2025 Australian federal budget

2025–26 Australian federal budget

Appropriation Bill (No. 1) 2025-2026
Submitted	25 March 2025
Submitted by	Jim Chalmers, Stephen Jones, Katy Gallagher
Submitted to	House of Representatives
Parliament	47th Parliament of Australia
Government	Albanese government
Party	Australian Labor Party
Treasurer	Jim Chalmers
Total revenue	A$750.5 billion
Total expenditures	A$785.7 billion
Tax cuts	A$536 on average
Deficit	A$42.1 billion
Debt	Gross 35.5% of GDP (A$1,022.0 billion), Net 21.5% of GDP (A$620.3 billion)
Website	budget.gov.au
‹ 2024 2026›

The 2025–26 Australian federal budget speech was delivered at approximately 7:30pm on Tuesday, 25 March 2025 by Treasurer Jim Chalmers. The budget dictates how the Australian Government will allocate an estimated A$785.7 billion of funds across the various departments of the federal government, and to state and territory governments. It is the fourth federal budget handed down by the Labor Party since their victory in 2022 and the last to be handed down before the May federal election.

Prior announcements

Prior to the budget speech by the treasurer, certain policies were announced, those including: a return to deficits, further power bill relief worth $150 for every bill payer, a boost to funding for Medicare bulk-billing services worth $8.5 billion, funding for additional Medicare urgent-care clinics, cheaper medicines through the Pharmaceutical Benefits Scheme (PBS) with this policy measure worth $689 million, a cut to HECS-HELP debts for students worth $500 million, creating a permanent free TAFE system, the government will spend $9.2 billion on social and affordable housing, an expansion of the government's help to buy scheme — in this scheme the government will part own your home with the option to buy back that equity — with the changes to be worth $800 million and the total policy measure to cost $6.3 billion, the activity test requirement for childcare to be abolished, $7.2 billion to go towards upgrading the Bruce Highway in Queensland, $2 billion for green aluminium, 2.4 billion on a support package for the Whyalla Steelworks that entered voluntary administration in February, a $1 billion boost to defence spending, $45 billion for spy agencies, $272 million on Australian-made radar systems, $650 million for long-range missiles, $262 million for the infrastructure needed to support the development of the AUKUS nuclear submarines, a freeze to the draught beer excise for two years from August which will lose the budget about $200 million in tax revenue, $2.9 million for a yet-to-be announced response for the ACCC's report into the supermarket sector.

Political impact

The 2025–26 budget was moved from May to March due to the imminence of the 2025 Australian federal election. There was speculation the election could have been held in April but that could not come to fruition due to the impacts of Cyclone Alfred.

Political response

The shadow treasurer of the opposition Coalition, Angus Taylor, stated that the Liberal and National parties will not support the tax cuts put forward in the budget measures.

In the opposition's budget reply held during the second reading debate of the appropriations bill revealed that the opposition plans to spend introduce a national gas plan to lower bills by creating a domestic reserve supply of gas which Peter Dutton said would lower prices by 10–20%, the Coalition would also reduce the fuel excise from 50 cents to 25 cents, the Coalition also reaffirmed its plans to cut immigration numbers, the Coalition would increase the amount that small businesses can claim on tax write-offs from $20,000 to $30,000 and that the Coalition would implement a previously announced policy that would allow small businesses making up to $10,000 to claim up to $20,000 on meal expenses, the Coalition said they would cut roles in the public sector, the Coalition will invest $9 billion in Medicare, they will also cap medicines at $25 following the government's announcement, the Coalition also plans to invest $400 million in mental health services.

Senator for the Australian Capital Territory (ACT) David Pocock stated that the budget fails to deliver adequate funding for services and infrastructure for the ACT.

Senator for Tasmania Jacqui Lambie state that the tax cuts going to politicians and rich people, this follows her criticism that previous cost-of-living relief such as power bill subsidies should be means-tested.

The Greens have proposed taxing profits of large corporations to pay for their plans to put dental care into Medicare, mental health care into Medicare, cap rent increases, lower mortgages and take strong climate action.

Post-speech developments

Further to the Greens' announcements regarding the budget, they have announced that they will spend at least 1% of the budget on environmental measures, which would see the government spend an additional $17 billion.

On 26 March 2025, the tax cuts proposed in the budget passed both chambers of parliament. The Coalition has vowed to repeal these tax cuts if elected to office at the May election.

Economists' reactions

EY's chief economist Charelle Murphy, and senior economists Paula Gadsby and Nicholas Hordern stated that they were disappointed not to see substantial funding for innovative practices in business or for encouraging competitive practices, but noted that there were cost-of-living relief measures at the expense of fiscal repair and business assistance.

Policies

The budget will:

• Ban non-compete agreements for low and middle-income workers
• Cut student debt by 20% and increase fairness in the system
• Spend $784.6 billion to make PBS scripts cost a maximum of $25 and subsidise new and affordable medicines with an investment of $1.8 billion
• Deliver $2.6 billion to increase award wages of aged care nurses
• Deliver $1.8 billion to extend energy bill relief to the end of the calendar year
• Invest $7.9 billion to make nine out of ten visits to the GP bulk billed by 2030 for 4,800 bulk-billed GPs
• Deliver a $1.8 billion funding boost to public hospitals
• Fund the creation of an additional 50 Medicare urgent care clinics
• Spend $662.6 on measures to ensure Australia has a large workforce of doctors and nurses
• Spend $792.9 billion to deliver lower costs, more choices and better healthcare for women.
• Ban foreign buyers from purchasing existing houses for up to two years from 1 April 2025
• Spend $5 billion towards delivering a universal early childhood education and care system
• Guarantee eligibility for children to go to an early childhood education centre via a subsidised scheme
• Fully fund public schools
• Make free TAFE permanent
• Reform universities as per the agreed Universities Accord
• Further the government's future made in Australia policy, with a further $3 billion in green metals production
• Expand the Clean Energy Finance Corporation with a $2 billion investment
• Provide $4 billion to address violence against women and drive economic equality
• Provide $842.6 to support critical first nations services in remote communities of the Northern Territory
• Spend $432.8 million to assist people with a disability
• Deliver a tax cut worth $536 for most workers by reducing the tax bracket for these earners from 16% down to 15% from July 2026 with a further reduction in July 2027
• Spend $50 million to control grocery prices in remote first nations communities
• The first new PBS listings for oral contraceptive pills, and menopausal hormone therapies
• 2,000 government-funded GP training places by 2028
• Spend $3.6 billion to fund a wage increase for the early childhood education and care workforce
• Respond to the final report of the royal commission into defence and veteran suicide
• Spend $291.6 billion to deliver aged care reforms
• Spend $364.5 million to provide general supports for disabled people and their carers
• Increase opportunities for first nations people to buy their own home
• Provide business coaching for First Nations women
• Spend $1.3 billion to support strong outcomes for First Nations communities
• Build on the government's $4 billion commitment to women's safety
• Spend $3.9 billion to allow those fleeing gender-based violence scenarios to seek legal help
• Expand the government's help to buy scheme
• Provide up to $10,000 for apprentices in eligible home construction occupations
• Deliver a 45% increase in rent assistance
• Provide $50 million to develop Australia's construction capabilities in modern construction methods
• Deliver 18,000 homes under rounds one and two of the housing Australia future fund
• Provide states and territories with $120 million to remove barriers to modular and prefabricated construction
• Revitalise competition policy with a $900 million national productivity fund
• Deliver $17.1 billion in infrastructure investments across Australia
• Deliver up to $3 billion to complete the national broadband network
• Ensure banking services remain in regional places
• Deliver $330 billion to help the Australian Defence Force
• Deliver $20 million to support a buy Australian campaign
• Deliver energy efficiency grants to small and medium-sized businesses
• Provide $1.2 billion to respond to the aftermath of Cyclone Alfred
• Deliver up to 13 weeks of income support
• Deliver payments upon the meeting of eligibility criteria
• Deliver $10,000 business continuity payments
• Provide 3.2 million to help emergency service workers with mental health support

Financial measures

Balance sheet

It was projected that the budget would result in a net deficit after three years of surpluses, with a predicted loss of A$42.1 billion.

The budget includes total government spending estimated to total A$785.7 billion.

Spending and revenue by category

The 2025-26 Budget Paper 1 provides a high-level overview of government spending and revenue projected from the budget.

Federal government spending by major category

Major category	Spending	Percentage of government spending
Social security and welfare	A$290.9 billion	37.0%
Health	A$124.8 billion	15.9%
General purpose inter-governmental transactions	A$99.9 billion
Other	A$149.7 billion	19.1%
Defence	A$51.4 billion	6.6%
Education	A$54.0 billion	6.9%
General public services	A$31.4 billion	4.0%
Interest	A$23.9 billion
Transport and communication	A$16.5 billion
Fuel and energy	A$19.2 billion

Federal government revenue by major category

Major category	Revenue	Percent of government revenue
Individuals and withholding tax	A$335.6 billion	47.1%
Company tax	A$141 billion	19.9%
Goods and services tax	A$92 billion	12.9%
Non-taxation revenue	A$52.6 billion	7.4%
Excise and customs duty	A$47.28 billion	6.6%
Other taxes	A$23 billion	3.2%
Superannuation fund taxes	A$19.8 billion	2.8%

External links

• Official website