Was the Budget really unpopular? Plenty of reasons suggest ‘no’

There was much distress in the media and a small army of interest groups about the economic implications of the Federal Budget presented by the Minister of Finance. Jim Chalmers On May 12.

This melodrama is quite embarrassing for those touting the downward threat to the economy that some tax reforms pose. Geoff Wilson from Wilson Asset Management And Matt BarrieCEO freelanceA firm whose business model is effectively exporting job opportunities from Australians to cheap labor overseas has been particularly vocal in its assessment of what the tax changes will mean for the economy.

Among Geoff Wilson’s outrageous claims about X were:

[Labor] like that degrading our democracy…

[Treasurer Chalmers] looks exactly Like the Minister of Finance, who knows that he is setting fire to productive investments for the sake of ideology.

Regarding capital gains tax changes, Wilson said: he tweeted:

…this is economic vandalism that crushes aspirations, kills startups, and exports our best talent and future companies to the United States and Asia.

Every founder is now rethinking Australia. Every high-skilled job is at risk. The innovation machine is being deliberately disrupted. This is not a budget. This is a declaration of war against mobile capital…

Matt Barrie was similarly melodramatic.

Mr Barrie interviewed by ABC quotation:

“There will be no capital coming into Australia. You will ensure that Australia is erased from the investment mandates of overseas fund managers, if it is not already.”

Barrie in X in question:

‘…all taxation is punitive to the Australian soul.’

Wilson Asset Management’s share price (WAMListed on the ASX ), around $1.50. That’s not far off the 15-year low and is 40% lower than the 2019 peak of $2.50.

Freelancer’s share price (FLN) is even weaker. Freelancer is trading at about 14 cents per share; This is a drop of over 90% from its peak in 2015.

Perhaps the status of Wilson and Barrie’s criticisms of the Budget should be viewed in the context of their “successes” at these two companies.

How do consumers evaluate the budget?

In terms of consumer response to the economic effects of the budget, Roy MorganIt produces a weekly consumer confidence index in partnership with ANZ bank.

The compiled index is a synthesis of questions regarding consumers’ opinions on the following topics:

financial situation compared to a year ago;
next year’s financial situation;
next year’s economic conditions;
economic conditions for the next five years; And
It’s time to make a major household purchase.

On May 10, just two days before the budget was announced, the consumer confidence index was at 64.1 points. This level was an extremely low level, negatively affected by interest rates, concerns about the oil shock and falling house prices.

On May 17, the week after the budget, consumer confidence It rose to 66.4 points. In the latest reading on June 7, the index rose to 70.8 points; This is around 10.5% above the reading just before the Budget and is at the highest level since March.

Of course, there are many issues that affect consumer confidence. It could be interest rates, unemployment, oil prices, among other factors. To attribute the increase since the Budget solely to the Budget is almost certainly to exaggerate the response to it.

However, it does suggest that consumer pessimism has eased since the Budget and confidence has risen from its lowest levels. Interestingly, this is happening despite other economic news, including ongoing strife in the US-Iran war, rising unemployment, and widespread reports of falling home prices.

What do financial markets reveal about the Budget?

If the policy reforms announced in the budget pose a major threat or disruption to the economy, this will inevitably be reflected in the behavior of investors towards financial assets in Australia. If the Budget were the “economic vandalism” that Wilson judged it to be, we would inevitably see investors sell Australian stocks, bonds and the Australian dollar.

This is not the case.

On the contrary, since the budget is more than a month old and has had plenty of time to analyze and evaluate its effects on the economy. ASX200 share index 1.5% stronger than before the ten-year Budget government bond yield There was a significant decline of 20 basis points due to sound budget settings and a low inflation outlook.

At the same time, the Australian dollar fell to just under 2 US cents, but this followed some strengthening of the US dollar. On a trade-weighted basis, there is little change.

Suffice it to say that investors are not worried that their actions in the money markets will have repercussions on the economy from the Budget. On the contrary, market movements can be portrayed as a vote of confidence in the economic outlook.

Budget 2026 introduced a number of reforms, some of which will have a negative fiscal impact on some parts of the economy. It’s no real surprise that potential losers are squealing. Nobody likes to be given unfair tax breaks.

However, considering other reactions to the budget from consumers and money markets, it appears that the budget is a policy document that will be well accepted, especially considering that many of the measures announced have begun to affect the parts of the economy it targets.

Stephen Koukoulas is one of Australia’s most respected economists, the former chief economist of Citibank and senior economic advisor to the Australian Prime Minister. You can follow Stephen on Twitter/X @TheKouk.

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