Australian Labor Party

Budget impacts over the medium term

The combined impact of Labor's election commitments is estimated to improve the fiscal, underlying cash, and headline cash balances over the medium term (see Figure 3‑1).

Unlike the fiscal and underlying cash balances, the headline cash balance is negative through the forward estimates and remains negative until 2033‑34, improving in the final 2 years of the medium term. This reflects the impact of Delivering 100,000 homes and 5% deposits for all first home buyers (ECR-2025-1344), which decreases the headline cash balance through the provision of concessional loans from 2026‑27 to 2033‑34, with ongoing repayments and no new loan issuance driving the strong improvement to the headline cash balance from 2034‑35.

Figure 3-1: Medium-term impact of Labor's platform on the budget balance aggregates

The medium-term improvement to the underlying cash balance (Figure 3‑2) is driven by a combination of lower expenses, including grants announced in the election terminating by the end of the forward estimates, and savings from reductions in consultants and non-wage public service expenses, which are both ongoing and increase beyond the forward estimates. The improvements are estimated to result in underlying cash deficits of $322.6 billion in total over the medium term (Table 3‑5).

Figure 3-2: Medium-term impact of Labor's platform on the underlying cash balance

Labor's platform would result in a slight increase in tax receipts (Figure 3‑3) in the early years of the forward estimates, before a small net decrease in tax receipts at the end of the forward estimates, continuing over the medium term relative to PEFO. This impact is primarily driven by the commitment $1,000 instant tax deduction for work-related expenses (ECR-2025-1700). As a share of GDP, the net impact on receipts is negligible.

Figure 3-3: Impact of Labor's platform on receipts, by major receipt type
Underlying cash balance

Payments (Figure 3-4) are estimated to fall due to a decrease in general public services, driven by a reduction in departmental costs under Further reducing spending on consultants, contractors and labour hire, and non-wage expenses (ECR-2025-1596).

These savings are partly offset by increased spending in health from the commitment More free mental health services (ECR-2025-1566), and housing and community amenities, with the commitment Delivering 100,000 homes and 5% deposits for all first home buyers (ECR-2025-1344).

Figure 3-4: Impact of Labor's platform on payments according to purpose
Underlying cash balance, average annual impact 2025‑26 to 2035‑36

While government gross debt is estimated to decrease by $1.9 billion by the end of the medium term (Figure 3‑5), public debt interest payments are expected to be $0.6 billion higher over the same period relative to PEFO. This reflects higher gross debt for most of the period. By the end of the medium term, gross debt is expected to reach $1.5 trillion, approximately 31.9% of GDP.

The wedge between gross and net debt is primarily driven by concessional loans included in Delivering 100,000 homes and 5% deposits for all first home buyers (ECR-2025-1344), with the loans contributing to gross debt but not net debt.

Figure 3-5: Medium-term impact of Labor's platform on government debt

Figure 3-6 summarises Labor's 10 largest election commitments over the medium term. The full list of medium‑term impacts for each commitment is provided in Appendix A.

Figure 3-6: Labor's 10 largest election commitments over the medium term
Cumulative impact on the underlying cash, fiscal and headline cash balances