2025 Budget Analysis

Taxpayers are being promised $10 a week of relief in a pre-election sweetener, as Jim Chalmers lays out the economic case for a second term of a Labor government.

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In his fourth federal budget handed down on Tuesday night, weeks before Australians go to the polls, the treasurer revealed the average earner would be $536 a year better off once the tax cuts are fully implemented.

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But workers will have to wait more than a year before they get the first hit of additional hip-pocket relief.

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The first round will be from July 2026, with those on an average income (about $80,000) getting a $268 boost, with the second round coming in from July 2027.

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After the government’s 2024/25 tax cuts are included, it’s estimated taxpayers will be more than $2500 a year – or about $50 a week – better off overall in 2027/28.
 

The cuts will cost $17 billion over the next four years, but Dr Chalmers said the first tax rate would be at its lowest level in more than 50 years.

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“These additional tax cuts are modest but will make a difference,” the treasurer said.

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The tax measures are among multiple cost-of-living measures that have been locked in by the government in a pitch to voters before the federal election, due to be held in May.

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Dr Chalmers said the economy was “turning a corner” after previous years of high inflation, insisting better days were to come despite global uncertainty.

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“The plan at the core of this budget is about more than putting the worst behind us. It’s about seizing the best of what’s ahead of us,” he said.

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“We’ve come a long way, but there’s more work to do. This budget is our plan for a new generation of prosperity in a new world of uncertainty.

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“It’s a plan to help finish the fight against inflation.”

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The budget comes as Australia and other countries brace for further tariffs imposed by US President Donald Trump, after he targeted steel and aluminium exports.

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A $20 million Buy Australia campaign will be set up in response to the tariff threat, which will encourage shoppers to buy local products.

The treasurer said the budget was a “platform for prosperity in a world of uncertainty”.

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Among the cost-of-living measures already announced were a further $150 in power bill relief for households and one million small businesses, to be handed out in two lots of $75 rebates through to December, under an $1.8 billion package.

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Health measures have been reiterated through $7.9 billion to expand bulk billing to 90 per cent of GP appointments by 2030, and an extra $644 million to build more urgent care medical clinics.

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Scripts for medicines on the Pharmaceutical Benefits Scheme will also be capped at $25 for non-concession card holders.

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The low-income threshold for the Medicare levy has also been lifted by more than $1200 for singles and about $2700 for families.

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Student loans would also be cut by 20 per cent for all three million people with a HECS debt, which would wipe $16 billion from all balances.

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From July, students can also earn more before they would have to repay their remaining debt, with the threshold rising from just over $54,000 to $67,000.

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The budget also included funding for the consumer watchdog to crack down on misleading conduct by major supermarkets, with more than $38 million set aside.

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An extra $240 million will also be spent for states and territories to relax planning laws to allow more supermarkets to open and increase competition in the sector.

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First home-buyers will also be helped through an $800 million expansion of the Help to Buy scheme, which allows people to purchase a property with a lower deposit.

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The government will set aside almost $6 million to enforce a ban of foreign buyers purchasing a home in Australia for two years, which starts in April.

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Andrew Brown
(Australian Associated Press)