Australian governments grapple with rising taxes and spending cuts

NSW Treasurer Daniel Mookhey is targeting a return to a budget surplus in 2027‑28 and has outlined cuts to health and education infrastructure spending, aiming to reduce overall infrastructure outlays to 2 % of gross state product. The state’s budget still projects an eighth consecutive deficit before the planned surplus, with debt projected to rise to $219 billion by 2030.

At the federal level, the Parliamentary Budget Office warns that personal income tax receipts will increase by $336 billion by the mid‑2030s, driven largely by bracket creep, pushing the average tax rate from 24.9 % to a record 28.6 % in 2036‑37. While the Albanese government’s budget projects a surplus by 2034‑35, the analysis notes that any further tax cuts would delay that horizon.

The PBO also found that reducing net overseas migration by 40,000 people would worsen the budget bottom line by about $79 billion over a decade, highlighting the fiscal trade‑off between migration policy and public finances.