How Jim Chalmers’ Budget has alienated both the rich and the poor

A 69-year-old grandmother from Melbourne’s west who spent more than four decades working as a hospital receptionist is usually the kind of working-class Australian who would be a Labor voter.

Caryn Hearsch, who badly injured her shoulder at work in 2012 slipping on the floor at The Royal Melbourne Hospital, struggled to get another full-time job despite applying for more than 800 positions over coming years.

Her local Federal Labor MP Joanne Ryan was so moved by her story she delivered a speech to Parliament in 2018 calling on then Liberal prime minister Malcolm Turnbull to understand how tough it is living on $40 a day under Newstart, as the unemployment benefit was then called.

“I call on the Prime Minister to think about the Caryn Hearsches of the world all across Australia and do something in response to their pleas,” she said.

Eight years on with Labor now in power, Ms Hearsch spends almost half her $1100 fortnightly age pension paying off a 30-year mortgage on her small, three-bedroom house at Hoppers Crossing, bought in 2002 after a divorce in middle age left her bankrupt as a single mother with a young daughter.

To survive, she now has one daily meal of Sustagen with milk, and only has a loaf of bread occasionally thanks to the charity of a friend visiting from interstate.

“I make that last because they’re not coming back for another few weeks. When that runs out, I don’t eat,” she told The Nightly.

She saves every dollar in fear she could end up on the street if she can’t service her home loan or pay her medical bills associated with leukaemia treatment, upcoming cataract eye surgery and arthritis.

This life-long Labor voter — barely “existing” — is fed up with the ALP and Prime Minister Anthony Albanese repeatedly reminding voters he grew up in a housing commission flat in Sydney’s inner west with his mother Maryanne, an invalid pensioner.

“Mr Albanese said prior to his election that he knew how hard it was to be brought up in a single parent family. He clearly has no memory,” she said.

She is angered at Treasurer Jim Chalmers’ fifth Budget for failing to boost Centrelink payments for people like her, with little superannuation savings from low-paid jobs, confirming she had been a Labor voter for most of her life.

“Yes, I would have to say I have been however I’m really not confident in either party over broken promises,” she said.

“Just heading into the bank to see if I’m going to be added to the number of homeless.”

Australia’s high level of immigration during a housing crisis has, in her mind, caused homelessness in her area, worsened inflation and sparked the Reserve Bank’s three interest rate rises this year that have pushed up her monthly mortgage repayments.

“We’ve got all these people coming over from other countries - and I’m still not racist by any means - but they’re all coming over here but yet the people who are here, that are born and bred here, that paid our taxes and worked hard and everything, we’re getting forgotten,” she said.

“There’s a lot of people in a similar situation and we’ve got to make these bloody politicians realise that Australia’s supposed to be the lucky country and they’re bringing all these people in, assuming that it’s the lucky country but it’s not really.”

Labor’s first Budget since it was resoundingly re-elected a year ago is polarising voters, from the poor struggling with cost-of-living concerns to the wealthy worried about the prospective of capital gains tax changes that will leave Australia poorer.

Battlers are battling higher rents and mortgage repayments while the investor class, including millionaires and billionaires, see only gloom if entrepreneurs are too heavily taxed for growing a successful business from scratch.

While stronger-than-average population growth after the pandemic has boosted Australia’s gross domestic product, the economy had also been in the grip of a GDP per capita recession from 2022 to 2024 where output for every individual had been in decline, as productivity has flatlined.

Dr Chalmers had promised Australia’s population growth pace would slow, from record-high immigration levels approaching 550,000 in 2023.

Rental vacancies remain tight, especially in mid-sized capital cities like Brisbane and Perth receiving high interstate migration from over-priced Sydney.

But the Treasury Budget papers are now forecasting a net overseas migration rate of 295,000 for 2025-26.

This is higher than 260,000 level predicted just five months ago for this financial year in the Mid-Year Economic and Fiscal Outlook, released just before Christmas.

More skilled migrants add to income tax revenue, with overall tax receipts projected to climb by another $37.6 billion to $737.1b in 2026-27, making up 23.8 per cent of gross domestic product.

The Treasury Budget papers acknowledged the Federal Government is reliant on income taxes for more than half its revenue, with the take from personal income taxes levied on individuals projected to grow by another 5 per cent during the next financial year to $382.4b.

“Australia’s largest single source of Commonwealth revenue is personal income tax, mostly composed of taxes on salaries and wages,” it said.

“As wages grow, bracket creep tends to raise tax rates on this income over time.”

Despite the observation from Treasury, Labor has ruled out indexing marginal income tax brackets, as proposed by Opposition Leader Angus Taylor in his Budget-reply speech with surprise support from NSW Labor Premier Chris Minns.

Instead, Dr Chalmers is proposing to collect more from capital.

Labor had initially wanted to scrap generous capital gains tax concessions for property investors, hoping this would see fewer investors compete with first-home buyers.

But in the most radical shake-up to capital gains taxes in a generation, the 50 per cent discount is being scrapped for gains on a range of assets, including shares, made after July 2027, with a new minimum 30 per cent tax to replace it.

Tech entrepreneurs like Finder co-founder Fred Schebesta are leading the campaign against Labor’s proposed tax change, arguing it will discourage start-ups and see them instead move overseas.

“Whoever thinks this will motivate start-ups clearly never spoke to businesses and always worked on a wage from the government,” he told The Nightly.

“And no start-up founder wants to work for less reward. This is a backwards step to zero innovation in Australia.”

Mr Schebesta, who started a financial comparison website two decades ago that employs 180 people in six countries, accused Labor of trying to introduce policies voters had rejected at the 2019 election without an electoral mandate.

“Clearly, Australians voted and said they don’t want these things and this doesn’t just hurt people’s investment properties, it hurts their share portfolios, it hurts their retirement accounts, mum and dad investors with their super funds, regional communities with their small businesses trying to attract new start-ups,” he said.

Dr Chalmers has repeatedly slammed as “misinformation” social media memes noting the top capital gains tax rate of 47 per cent, double the existing 23.5 per cent ceiling.

That’s based on them failing to tell their followers that existing CGT exemptions would remain in place for small businesses with a turnover of less than $2 million, along with businesses that are at least 15 years old and ones where the proprietor is 55 or older.

The capital gains tax changes weren’t taken to either the 2022 or 2025 elections, which Labor won.

Under former leader Bill Shorten, Labor had lost the 2016 and 2019 elections with a plan to halve the 50 per cent capital gains tax discount to 25 per cent and quarantine negative gearing to brand-new properties when it came to future purchases.

A Newspoll released this week showed support for Labor’s Budget was the worst since 1993 when then Prime Minister Paul Keating’s treasurer John Dawkins failed to deliver promised “L-A-W law” income tax cuts.

Labor went on to lose the next election in 1996 by landslide proportions.

This Budget was even more unpopular than the 2014 effort of Liberal treasurer Joe Hockey who proposed a $7 GP co-payment.

The following year, the Liberal Party replaced first-term Prime Minister Tony Abbott with Malcolm Turnbull who barely won the 2016 election.

But former Victorian Labor campaigner Kos Samaras, who is now the director of strategy with polling company RedBridge, said voters would be annoyed at the Federal Labor Government no matter what it did in the Budget.

“It’s a Budget that’s been tabled at a time when Australians are the most pessimistic and depressed in recorded history since the Great Depression,” he said.

“They’ve endured a pandemic, they’ve endured an inflationary crisis, they’re enduring a fuel crisis and enduring more inflation and interest rate rises as a result of that fuel crisis as well and they are at their wit’s end, and you go and ask Australians about anything that any politician’s doing right now, they’re going to give you a thumb’s down. That’s why One Nation is growing.”

Labor, in numerous opinion polls, is still the overwhelming choice among young voters under 30 and those living in urban areas, which would ensure the Federal Government is re-elected.

Nonetheless, Mr Samaras said Labor was likely to back down on some of its controversial proposed capital gains tax changes, at least where it affected start-ups.

“There probably does need to be some flexibility and some compromise around whether start-ups to ensure the entrepreneurial nature of young people is rewarded,” he said.

Ms Hearsch had a harsh verdict on Labor’s leadership after four years in power.

“I’d love to get Mr Albanese and bloody Mr Chalmers to wake up and realise they’re not helping us at all,” she said.

“They’re not making our lives any better.”