Federal Budget targeted at family hip pockets

Treasurer Jim Chalmers last night delivered the 2025-26 Federal Budget, focussing on the cost of living, shoring up Medicare, dealing with the housing crisis and lifting investment in education.

Given the imminent Federal Election, much of the budget could be considered election promises rather than guaranteed commitments.

The following are the highlights.

Economic outlook

Mr Chalmers said the economic outlook was being heavily influenced by natural disasters in Queensland and the “storm clouds” that were gathering in the global economy.

He said ex‑Tropical Cyclone Alfred could wipe a quarter of a percentage point off quarterly growth.

In this climate:

The global economy was expected to grow 3.25 per cent for the next three years – its slowest since the 1990s.
Economic growth in Australia is forecast to pick up from 1.5 percent this year to 2.5 percent in 2026–27.
Unemployment is projected to peak lower, at 4.25 percent.
Employment and real wage growth this year will be stronger, and labour force participation will stay near its record high for longer.
Treasury now expects inflation to be sustainably back in the target band six months earlier than anticipated.

The bottom line

The forecast 2025-26 budget deficit is $42 billion
Gross debt will hit $940 billion

Cost of living

The budget includes measure aimed at more hip pocket help for households:

Two new tax cuts for every taxpayer
More energy cost relief
Increasing wages and reforming non‑compete clauses
More bulk billing and cheaper medicines
Student debt relief

Tax cuts

Every Australian taxpayer will receive a tax cut next year and the year after, to top up the tax cuts which began last July.
The average earner will have an extra $536 in their pocket each year when they are fully implemented.
Combined with the first round of tax cuts, this rises to $2190.
The Medicare levy low‑income thresholds will increase, providing extra tax relief for more than a million Australians.

Energy rebates

An extra $1.8 billion in energy bill relief has been funded.
Every household and around one million small businesses will receive energy rebates until the end of 2025.
This will equate to another $150 off bills this year.
The Government will also be using the powers and penalties of the energy regulators and the ACCC to help ensure energy companies offer customers cheaper deals and pensioners receive the discounts they are entitled to.

Lifting real incomes

An additional $2.6 billion has been allocated to fund pay rises for aged care nurses from March this year.
Reforms are being made to non‑compete clauses, aimed at lifting wages by up to $2500 for workers covered by them.

Keeping prices under control

A crack down on supermarkets pricing has been announced. The Government will make the Food and Grocery Code mandatory, increasing penalties and boosting competition.
Excessive surcharging, scams and unfair trading practices will be targeted.

Reducing student debt

20 percent will be cut off all student loan debts, raising the minimum repayment threshold and reducing repayment rates.
Combined with existing student debt relief, the Government says this will equate to a reduction of $19 billion in student debt for more than three million Australians.

Cheaper medicines

The Budget confirmed that the maximum price for a PBS script would drop from $31.60 to $25.
Pensioners and concession cardholders will still pay $7.70 a script
Around $1.8 billion will be invested to list more medicines on the PBS, including lymphoma treatment.

Medicare reforms

$8.5 billion will be invested to lift bulk billing rates and help build the health workforce.
This is aimed at nine out of 10 GP visits being fully bulk billed by the end of the decade.
There will be new incentives for doctors to train as GPs and new scholarships for nurses and midwives.
An extra 50 Medicare Urgent Care Clinics will be funded. These will open on the weekends to take pressure off hospitals and emergency departments.
An extra $1.8 billion has been allocated for hospital funding.
$793 million will be invested in women’s health to creative savings in contraception, improve access to endometriosis and pelvic pain clinics, and improve support during menopause.

Addressing housing

$33 billion has been allocated to help build 1.2 million new homes before the end of the decade.
This includes $54 million to accelerate the uptake of modern methods of housing construction.
Eligible apprentices will get up to $10,000 if they train‑up in the housing construction sector (a doubling of the previous incentive).
The Help to Buy scheme will be extended with changes to the property price and income caps to help 40,000 Australians buy their first home in the next 4 years.
Foreign investors will be banned from buying established homes, and there will be a crackdown on foreign land banking.

Childcare and early learning

From January 2026, the Child Care Subsidy activity test will be replaced with a new Three Day Guarantee.
This will ensure families are entitled to at least 3 days a week of subsidised early childhood education and care.
$5 billion will be spent to expand childcare access across the country and lift the wages of early educators.

Productivity

Non‑compete clauses will be abolished for most workers.
More than 3 million Australians are subjected to these clauses, including childcare workers, construction workers and hairdressers.
The Productivity Commission estimates this reform could lift productivity, reduce inflation and improve GDP by $5 billion.
A national licensing scheme will allow electricians to “work seamlessly” across borders.

Made in Australia

More than $3 billion will be invested to support the production of Australian‑made green metals, like aluminium and iron.

Supporting the regions

$3 billion is being invested in additional equity to complete the rollout of the National Broadband Network.
$17.1 billion has been allocated over 10 years for projects that include $7.2 billion to upgrade the Bruce Highway in Queensland.

Cyclone Alfred