The final Federal Budget before the upcoming election set for May this year has been released.
Previously promised Medicare and health investments, Future Made in Australia funding and the expansion of the Help to Buy scheme have cropped up, but there are other more surprising announcements made by the Labor Government on Tuesday 25 March.
From an economic standpoint, a deficit of $27.6 billion is forecast this financial year, net debt will rise to $556 billion and Commonwealth gross debt is expected to rise to $940 billion (33.7 per cent of GDP). It is forecast to surpass $1 trillion in the 2025/26 financial year
It is mixed news for other key economic indicators:
Economic growth is expected to rise to 1.5 per cent, still below the target rate of two to three per cent but consumer price index (CPI) inflation is expected to fall to 2.5 per cent.
The unemployment rate is expected to rise to 4.25 per cent but for those in work, wages are expected to grow by 3 per cent.
Our material living standards are expected to rise with real household disposable income expected to grow by 2 per cent, above an originally forecast 1.25 per cent.
Migration will take a hit, with the net number of migrants to fall to 225,000 by 2026/27, down from 435,000 as recently as 2023/24.
Treasurer Jim Chalmers said this Budget is all about helping with the cost of living, strengthening Medicare and building Australia’s future in the face of some pretty substantial global economic uncertainty.
“Global uncertainty casts a shadow over the world’s economy and also over the Budget and that’s what makes the progress that Australians have made so remarkable,” he said.
“Together as Australians, we’ve got inflation down, wages and incomes are up, unemployment is low, we’ve got the debt down, interest rates have started to be cut, and now growth is rebounding solidly as well, with a bigger and bigger role for the private sector, which is especially welcome,”
“This Budget is really a platform for prosperity in a new world of uncertainty, it recognises that cost‑of‑living pressures are front of mind for many Australians, and that’s why it’s front and centre in the Budget.”
One of the standout cost-of-living measures announced in the budget was in new tax cuts, with the current 16 per cent tax rate, which applies to taxable income between $18,201 and $45,000, to reduce to 15 per cent from 1 July 2026 and then to 14 per cent exactly one year later.
For a worker on average earnings, this will equate to a new cut of $268 in 2026–27 and $536 per year from 2027–28 which combined with the revised stage three tax cuts introduced in 2024-25 will result in a tax cut of $1922 in 2026–27 and $2190 per year from 2027–28.
Across all taxpayers, the average new annual tax cut is expected to amount to $2548, about $50 per week.
Opposition Treasurer Angus Taylor said this is a Budget for an election, not one for our country’s future prosperity.
“Labor’s cruel hoax tax changes in 2026-27 fail to restore the standard of living you have lost after three years of Labor,” he said.
“The Coalition will not support these tax changes that do nothing to address the collapse in living standards under Labor, seventy cents a day, in a year’s time, is not going to help address the financial stress Australian families are currently under, this is an election bribe by a weak Prime Minister,”
“The Coalition will show leadership and take the necessary decisions to get our economy and our country back on track.”
Other cost of living measures include:
Households and eligible small businesses will also be receiving a further $150 (two $75 payments) off their energy bills in the next six months.
The maximum costs of medicines listed in the Pharmeaceutical Benefits Scheme (PBS) will also be reduced from $31.60 to $25 per script.
The government will seek to pass legislation to cut outstanding Higher Education Loan Program (HELP) and other student debts by 20 per cent and raise the compulsory repayment threshold to $67,000 in 2025–26, up from $54,435.
To help address wage suppression, which the government believes is occurring in industries like child care, hairdressing and construction, non-compete clauses for anyone earning under $175,000 will be banned to make it easier for workers to move to a competing business or start their own.
Rebates for women’s health are expanding, with the rebate for inserting an IUD to increase from $91 to $215, from $61 to $134 for removal and a new rebate for menopause health assessments. There will also be new medications for menopause, contraceptives and endometriosis added to the PBS.
Three days of subsidised childcare will be made available to all families earning under $533,000, whereas previously, parents had to study, work or be looking for work for 16 hours a week to access subsidies.
One popular policy not to return is the increased instant asset write-off, which will reduce back to $1000 from $20,000 as of July.
On the housing front, the government has matched a Coalition pledge to ban all overseas citizens from buying existing homes in Australia that don’t seek to add to the housing stock or boost availability for two years. The ban will cost $5.7 million to put in place and an $8.9 million audit will also be carried out on the land-banking by foreign buyers.
There is a boost for another group of home-buyers, however, with the expansion of the Help to Buy scheme, targeted at first-time home buyers, with the scheme now accessible to single people earning up to $100,000 and couples earning up to $160,000. The government will cover up to 40 per cent of the cost (for new builds, up to 30 per cent for existing homes), which the buyers can buy out over time, and the price cap on eligible properties to be increased, up to $950,000 in Melbourne.
