Treasurer Jim Chalmers has delivered his fourth federal budget, shaping economic policies before the upcoming election. The budget introduces tax relief, infrastructure investment, and sector-specific funding, while some groups see reduced support.
Winners
Taxpayers to Receive Additional Tax Relief
Taxpayers will benefit from further tax cuts in 2026-27 and 2027-28. The government will provide up to a $256 cut in the first year, which will double the following year.
Medicine Prices Reduced Under PBS Expansion
The government has allocated $784.6 million to lower medicine costs under the Pharmaceutical Benefits Scheme (PBS). Medicine prices will drop to a maximum of $25 per prescription. Families filling four prescriptions per month could save $316 annually. The government will also invest $1.8 billion to list new medicines under the PBS.
Figure 1: Medicines on the PBS will get cheaper thanks to funding contained in the budget
Funding for Social Cohesion and Security Upgrades
A $178 million five-year package will support multicultural media and African-Australian community groups. The budget includes $31 million for restoring Melbourne’s Adass Israel Synagogue and enhancing security. Jewish and Muslim community sites will receive $60.4 million for security improvements.
Infrastructure Projects Receive Billions in Funding
The government will invest $17.1 billion in major infrastructure projects over ten years. This includes $7.2 billion for upgrades to Queensland’s Bruce Highway. Other projects include:
- Sunshine Station in Victoria
- Terrigal Drive in New South Wales
- Fifteenth Avenue in Sydney ($500 million)
- Kwinana Freeway in Western Australia
- Sturt Highway duplication in the Northern Territory
- Arthur Highway upgrades in Tasmania
- Curtis Road level crossing removal in South Australia
Disaster Recovery Efforts Strengthened
The government will allocate an additional $1.2 billion for disaster recovery following ex-Tropical Cyclone Alfred. This is on top of $11.6 billion previously provisioned for recovery efforts over four years.
Continued Military Aid for Ukraine
Australia will provide an additional $17 million in military assistance to Ukraine. The package includes communication systems, artillery components, and firearms. Since the war began, Australia has committed over $1.5 billion in aid to Ukraine.
Funding for Indigenous National Parks and Remote Communities
The government will extend lease agreements with traditional owners of Booderee, Kakadu, and Uluru-Kata Tjuta national parks with a $55.2 million investment over four years. Additional funding includes:
- $50 million for low-cost grocery items in remote stores
- $37 million for potable water supply upgrades in the Torres Strait
Australian Products Promotion Receives Investment
The government will allocate $20 million to initiatives promoting Australian-made products. This move comes as global trade tensions increase, particularly in response to United States President Donald Trump’s tariff measures.
Households and Small Businesses Receive Energy Rebates
The government will extend last year’s energy rebate scheme with an additional $1.8 billion. Households and small businesses will receive $150 off their energy bills, split into two $75 rebates before the end of the year.
Women’s Healthcare Receives a $792.9 Million Boost
The government will invest $792.9 million in women’s healthcare. The funding will improve access to treatment for endometriosis, pelvic pain, contraception, and menopause-related healthcare.
Student Loan Debt Slashed by $16 Billion
Three million Australians will see their student loan debt reduced by a combined $16 billion. The government will cut total debt by 20 per cent from June 1.
Figure 2: Any student with debt will get a 20 percent discount from 1st June
Non-Compete Clauses to Be Banned for Many Workers
The government will ban non-compete clauses for workers earning less than $175,000 annually from 2027. This measure is expected to increase GDP by $5 billion and lift wages by an average of $2,500.
Pay Increases for Aged Care and Childcare Workers
Aged care nurses will receive $2.6 billion in wage increases over five years. The budget also includes $3.6 billion for childcare worker pay rises.
Apprentices to Receive Higher Incentives
Apprentices in the housing construction industry will receive $10,000 in incentive bonuses, double the previous amount. The government aims to increase the workforce for its housing initiatives.
Beer Tax Increase Paused
The government has halted indexation on the alcohol excise for draught beer for two years. This pause will cost the budget $165 million over five years.
Figure 3: The Albanese government has capped the excise on draught beer for the next two years
Support for Green Metal Manufacturing
The budget includes $3 billion to support Australia’s steel and aluminium sector. The funding aims to boost locally made “green” aluminium and iron production.
Losers
Renters Face Limited Support
The government will add $800 million to the Help to Buy shared equity housing scheme. However, there are no significant new measures to assist renters struggling with high costs.
Figure 4: Renters have missed out in the budget
Budget Returns to Deficit
After two consecutive surpluses, the budget forecasts a $27.6 billion deficit. Revenue upgrades federal have slowed, and declining tobacco excise collections will reduce revenue by $7 billion through 2028-29.
Farmers Receive Minimal Direct Support
The budget contains few new measures specifically for farmers. Despite the government’s commitment to fair pricing at the “farm gate,” there are no major industry-focused initiatives.
Major Supermarkets Face Greater Scrutiny
The government will provide the Australian Competition and Consumer Commission (ACCC) with $38.8 million to investigate supermarket pricing practices. The federal crackdown aims to address misleading and deceptive pricing conduct.
Welfare Recipients See No Major Payment Increases
Welfare payments increased due to routine federal indexation, but the government did not introduce additional boosts. The Australian Council of Social Service (ACOSS) had called for JobSeeker payments to rise to $82 a day.
Figure 5: Welfare recipients haven’t received a new boost to their payments
Sugar Tax Advocates Ignored
The government did not introduce a tax on sugar-sweetened drinks, despite calls from the Australian Medical Association. The proposed tax could have generated $3.6 billion in revenue.
Russia and Belarus Face Extended Trade Tariffs
The government will extend 35 per cent tariffs on goods from Russia and Belarus for two more years. The tariffs will remain in place until October 24, 2027.
Also Read: Qantas Slashes Airfares in 72-Hour Sale, Offering Over One Million Discounted Seats Starting at $99
Foreign Investors Banned from Buying Existing Homes
Overseas buyers will be prohibited from purchasing existing homes in federal Australia for two years, starting next month. This measure aims to ease housing market pressures. The federal government will lose $90 million in foreign investment application fees over five years.
Illegal Tobacco Market Cuts Government Revenue
The rise of illegal tobacco sales is reducing federal tax revenue. The government has downgraded expected excise collections by $6.9 billion over five years.
Figure 6: The rise of illegal tobacco sales is reducing tax revenue
Migration Numbers Set to Decline
Treasury forecasts net overseas migration to drop from 335,000 this federal year to 260,000 next year and 225,000 the following year. The government has introduced measures to limit international student numbers, though a hard cap has not been legislated.
Instant Asset Write-Off to End
The government will not extend the instant asset write-off scheme federal beyond July. The benefit, which allowed businesses to claim $20,000 in tax deductions, will revert to $1,000.
Consultants and Contractors Face Reduced Government Spending
The government will cut outsourcing costs by $720 million over four federal years. This follows efforts to limit public service reliance on consultants, particularly after the PwC tax scandal.
The 2025 federal budget introduces federal wide-ranging policies with federal economic, social, and industry implications. While some groups receive financial federal relief and funding, others face increased scrutiny or reduced support.
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