Treasurer Jim Chalmers presented his fourth federal budget on March 25, 2025, marking a pivotal moment as the Labor government gears up for elections later this year. Throughout the budget address, Chalmers emphasized that Australia has importantly turned a corner in its economic recovery. He stated, "Inflation is down, incomes are rising, unemployment is low, interest rates are coming down, debt is down, and growth is picking up momentum." However, he was quick to acknowledge the ongoing cost-of-living challenges many Australians still face.
This year's budget includes various measures aimed at providing financial relief for families, taxpayers, and individuals in specific occupations. With the government hopeful that these measures will resonate positively with voters, the budget also reveals stark divisions between sectors that will benefit and those that might feel left behind.
Winners of the Budget
Taxpayers stand out as the most significant beneficiaries, receiving tax relief over the next few years. From July 1, 2026, the existing 16% income tax rate for individuals earning between $18,201 and $45,000 will decrease to 15%. The rate will drop again to 14% from July 1, 2027. This move is expected to save the average worker approximately $268 in the 2026-27 financial year and around $536 in 2027-28, compared to the previous financial year.
Another group to benefit is Australians holding student debt. Starting June 1, three million borrowers will see a 20% reduction in their outstanding loans, totaling approximately $16 billion wiped off the national debt. This initiative is a response to mounting concerns over student financial burdens.
Additionally, the government has outlined a significant shift in apprenticeship incentives. From July 1, 2025, apprentices in residential construction can look forward to a $10,000 incentive payment. This includes structured payments throughout their training—$2,000 after the first six months, and similar amounts at intervals until completion. This measure aims to bolster the construction workforce as the country seeks to build more homes.
Moreover, significant funding has been earmarked for women’s healthcare. The budget allocates $792.9 million to improve services related to endometriosis, pelvic pain, contraception, and menopause, indicating a focused effort on health issues previously overlooked.
A notable portion of the budget, $789 million, is also aimed at reducing the price of medicines under the Pharmaceutical Benefits Scheme to a maximum of $25 per script for general customers, effective January 1, 2026. Those on pensions and concession cards will see their copayment rates frozen until 2030, enhancing access to necessary medications.
Households and small businesses are set for energy relief with a rebate of $150 on power bills, delivered as two $75 credits through December 31, 2025. This is essential as many Australians grapple with rising energy costs due to inflation.
Lastly, a $2.5 billion allocation is made for pay increases for aged care nurses, recognizing the essential workforce that has been under strain in recent years. With an additional $3.6 billion earmarked for improving wages for childcare workers, the labor government appears committed to enhancing these critical sectors.
Losers in the Budget
However, the budget's relief measures do not extend equally to everyone, resulting in defining losers among various groups. One key sector that remains unaddressed is renters. Despite the government adding $800 million to its Help to Buy shared equity housing scheme, no new assistance comparable to last year’s rent assistance boost was introduced, leaving many still struggling.
Furthermore, despite some increases in welfare payments due to indexation, advocates have drawn attention to the inadequacy of these adjustments, stressing that they do not sufficiently address the financial difficulties many face. "If the Federal Government is serious about addressing the cost of living crisis, it must lift income support payments to at least $82 a day, in line with the age pension," stated Cassandra Goldie from the Australian Council of Social Services.
The agricultural sector appears largely overlooked in this budget, as measures focused predominantly on consumer relief rather than direct support for farmers, despite promises to promote fairness at the farm gate following a recent ACCC report.
Additionally, despite a crackdown on pricing practices in the supermarket sector with $38.8 million allocated for the Australian Competition and Consumer Commission (ACCC), the big retailers are still in the spotlight, under scrutiny for potential exploitation of consumers amid the ongoing cost-of-living crisis.
Moreover, with Australia facing a considerable deficit projected at $26.7 billion, and debts expected to grow into the coming years, the country faces ongoing fiscal challenges that increase scrutiny on the sustainability of these budget measures.
The federal budget has also indicated a continued tough stance on foreign goods, particularly from Russia and Belarus, with trade tariffs extended in response to geopolitical tensions. The economic implications of these tariffs have a bearing on domestic consumers as well.
As this budget rolls out, the government aims for more than just short-term relief. The success of these measures will ultimately depend on the government securing re-election to follow through with the proposed changes and how well they resonate with constituents navigating the ongoing economic landscape.
