While most of us are starting our weekends, somewhere in Canberra right now a room full of sleep-deprived staffers, officials, and government ministers are likely poring over budget documents.

Why the long faces?

The Federal Government will hand down its 2025/26 budget on Tuesday. While an annual budget is a given, the timing of this one might have caught some people by surprise.

Imagine getting an extension on a massive assignment, only to have your university professor revoke it at the last minute. You were expecting smooth sailing through to the end of the semester, but now you’re pulling all-nighters to get through the work. Thus captures the general Treasury mood.

Tuesday’s budget is not expected to include huge surprises for taxpayers, but it’s the timing of it that has left some Australians confused. With an election around the corner, why is a federal budget being handed down now?

I’ll be heading down to Canberra with my colleagues – the sunny Emma Gillespie and sharp Lucy Tassell – to unpack the details of the budget for you! But first, let’s take a peek at what we can expect from this glorious stack of financial documents.

P.S. A quick correction from Thursday’s newsletter: You might’ve seen we have an offer with ROLLiN’ Insurance using the code TDA10. The T&Cs link for the offer (TDA10) is now available here.

The budget sets out two main things: Where the government wants to distribute its money (spending), and how it’ll pay for it (revenue).

Revenue mostly comes from taxes – made up of personal income tax (paid by individual workers), companies, and the goods and services tax (GST). Other times, governments can choose to borrow money to fund more than what they can afford solely through taxes.

Australia is expected to head into deficit this year, according to the biggest celebrity of budget day: Treasurer Jim Chalmers.

When a government is in deficit, this means it hasn’t collected enough money to fund its spending promises. As a result, it will need to borrow money to fund projects that it otherwise couldn’t afford. However, borrowed money needs to be paid back with interest, which increases government debt.

Over the past two years, the Government recorded back-to-back surpluses. That’s when it receives more money than it spends – after distributing funding to projects and departments.

Graph: Federal Government's underlying cash balance, according to last year’s budget papers. The current 2024-25 year is expected to record a deficit.

The budget is the Federal Government’s most important economic document.

Everything in government starts and ends with money. A government can promise the streets will be paved with gold, but it needs to pay for it. So, realistically, the taps won’t be flowing with milk and honey – because it’s too expensive.

A budget also gives the public an insight into the government’s priorities: Where it will dedicate taxpayer money. And remember – the taxpayer is you.

The budget can also provide hints about the economic future of Australia: it forecasts how external forces – like tariffs from the U.S. – will impact jobs and growth here.

Tax settings are also revealed in the budget, meaning there are clues about how much your take-home pay could be affected. There were some big changes to income tax at the last budget – known as the stage three tax cuts.

However, in the words of Jim Chalmers, we’re not expecting any “big surprises” in this budget.

The Government has recently announced (and in some cases, legislated) numerous policies. Next week’s budget will tell us how much these policies will cost, including:

While it hasn’t been announced, the main cost of living relief measure that TDA is expecting will be an extension of the $300 energy bill rebate. This was the centrepiece of last year’s budget, where households and businesses received an automatic discount on their power bills.

Importantly too, Opposition Leader Peter Dutton will provide a budget-in-reply. This will be the Coalition’s official response to the Albanese Government’s vision for the 2025/26 financial year.

Since an election is due by 17 May, this budget reply will be a chance for Dutton to lay out the Coalition’s policy plans if it wins government.

Now, back to the bureaucrats in Canberra who are feeling the crunch after being granted that metaphorical extension on their uni thesis…

Without a budget, the government has no money and can’t govern. So, there are well-established rules in place dictating the timing of a federal budget (which is, itself, a year-round process). Budget day is normally in May. This gives Parliament time to consider the budget’s details before a new financial year starts on 1 July. However, Parliament House documents state “the budget may occur at another time if a general election (or other circumstance) prevents it being delivered in May.”

Most political experts were confident that voters would head to the polls on 12 April. If we were mid-election cycle by now, we wouldn’t have had a budget handed down until after the election. This is because once an election is called, the House of Representatives is dissolved as politicians enter campaign mode. You can’t hand down a budget during a campaign.

So, why hasn’t an election been called yet, what changed?

Those 12 April predictions fell apart two weeks ago when ex-cyclone Alfred made landfall south of Brisbane. That weekend was the last chance for Albanese to call an election for 12 April, but with an emergency unfolding in Southeast Qld and northern NSW, the Government’s priorities shifted. Dutton said any campaign announcement during the disaster would be “tin-eared”.

While public sentiment broadly favoured the PM’s decision, the delayed announcement cemented the next budget’s fate, and probably sent the Treasurer’s office into overdrive.

That’s up to us: the voters!

Polling consistently shows a strong likelihood of a minority government. This is where neither major party receives enough votes to form government in their own right, so they need to negotiate with minor parties and independents to secure a majority of support in the Parliament’s lower house.

If Labor loses the upcoming election, the Coalition could theoretically upend most of Tuesday’s spending commitments.

It’s unlikely the Coalition would tinker with funding for things like AUKUS nuclear-powered submarines, or healthcare measures like capping PBS medicines cost and tripling the bulk-billing incentive for GPs, because it’s already publicly backed these funding measures.

Basically, if the Coalition forms government, it will have the power to change public spending and look at new ways to increase revenue. So, the shelf life of Tuesday’s announcements will remain somewhat uncertain until we get an election result.

On Tuesday, a mass of journalists, interest groups, lobbyists, and politicians will enter what’s known as the lock up.

No, we won’t be under arrest (although we won’t have our phones for six hours). Instead, we will be given the Treasurer’s budget papers at 1.30pm AEDT – and spend six hours combing through the documents (in hard copy and on USB) in a room with no internet access.

At 7.30pm: SHOWTIME. Myself, along with the wonderful Emma and Lucy, will be scurrying to connect to the Parliament House Wi-Fi so that we can share all the important news from the budget with the TDA audience.

If staying up to get the budget details isn’t your idea of a wild Tuesday night (can’t imagine why), you can expect to wake up on Wednesday with everything you need to know via TDA’S podcast, daily newsletter, and Instagram feed.

We can’t wait to budget boogie with you when the curtain lifts on Tuesday night, see you then!

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