Major party election commitments

Budget impacts over the medium term

 

Figure 2‑1 shows the PBO's estimates of the budget impact of each party's election platform over the medium term (2025‑26 to 2035‑36) on the underlying cash balance.

Labor's platform, if fully implemented, would result in slightly smaller underlying cash balance deficits in each year relative to PEFO.

The Coalition's platform would result in a net decrease in the underlying cash balance over the medium term. A decrease in the first 2 years of the forward estimates is followed by an improved underlying cash balance from 2027‑28 to 2030‑31. In 2031‑32 and beyond, an escalating decline is estimated as the impacts of ongoing commitments grow and unspecified tax cuts are required to meet the Coalition's tax cap of 23.9% of gross domestic product (GDP) (indicated by the shaded area in the Coalition chart).

The Greens' platform, if fully implemented, would result in larger deficits in each year of the medium term. The magnitude of the impact of the Greens' commitments is significantly higher than that of the other major parties.

Box 2: The budget impact of commitments over the medium term

The ECR presents the financial impacts of election commitments over the medium term, rather than just the forward estimates. This gives an indication of the trajectory of fiscal policy over the coming decade and can be useful where parties make commitments that may not take effect, or fully mature, until the period beyond the forward estimates. Even when there is a financial impact, it may not always be possible to quantify that impact. In that case, our costing minutes clearly indicate why we consider the commitment to be unquantifiable.

Parties usually make their election announcements transparent, including by publishing detailed material on the purpose and cost of their policies over the forward estimates. Nevertheless, the PBO will sometimes need to make assumptions. Where it cannot be determined from the policy announcement and related supporting material whether the commitment is ongoing or terminating, the PBO will adopt the default assumption that the proposal is ongoing, for the purpose of estimating the medium-term impacts.

This assumption had a material impact on the total fiscal impacts of the election platforms for Labor and the Coalition, but not for the Greens.

  • For Labor's platform, the commitment where this assumption made a material difference to the total fiscal impact was Further reducing spending on consultants, contractors and labour hire, and non-wage expenses (ECR-2025-1596). The PBO has assumed that this policy will continue beyond the forward estimates, with the estimated impact being a saving of $2.5 billion per year, on average, from 2029‑30.
  • For the Coalition's platform, the commitment where this assumption made a material difference to the total fiscal impact was Reducing the APS to a sustainable level over time through natural attrition (ECR-2025-2147). The PBO has assumed that this policy will continue beyond the forward estimates, with the estimated impact being a saving of $7.4 billion per year, on average from 2029‑30.

Figure 2-1: Medium-term impact of election commitments, by party
Underlying cash balance

Labor


Coalition


Greens

Source: 2025 PEFO and PBO analysis.
Note: ‘Saves’ includes all commitments that improve the budget balance (that is, those commitments that increase receipts or decrease payments). ‘Spends’ includes all commitments that deteriorate the budget balance (that is, those commitments that decrease receipts or increase payments).

 

Figure 2-2 shows the underlying cash balance level under the PEFO baseline and for each major party's platform. Overall, Labor's platform would result in an improvement in the underlying cash balance by the end of the medium-term, consistent with the PEFO baseline, whilst the platforms of the Coalition and the Greens would decrease the underlying cash balance relative to PEFO.

Figure 2-2: Underlying cash balance, by party
Final level

Source: 2025 PEFO and PBO analysis.

 

Impacts on receipts

Figure 2-3 shows the impact of each major party's platforms on receipts in each year and whether these are tax or non-tax receipts.

Labor's receipts commitments, if fully implemented, would result in a slight increase in tax receipts in the early years of the forward estimates, before decreasing slightly from 2027-28 and over the remainder of the medium term, relative to PEFO. This impact over the medium term 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.

The Coalition's receipts commitments, if fully implemented, would result in less tax receipts in the early forward years and over the medium term. The medium-term impact is primarily due to the Coalition's policy to maintain tax receipts at or below a cap of 23.9% of GDP (indicated by the shaded area in the Coalition figures).

The Greens' receipts commitments, if fully implemented, would result in significantly higher receipts over the forward estimates and the medium term. The Greens’ platform includes major tax changes, including a super-profits tax in the commitment 40% excess profits tax on corporations with over $100 million turnover (ECR-2025-3194), reversal of the Stage 3 tax cuts in the commitment A fair and progressive income tax system (ECR-2025-3602), and the introduction of a wealth tax on billionaires in the commitment Tax billionaires and future billionaires and make them pay their fair share (ECR-2025-3463).

Figure 2-3: Impact of party platform on receipts, by major receipt type
Underlying cash balance

Labor


Coalition


Greens

Source: 2025 PEFO and PBO analysis.
Note: Tax receipts include income derived from taxes; such as company tax, personal income tax, and goods and services tax. Income from other sources is included in non‑tax receipts; such as royalties, interest earned on loans and dividends from investments. See Appendix E for information on the application of the tax cap.

Impacts on payments

Figure 2-4 shows the impact on payments of each major party’s policies according to their primary purpose, using the standard Australian Bureau of Statistics classification for government spending.[10]

Labor's estimated decrease in spending is entirely 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 partially offset by increased spending in health, under the commitment More free mental health services (ECR-2025-1566), and housing and community amenities, under the commitment Delivering 100,000 homes and 5% deposits for all first home buyers (ECR-2025-1344).

Under the Coalition's platform, payments are estimated to be higher over the medium term relative to PEFO. The additional spending is mainly on the defence commitment Increase defence spending – including investing in a fourth F-35A Lightning Squadron (ECR-2025-2734). The additional spending would be partly funded by commitments to achieve savings, mainly from general public services, such as the commitment Reducing the APS to a sustainable level over time through natural attrition (ECR-2025-2147) and economic affairs, such as the commitment Green Hydrogen Production Tax Incentives – reverse (ECR-2025-2013).

The Greens committed to significantly higher payments overall, partly funded through higher receipts and a reprioritisation of funding from defence under the commitment Reduce defence waste (ECR-2025-3633). Increases in payments are mainly directed to social protection, education, health and general public services.

Figure 2-4: Impact of party platform on payments according to purpose
Underlying cash balance, average annual impact 2025-26 to 2035-36

Labor


Coalition


Greens

Source: 2025 PEFO and PBO analysis.
Note: Spending is allocated according to the Classification of the Functions of Government – Australia, consistent with the framework underpinning the Australian Bureau of Statistics’ Government Finance Statistics. Where commitments cover multiple purposes, they have been allocated to the primary category according to the relative dollar value.

 

Impacts on government debt

The impact of the party platforms, including any commitments that involve balance sheet financing arrangements will impact the 2 main measures of government debt: gross debt and net debt.[11] Gross debt is simply the total amount of Commonwealth Government debt, while net debt adjusts the value of gross debt to account for the government's financial assets.

Compared to gross debt, net debt is a better indicator of the strength of the government's financial position. However net debt has limitations, including a sensitivity to the investment structures and strategies adopted by government investment funds, due to the inconsistent treatment of financial asset types (such as the exclusion of equity) in the net debt calculation. See section on Commitments funded through balance sheet financing arrangements for further information.

Labor's platform is not expected to materially impact debt relative to PEFO. Under the Coalition's platform, both gross and net debt are lower over the forward estimates but higher by the end of the medium-term relative to PEFO. Under the Greens’ platform, both gross and net debt are expected to increase significantly over the medium-term.

Figure 2-5 shows the impact of government gross debt and net debt of each party's election platform.

Figure 2-5: Impact of party platform on government debt

Source: 2025 PEFO and PBO analysis.
Note: A positive impact indicates an increase in debt levels. A negative impact indicates a reduction in debt levels. Figures may not sum to totals due to rounding. Coalition figures include the impact of the tax cap.

 

Figure 2-6 shows the levels of government gross debt and net debt in the 2025 PEFO, and the estimated impact of each party’s election platform on them.

Figure 2-6: Gross and net debt, by party
Final level

Source: 2025 PEFO and PBO analysis.

 

Across the medium term, public debt interest (PDI) payments are estimated to increase as a share of GDP under the PEFO baseline and all party platforms (Figure 2‑7). PDI under Labor's platform is not materially different to PEFO. For the Coalition's platform, PDI is slightly lower relative to PEFO across the medium term due to lower debt levels for most of the period. The Greens' platform would result in PDI payments increasing to more than 2% of GDP by the end of the medium term due to the higher levels of government debt.

Figure 2-7: Public debt interest, by party
Final level

Source: 2025 PEFO and PBO analysis.
Note: Presents the impact of PDI payments on the underlying cash and headline cash balances, at PEFO and under each party’s election platform. An increase in PDI payments deteriorates the budget balance.

 

 

[10] The Classification of the functions of Government – Australia, as per the Australian Bureau of Statistics’ Government Finance Statistics. Final levels of spending for 2023–24 were: Defence $48.6 billion; Economic affairs $30.5 billion; Education $53.4 billion; Environmental protection $7.5 billion; General public services $149.9 billion; Health $108.8 billion; Housing and community amenities $3.3 billion; Public order and safety $8.0 billion; Recreation, culture and religion $4.6 billion; Social protection $259.1 billion; and Transport $13.3 billion.

[11] In the budget papers, gross debt is the sum of Australian Government Securities on issue, based on their value when the securities were issued (their ‘face value’). Net debt is the sum of selected financial liabilities (including government securities, loans, deposits held, and other borrowings) minus the sum of selected financial assets (including cash and deposits, advances paid, and investments). In the net debt calculation, Australian Government Securities are valued at the price they are currently trading at (their ‘market value’) rather than their face value.