On March 25, Treasurer Jim Chalmers unveiled the proposed 2025-26 Budget. It has a strong focus on easing cost-of-living pressures while keeping an eye on economic stability. However, with an election looming, it’s hard to parse what could be viewed as election promises and what will make an impactful change for Australians dealing with a cost-of-living crisis.
On March 27, news broke that Prime Minister Anthony Albanese was calling an election for May 3. Campaign trails here we come!
Here are the salient points we gleaned from the 2025-26 Budget and what it means for you and your wallet, your bills, and your future. Here’s what you need to know.
Lower taxes, but not just yet
If you’re earning a salary, you’ll see tax relief — but not immediately. The government is reducing the lowest income tax rate from 16 per cent to 15 per cent in 2026, with a further drop to 14 per cent in 2027.
While this means more money in your pocket in the long run, the timing means no immediate relief in the next financial year. Also, if Labor are not successful in the upcoming election, there is a chance that the Coalition will not go forward with this proposal. In fact, on March 26, Opposition Leader Putter Dutton has promised to undo the tax cut if elected.
In addition, the budget sets aside funds for a broader economic strategy that will encourage “Buy Australian” campaigns and expand green energy grants for local industries. The government is dedicating $20 million to boost Australian-made products, with $3 billion in grants for iron and aluminium producers to transition to greener energy sources.
The government has also announced excise freezes on beer and other alcohol products, including draught beer, to benefit brewers and pubs, which it announced in recent months.
Cheaper bills promised
Rising electricity prices remain a major concern, and to combat that, the government is extending energy bill rebates. Households are set to receive an additional $150 in support. While this will help in the short term, it doesn’t address the bigger question of long-term energy affordability.
How it will work is that eligible households and small businesses will receive a $150 rebate, distributed in two installments of $75 each, applied directly to electricity bills. These rebates will be automatically processed between July and December 2025, with no action required from most recipients.
This builds on previous relief measures, bringing the total support to up to $800 per small business since 2022-23. Approximately one million small businesses are expected to benefit from this extension.
Additionally, the Government is planning to invest in consumer protections and food security by cracking down on unfair supermarket pricing, supporting fresh produce suppliers, cutting costs on essential items in remote communities, and simplifying planning laws to encourage competition. It’s also targeting excessive surcharges, unfair trading practices, and scams, with over $225 million in funding to strengthen consumer rights and reduce scam losses.
Student debt, wages and limiting non-compete
In a move that is bound to be popular for many students, recent graduates, and millennials in Australia, the Government has promised to cut a combined $19 billion in student loan debt for three million Australians. All outstanding Higher Education Loan Program (HELP) and other student debts is promised to be cut by 20 per cent (however, there’s a caveat: “subject to the passage of legislation). The student loan repayment system will begin reforming from 1 July 2025 (also subject to legislation). Furthermore, the Government is promising to increase the required salary amount a person must earn before they must start paying back their loans to $67,000 in 2025-26.
Outlined in the 2025-26 Budget is the promise to limit non-compete clauses. According to the Budget, the Government will ban clauses for low- and middle-income employees, which should enable workers to move onto higher-paying roles in the same field.
Also promised in the Budget is an investment of $2.6 billion for increased pay for aged care workers from 1 March 2025. A further $3.6 billion is promised to support a wage increase for early childhood education and care workforce.
Healthcare gets a funding boost
If you’re a parent, the budget brings expanded childcare subsidies, aiming to ease the financial burden on families. Medicare is also receiving a boost, increasing the Medicare levy low‑income thresholds by 4.7 per cent for singles, families, and seniors and pensioners from 1 July 2024. There is also increased funding to support bulk billing and access to public hospitals.
An additional $90 million for wage increases, on top of previous funding, aimed at improving pay rates for aged care workers following a Fair Work Commission ruling.
The government has allocated $644 million to establish an additional 50 Medicare Urgent Care Clinics nationwide, increasing the total to 137 clinics. These clinics offer bulk-billed care for urgent but non-life-threatening conditions, operating seven days a week with extended hours and no appointment necessary.
Of the 50 new clinics, 17 will be located in regional, rural, and remote areas, bringing the total number of such clinics in these communities to 48. This initiative aims to improve healthcare accessibility for residents outside major cities.
Additionally, there is an allocation of $1.8 billion designated to fund public hospitals and health services in the 2025–2026 period, aiming to reduce waiting times and ease emergency department pressures.
The budget also includes $689 million over four years to reduce the cost of most medications listed on the Pharmaceutical Benefits Scheme (PBS), capping prescription costs at $25, thereby saving households approximately $200 million annually. An investment of $792.9 million is directed specifically towards women’s reproductive health and menopause services, something the government announced recently.
Housing budget plans
With affordability a growing concern, the government is pledging to build 1.2 million new homes by 2030. This could help ease supply shortages over time, but it remains to be seen how quickly these homes will be delivered and whether they will be enough to meet demand.
To speed up construction, the government has allocated $54 million to promote the use of prefabricated and modular homes, which can be built much faster than traditional brick and mortar houses.
However, renters and first-home buyers may feel a little left out. The Help to Buy program is being expanded by $800 million, but the program only offers space for 40,000 new participants.
The government is allocating $3 billion to complete the rollout of the National Broadband Network (NBN), which includes upgrades to 622,000 households, aiming to improve internet accessibility for those in underserved areas.
What’s next?
While the budget brings relief measures, Australia is facing a projected deficit of $27.6 billion. Inflation is expected to hover around three per cent next year, meaning prices may remain high for some time. The government has chosen to focus on short-term relief rather than deep structural reform, leaving open questions about long-term economic growth.
For most Australians, this budget provides modest relief but no major shake-ups. You might see lower energy bills, better healthcare access, and eventual tax cuts — but the real test will be whether these measures help ease financial pressures in the years ahead. And that can only happen if Labor wins the next election. Prime Minister Anthony Albanese has called for the election on May 3, 2025.
What was the Budget response from the Opposition?
Every Budget gets to be rebutted, and the 23025-26 Budget is no different. After Labor outlined its plans for the Budget, Peter Dutton, the current Leader of the Opposition, who has led the Liberal Party since 2022, gave his party’s response. He made several claims and policy announcements aimed at reducing the cost of living for Australians
First up, Dutton has promised to repeal the tax cuts which Labor promised, deeming them a “tax cut cop-out”.
Cost of living and energy promises:
The biggest (and most tantalising) policy he promised was halving the fuel excise for 12 months. The $6 billion plan would save an average household with one car $14 a week on average. Heavy road vehicles would be included in the policy.
In addition to the fuel excise, Dutton announced his National Gas Plan, which aims to prioritise Australian gas for domestic use and reduce the amount of gas going overseas. A lofty goal, how is he going to do it? He proposes an east coast gas reservation policy to ensure that a percentage of gas exports are retained for domestic use, which would secure 10-20 per cent more of the east coast’s gas needs. Dutton also wants to decouple domestic gas prices from international markets to protect Australians from global price fluctuations. Whether that would protect prices remains to be seen. To boost supply, the plan includes fast-tracking gas projects, auditing development-ready projects, and creating a $1 billion Critical Gas Infrastructure Fund to improve gas pipelines and storage.
Nuclear energy as a long-term solution did get a mention, but as most of the commentary surrounding nuclear energy remains theoretical, he did not go into too many details (unlike the National Gas Plan). He again made his claim that having nuclear energy would be 44 per cent cheaper than Labour’s, however, it’s not something that he would be able to deliver within the next decade (or more).
The Coalition is also promising $50 million for food charities to enable them to scale up and expand their services and to “include school breakfast programs.”
Housing and migration promises:
Dutton’s housing affordability plan includes cutting permanent migration by 25 percent, which he says should help reduce housing demand. However, it’s unclear whether it would make much of an impact, but it could negatively impact the workforce and economy. Furthermore, he plans to ban foreign investors from purchasing existing homes for two years. He wants to invest $5 billion to get stalled housing projects back on track and build 500,000 new homes. First-time homebuyers could access up to $50,000 from their superannuation for a home deposit; however, this could leave them vulnerable when they retire.
Healthcare promises:
In healthcare, Dutton promises $9.4 billion in investment, which includes expanding access to mental health services. He proposes to double subsidised mental health sessions and reduce the Pharmaceutical Benefits Scheme (PBS) co-payment to $25. An additional $500 million would be dedicated to women’s health, and $400 million to youth mental health services, addressing gaps in care for vulnerable groups.
Businesses support
To support small businesses, Dutton plans to raise the instant asset write-off to $30,000 and offer subsidies for hiring apprentices, with a focus on construction. He also intends to simplify casual work laws. Additionally, Dutton has promised to offer $20,000 tax deductions for business-related dining expenses, which he claims will enable businesses to hire more staff/increase hours for workers, as less money could go towards staff parties.
Related stories
Native ad body.
Native ad body.
Native ad body.
