Welcome back to another federal Budget! At the forefront of everyone’s minds and at the ‘front and centre’ of the Budget is the overwhelming cost of living crisis. Let’s take a deep dive into how the Labor government has aimed to mitigate the effects of increasingly expensive groceries, give renters some relief, combat energy bills, cheapen medicines, strengthen Medicare, and protect workers. This year’s budget has some positive elements, but is still underdelivering on Albanese’s promise of a “fair go for Australia”.
Australia has been under the Labor government for the better part of three years, up to their fourth budget. With the federal election coming up, Labor has only $1.5 billion allocated between 2025-2026 for “decisions made but not yet announced”; comparative to previous allocations of up to $10 billion, this suggests Labor has made the strategic decision to slow-rollout almost all their election policies before or during the Budget.
Tax Cuts
Labor plans for “all 14 million taxpayers” to receive another (tiny) tax cut in 2026 and 2027, on top of the tax cuts that have been rolling out since 1 July 2024. Described as “modest” Labor argues that these tax cuts will still make a difference “in combination with their other policies,” as repeatedly refrained by Treasurer Jim Chalmers during his address.
Observing new personal tax rates, the main changes are in the $18, 201 – $45,000 wage bracket which experienced tax rates of 16% from 2024-2025 and 2025-2026, which are to reduce by one percentage point to 15% from 1 July 2026 and then 14% from 1 July 2027.
The average tax cut is expected to be around $43 per week in 2026-2027 and around $50 per week in 2027-2028.
Labor aims to offset “dangerous bracket creep”. Bracket creep occurs when wages are adjusted to account for inflation. When people in lower thresholds move up, they end up in a higher tax bracket which is not offset by their new wage. Consequently, people end up having less purchasing power.
These new tax cuts mitigate this by lowering average tax rates for all taxpayers, namely low and middle income earners. With tax cuts, workers on average are expected to pay $30,000 less tax from 2024-2025 to 2035-2036, relative to 2023-2024 tax settings.
The Government’s combined tax cuts are expected to increase labour supply by 1.3 million hours per week, equivalent to more than 30,000 full time jobs, relative to the 2023-2024 tax settings.
Honi found it frustrating that the tax cuts are applying to all voters equally, instead of being scaled by income and targeted to low-income earners more specifically. When questioned by journalists as to why these tax cuts have been implemented when the budget is absent of any measures to increase Centrelink payments (such as JobSeeker and Youth Allowance) Chalmers stated that the tax cuts are to solve the problem of bracket creep and skirted around the question. He repeated that although it is a “modest cut, in combination with other policies it will benefit Australians”. That’s his answer for everything! Honi believes the rich can and should be required to pay higher taxes to allow either larger tax cuts or increased social services for lower income earners. It is an absolute shame that Labor has latched on to marginal tax cuts and refused to deliver appropriate cost of living mitigation for the millions of vulnerable Australians on Centrelink.
Renters & Relief
The Government has not increased rates of Commonwealth Rent Assistance (CRA) for renters,. Greg Jericho, Chief Economist at the Australia Institute, tells Honi that “We still seem very much stuck in the 1980s and 1990s belief that renters aren’t a big part of the voting public.” This rings true in the face of the Budget’s lacklustre energy towards renters rights, which decrees that it is “moving towards limiting rental increases to once a year” through A Better Deal for Renters, with no concrete measures, performance indicators, or financial statistics to solidify neither the claim nor the process. Alongside no increase in financial assistance, there is also no proposed cap on excessive rent increases, with the ACT being the only jurisdiction in Australia which caps rent increases to a maximum of 10% above the Consumer Price Index (CPI) for Canberra.
The Government has, however, refined the Build to Rent tax concessions announced in the 2023-24 Budget to help increase rental housing supply, including the supply of affordable tenancies, and to provide greater security and stability for renters, including stable 5-year tenancies. This Budget severely lacks any proposed reform or financial alleviations for student accommodation, which is notably expensive and unstable as private companies hold a monopoly over the commercial student accommodation sphere and prices have increased significantly post-COVID.
As housing and renting prices continue to increase, renting is no longer a step towards home ownership but often a permanent housing situation for millions of Australians. The Labor party should aspire to provide policy that ensures renter’s stability and quality of life, if they want to lock in the ‘renter vote’ this Election.
Energy
The Labor Government has promised $1.8 billion to extend energy bill relief to the end of the year for every household and small business, on top of the nearly $5 billion of bill relief being delivered so far. Households and small businesses will receive two $75 rebates off their electricity bills through to 31 December 2025.
The Government plans to help small businesses by cutting red tape. They have extended energy bill relief to 31 December 2025, with one million eligible small businesses able to access up to $800 of energy bill relief since the 2023-2024 Budget. Commonwealth and state energy bill relief has already helped to lessen electricity price increases, with prices dropping 25.2 per cent across 2024.
The Labor Government will provide $2 billion to recapitalise the Clean Energy Finance Corporation to invest in renewable energy, energy efficiency and low emissions technologies. The Government has already provided funding for this measure starting from 14 February 2025.
Our Beloved PBS
Labor has promised $1.8 billion to list more life-changing medicines on the Pharmaceutical Benefits scheme (PBS).
https://datawrapper.dwcdn.net/conRT/3/The Government will provide $784.6 million over four years from 2025-2026 with $236.4 million per year ongoing, to lower the (PBS) general patient co-payment from $31.60 to $25 starting 1 January 2026. This measure extends from their plan to secure cheaper medicines from 2023 and 2024.
Labor will also allocate $690 million to lower the cost of PBS-listed medicines from $31.60 to $25, which the Coalition has also agreed to uphold.
Does our Government Even Medi-care?
The Labor Government promises $7.9 billion to increase GP bulk-billing in Australia. They plan for 9/10 GP visits and 4,800 practices in Australia to be fully bulk-billed by 2030. This is the largest single investment in Medicare since its creation in 1984. The Coalition has promised to match the Budget spending on bulk billing, meaning this policy will benefit all Australians regardless of the federal election outcome.
The Government also aims to spend $657.9 million to open another 50 Medicare Urgent Care Clinics, bringing the total to 137 nationwide, with an additional $1.8 billion to fund public hospitals.
Starting on the 1st of July 2024, the Government will increase the Medicare levy low-income thresholds by 4.7% for singles, families, and seniors. This change will ensure that over one million Australians on lower incomes remain exempt from paying the full Medicare levy or are subject to a reduced levy rate.
The increase to the thresholds is estimated to decrease receipts by $648.0 million over five years from 2024–2025.
For students in particular, the family income thresholds will increase by $4,216 for each dependent child or student, up from $4.027.
Data: ABS
Patient experience is still likely to be subpar; the critical GP shortage, which the Labor Government has failed to address on a structural reform level, has resulted in understaffed clinics and overworked GPs. Also in the realm of healthcare, dental remains completely inaccessible as it lies outside Medicare; this remains an urgent issue which Labor has yet to propose a concrete solution for. And despite critical psychiatrist shortages due to medical union strikes, this years Budget — to Honi’s severe disappointment, albeit not our surprise — was utterly absent on any policy to combat the mental health crisis.
A Fair Go for Families, Farmers, and… Students
The government aims to help consumers get a better deal at checkouts. Labor is boosting funding to the Australian Competition and Consumer Commission by $38.8 million to challenge deceptive pricing practices in the supermarket and retail sector. Finally!
They are providing $2.9 million to support fresh produce suppliers to enforce their rights under the Food and Grocery Code of Conduct. The government has mandated the code and introduced multi-million dollar penalties if supermarkets breach the code.
The government is also reducing the costs of 30 essential products, such as milk, fruit, vegetables and nappies in stores in remote First Nations communities to improve food security and ease the cost-of-living crisis.
I feel a zap through my veins every time I tap my card and see those ridiculous surcharges. Society’s over-reliance on card transactions is costing us. I buy an $8 sandwich, and suddenly I’m being charged $8.34. Give me my 34 cents back, this stuff builds up! Seems like the government will do something about it, but at the moment it’s a promise of planning and preparation, as opposed to actual implementations.
The government is “prepared” to address excessive card surcharges by banning debit card surcharges, subject to further work by the Royal Bank of Australia (RBA) and safeguards to ensure both consumers and small businesses can benefit from lower costs.
The government will collaborate with state and territory governments to ban unfair trading practices and strengthen regulators’ ability to act against businesses that fail to uphold consumer guarantees under Australian Consumer Law.
Funding of $6.7 million is being provided in 2025-26 to extend the operation of the National Anti-Scam Centre, building on the $180 million the Government has invested since 2022-2023 to combat scammers. Since then, Australia has seen annual scam losses decrease by over $1 billion since 2022.
Social Welfare
Data: ABS
Beyond tax indexation, there is little change to welfare. Treasurer Jim Chalmers has claimed that “tax relief for working people, strengthening Medicare, cheaper medicines, energy rebates, and slashing student debt” are the government’s main avenues for boosting social support.
But after scanning the endless pages of Budget documents, it’s clear that while there is plenty on cheaper medicines and Medicare, information on Centrelink is scarce. The Budget notes that Services Australia is expected to grow in response to rising demand, driven by an ageing population, shifting demographics, and new support measures like paid parental leave, which has resulted in a 35% increase in Medicare and Centrelink claims since 2012. What we do know is that between 2023 and 2024, Services Australia staff completed 1.2 million Centrelink claims and Medicare-related activities — yet the detail beyond that is limited.
First Nations
To help close the gap amongst First Nations Australians, the government is investing $1.3 billion over six years from 2024-2025. This adds to previous investments that deliver services and infrastructure for First Nations Australians, including the Northern Territory remote housing agreement and the $706 million Remote Jobs and Economic Development Program.
To provide opportunities for First Nations businesses, the government is investing $23.9 million over five years from 2024-2025 over five years to strengthen the Indigenous Procurement Policy.
They are also giving $3.4 million over three years from 2025-2026 to establush a place-based busines coaching and mentoring program for First Nations businesswomen and entrepreneurs.
Albanese’s government is also boosting Indigenous Business Australia’s Home Loan Capital Fund by $70.9 million over two years from 2025-2026 to increase home owning opportunities for First Nations people.
The government plans to provide $842.6 million over six years from 1 July 2025 towards Northern Territory Remote Aboriginal Investment, in partnership with the Northern Territory government and the Aboriginal Peak Organisations Northern Territory. They aim to improve health, safety and education outcomes. 2024 had a similar budget of $4 billion to improve overcrowding in remote area housing in the Northern Territory and $2.4 billion toward education, health and jobs. Labor is simply continuing on from that.
Workers Rights: Non-Compete Clauses
Non-compete clauses are contractual terms which restrict employees from engaging in competing activities — such as pursuing higher-paying work in the same industry — after their employment ends, which restricts their financial mobility and autonomy. This Budget is removing non-compete clauses which more than 3 million Australian workers are covered under, in industries such as childcare and construction. It will apply to workers earning less than the high-income threshold in the Fair Work Act, which is $175,000. This is spurned by the Treasury’s Competition Review being informed of the misuse of non-compete clauses with vulnerable people, including minimum wage workers being sued by former employers for switching jobs.
This budget presumes that the increase in decision-making freedom for employees will unlock access to higher-paying jobs for these minimum wage workers, either through moving workplaces or enabling more competition in industries such that wages naturally increase across the board. According to Chalmers, the Productivity Commission stipulates that this will add $5 billion in growth to the Australian economy.
Allowing workers to maximise their earnings will also result in a “4% wages benefit” of approximately $2,500 per year for the average worker. Reducing anti-competitive behaviour from businesses is at the forefront of this Budget, with the aim of a more competitive economy hopefully lifting currently underpaid workers into better economic opportunities and revitalising previously stifled industries.
This is a proposal that is disappointingly most likely contingent on re-election; following consultation and passage of legislation, the reforms will take effect from 2027, “operating prospectively to give businesses and workers time to adjust”. Labor has had the political capacity to enact these changes — particularly given they are enforcement-related as opposed to strictly fiscal — in the last three years. The announcement of election-contingent benefits for workers under the high-income threshold, many earning minimum wage, only towards the end of their term, reads as an electorally strategic move rather than a genuine economic solution for workers from a so-called workers rights party.
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Overall, Labor has promised some degree of relief for Australians. However, this Budget ignores crucial policy areas and staunch measures to significantly reform key issues — such as growing cost of living pressures on the working class, the GP shortage, mental and dealth healthcare, and excessive rental increases — are shamefully absent. This year’s budget is filled with incremental measures, leaving room for the Labor party to, in the lead up to the 2025 Federal Election, dangle policy in front of us like a carrot.
