decline through redistribution rather than create prosperity through growth.
A nation cannot tax, subsidise and regulate its way to prosperity indefinitely.
Eventually reality intrudes.
Tomorrow night’s budget may provide a few temporary sweeteners and carefully targeted handouts. There will no doubt be optimistic language about resilience, fairness and future opportunity. But beneath the marketing campaign lies an uncomfortable truth:
Australia’s cost-of-living crisis, housing crisis and productivity collapse are not random events. They are the direct consequences of policy choices.
And increasingly, Australians know it.
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