Pre-election budget traded structural reform for virtue signalling

‘Building Australia’s future’ is the slogan the Australian Government slapped on its 2025-26 Budget that unavoidably turned out to be the red carpet leading to an election announcement.

For all the gravitas of Prime Minister Anthony Albanese’s May 3 election revelation, the budget itself wasn’t the sparkling pièce de résistance it could have been had there been no threat of losing out to Peter Dutton and the Coalition party.

In a scathing analysis of the budget, University of New South Wales economist Professor Gigi Foster told Hello Leaders it’s a politically motivated, short-term budget lacking structural reform in favour of cash splashes and virtue signalling.

According to Professor Foster, it’s a typical pre-election budget that hoped to avoid criticism (although in the political world that’s never possible).

“There is a lot of virtue signaling, particularly in relation to how it supports caring professions. There were callouts to those professions and to women’s health, the things that of course make hearts bleed because we all love the women in our lives, we love those who take care of our elderly and our children,” Ms Foster explained.

“Once you start talking in that fashion it makes it difficult for people to criticise the budget because the implication is if you don’t support these measures, do you not value caring labour? Do you not value women?”

Professor Foster also argues that the individual measures such as tax cuts, while a positive step, fail to address any of the systemic issues plaguing Australia and also aged care.

The tax cuts will see the 16% tax rate on taxable income between $18.201 and $45,000 reduced to 15% from July 1, 2026, and then 14% from July 1, 2027. This equates to an additional $268 in the pocket for 2026-27 and then $536 from 2027-28.

“I would like to see a more comprehensive attack on our tax system that addresses the wealthy, multinational corporations and individuals who know how to hide their wealth and evade our corporate taxes. That’s an example of structural change that is not addressed at all in this budget,” she added. 

“There’s nothing addressing the fundamental, structural problems that Australia has which include corporate tax evasion, corruption, productivity stagnation, excess deaths, housing stress, rising wealth inequality, etc.”

Bureaucracy vs effective care

The aged care sector was not immune to the virtue signalling in Professor Foster’s eyes. While she sees that the $2.6 billion commitment to increase award wages of aged care nurses is justified acknowledgement of the workforce’s hard work, it misses out on addressing structural problems. 

Comparing aged care and childcare, she says one of the most pressing concerns is the inefficient quality assurance systems that are diverting workers’ time away from caregiving. 

“We want our old people and our children to be well cared for in safe, nurturing environments. The approach to quality assurance has been, and continues to be, a bureaucratically led process whereby there are quality frameworks and standards focused on compliance and filling out forms,” she said. 

Although the sector did receive less dedicated funding compared to past budgets — $291.6 million to continue delivering aged care reforms — much of the money will go into pathways supporting regulation and compliance. 

This includes a total of $116.1 million to the Aged Care Quality and Safety Commission and $59.6 million to the Department of Health Care over four years. Both investments will help to deliver regulatory functions and implementation of the Aged Care Act

Additionally, as noted by Bolton Clarke Executive General Manager Policy and Advocacy Tim Hicks, government revisions of previous budget forecasts reveals there is at least $5.4 billion for aged care under parameter variations. 

“Government doesn’t need to provide a sugar hit before the election because the funding to cover costs is built into the system. The $5.4 billion figure above comes from comparing cost estimates in the Budget forecasts with the updated forecasts from the previous Budget, which came out in February,” he explained. 

“This means it undersells the upwards parameter variation because we can’t compare the full forecast period. Going back to the updated 2023/24 forecasts published in January 2024, we can see there has been a $4.5 billion increase in expected spending in just 2025/26. Some of this reflects policy changes and some of it reflects upwards parameter variations.”

Ongoing investments for the sector are to be celebrated, although Professor Foster would have liked more direct incentives that enhance the sector’s attractiveness. 

“The people employed in the sector are filling out forms and doing compliance checks. It crowds the time they would otherwise be spending on caring. A lot of school teachers left the education sector because of the administrative burdens. It’s just too unpleasant,” Professor Forster said. 

“When those jobs increasingly get taken up by filling out forms, compliance and interacting with mindless bureaucracy, it’s no surprise people get disheartened and discouraged.  and they start being unhappy and they don’t do as good a job at the actual caring labour that they got into the profession to do. 

“There’s a real failure of compassion for aged care workers in the budget. I don’t think there’s a real understanding of the sources of the problem.”

“These kinds of cash splashes are taking the place of structural reform in aged care and other sectors. The cash splashes feel good but under the surface there’s nothing being done to address structural problems. There’s nothing I see in the budget that’s likely to incentivise people in the community to enter caring professions.”

The path forward

While the budget might appeal to voters in the short term, Professor Foster remains sceptical about its long-term impact. She hopes that post-election, there will be greater political willingness to take on feedback from staff and older people at the coalface to inform future investments and improvements.

Likewise, she would like to see more acknowledgement of providers and peak bodies, expressing her concern that pre-budget recommendations were ignored. 

“Consulting with the actual providers and users of care services is one way to ensure that money is effectively spent to overcome barriers and design policies that solve problems,” she said. 

“I wouldn’t be surprised if the peak body in aged care or childcare haven’t had much input into the design of the policies that are basically being used to direct the funds allocated in the current budget. That’s a real pity. That’s a marker of a lack of trust or belief in those who are on the ground.”