Is a win for Labor a win for you?

Our strategic partner, Elston, has written this tremendous post-election economic update.

Is a win for Labor a win for you?

After such an emphatic win for Labor, the Government has a clear path to implementing many of its priorities for the electorate. Because many clients are wondering what that might mean for their lifestyle, nest egg, and family, we thought it was worth exploring the changes that are likely to be made over the next three years.

A tax on high super balances

Whether the threshold is $2 million, $3 million, or somewhere in between, three things are essential to remember.

This legislation is still being discussed and hasn't been passed yet.

The tax will only apply to the proportion of super balances above that threshold, not to the entire super balance.

Elston is already looking at strategies that could help minimise the impact of the Div296 legislation.

Is Government spending a sticking point for interest rates?

As inflation has shown signs of falling back to levels acceptable to the RBA, interest rate cuts have been foreshadowed for a while now. Regardless of who won this election, the market expected the Reserve Bank to seek to decrease rates.

Help for first home buyers

Housing was a big election issue, and both parties needed to put forward ideas that could make it easier for first home buyers. Labor promised an additional $10 billion to build 10,000 homes. Some critics have pointed to skills shortages and construction costs hampering this goal, but Labor has promised other initiatives to help remove barriers.

Under Labor's expanded First Home Buyer's Scheme, a 5% deposit (rather than 20%) could be sufficient to get a loan approval. The Government is promising to go guarantor on the 15% differential (20% - %5) so that the home buyer doesn't have to take out doesn't' mortgage insuranlenders' Government is also considering increasing the property price limits and removing the income caps that had previously limited the number of first-time home buyers who could apply to participate in the scheme.

Help to Buy will also be expanded. This scheme is based on deposits of as little as 2% and a government contribution of up to 40% to the purchase. Under Help to Buy, the homeowner must repay the Government when the property is sold.

Reducing student debt by 20%

Labor has promised to cut outstanding student debt by 20%, which will help up to 3 million Australians. A graduate with a $30,000 HECS debt could enjoy a reduction of around $6,000. The rules around when the debt must be paid back are also changing.

From 1st July this year, the minimum threshold at which borrowers begin paying back the debt will increase from $54,435 to $67,000. Repayments will also be calculated using a marginal system.

A small tax cut is better than no tax cut

Getting a tax cut and having more money in your pocket is always nice.

As reported by the AFR on 6th May, "From 1st July, 2026, the tax rate for the lowest tax bracket will be cut from 16 per cent to 15 per cent. That means you'll pay one cent less on every dollar earned between $18,201 and $45,000. And from 1st July, 2027, that will fall to 14 per cent. Every taxpayer will receive this tax cut. From July 2026, those earning $45,000 and above will receive a tax cut of $268 a year, and then $536 a year from July 2027."

Some help with the cost of living

Energy

With energy costs an ongoing concern for many households, Labor has stepped up with a home battery scheme that provides a 30% discount on installation for a battery with a home solar system. This incentive, combined with the cost benefits from solar (up to $2300 in energy bill reductions1 each year), is expected to attract an estimated 1 million households to the scheme.

Health

Medicare was front and centre throughout the election, and Labor was keen to show that it kept health costs down. The Government pledged to make 90% of doctor visits free of charge. They plan to achieve this by increasing doctor payments (a commitment of $8.5 billion).