The 2025-2026 Australian Federal Budget outlines plans addressing cost-of-living challenges, enhancing healthcare, improving housing affordability, expanding renewable energy investments, and strengthening economic resilience amidst global uncertainties, striking a balance between immediate needs and long-term sustainability goals.
Treasurer Jim Chalmers’ 2025-2026 Federal Budget, delivered amidst political and economic challenges, provides a detailed roadmap aimed at addressing key national priorities. With an election on the horizon, the budget reflects a balance between providing cost-of-living relief and positioning Australia for long-term economic resilience through tax reforms, health investments, housing initiatives, and renewable energy commitments.
Here we unpack the core elements of this budget and explore what they mean for Australians:
Cost-of-living relief and tax reform
An inclusive focus on easing the financial pressures facing households dominates the budget. One of its key components is a $17 billion tax cut, staggered over 2026 and 2027. The first reduction sees the tax rate on incomes between $18,201 and $45,000 cut from 16% to 15% in July 2026, followed by a further reduction to 14% in July 2027. These measures, projected to save average taxpayers $536 annually by full implementation, aim to alleviate economic pressures as Australians grapple with persistent inflation and rising living costs.
The Medicare levy low-income thresholds will also increase from July 2024, offering relief to lower-income households. Singles earning under $27,222 and families with incomes below $45,907 will see reduced Medicare payments, underscoring the government’s intent to support vulnerable parts of the population.
Energy bill relief continues to be a priority, with an additional $1.8 billion allocated to extend the program until the end of 2025. The ongoing rebate—which provides up to $150 per household and one million small businesses—is expected to ease power price pressures while encouraging more sustainable energy consumption.
Strengthening Medicare and affordable healthcare
Healthcare remains a pillar of the 2025-2026 budget, with an $8 billion investment to expand bulk billing services, the largest infusion into Medicare since its inception. This funding aims to ensure nine out of ten GP visits can be bulk billed by the decade’s close. Additional measures include the rollout of 50 new Urgent Care Clinics across Australia, bolstering access to medical services in underserved regions.
The Pharmaceutical Benefits Scheme (PBS) also receives attention, with the maximum co-payment for prescription medications dropping to $25 from January 2026 for those without concession cards. Pensioners and healthcare cardholders will continue paying $7.70 per script. The PBS reforms aim to reduce out-of-pocket costs for everyday healthcare while ensuring access to essential medicines.
These health initiatives address pressing medical expenses, allowing Australians to access affordable care amidst broader economic uncertainties.
Housing affordability and supply boosts
Housing affordability and supply challenges receive significant attention. The government has reiterated its target of delivering 1.2 million new homes over five years. While 45,000 homes have already been completed in early project phases, new measures include $120 million to assist states and territories in bureaucratic streamlining and $54 million to encourage modern construction practices.
For aspiring homeowners, the Help to Buy program expands with an $800 million fund injection, lifting property price and income caps to make participation more accessible. The proposals aim to help middle-income Australians overcome financial barriers to homeownership.
Foreign investment in housing is tightly controlled under new rules. A two-year ban on foreign buyers purchasing established dwellings is set to commence in April 2025. This measure, along with a crackdown on land banking by offshore entities, is designed to prioritise local housing requirements and increase the stock available to Australians.
Renewable energy and economic resilience
The Albanese government continues its push for renewable energy investments with more than $15 billion earmarked for the sector. This includes initiatives to promote hydrogen and critical minerals production, renewable technology manufacturing, and green metals. Additional funding will support low-carbon fuel production as part of Australia’s commitment to global emissions targets.
The Future Made in Australia initiative, featuring a $22.7 billion allocation, focuses on innovation and domestic manufacturing capabilities. This serves a dual purpose of strengthening Australia’s economy against global uncertainties while fostering advanced green technologies critical for long-term sustainability.
Addressing inflation and global economic challenges
Although the global economy faces headwinds from trade volatility, geopolitical conflicts, and slowing growth in China, the government expressed optimism about Australia’s resilience. Unemployment is expected to decline, wage growth to strengthen, and economic growth to climb to 2.5% by 2026-27, painting a cautiously optimistic outlook amid international disruptions.
Inflation, which has impacted households most acutely, is showing signs of moderation. At the same time, the government is strategically reducing gross debt by $177 billion, leveraging this to save approximately $60 billion in interest costs over the coming decade.
However, concerns persist around the budget deficit, projected at $42.1 billion. While this is lower than earlier forecasts, critics may point to growing expenditures such as tax cuts and disaster relief. Nonetheless, the Treasurer maintained that these investments are essential to “finish the fight against inflation” and prepare Australia for a “new world of uncertainty.”
Final thoughts
The 2025-2026 Federal Budget reflects a pragmatic approach to the dual objectives of cost-of-living relief and long-term economic strength. With a clear focus on healthcare, housing, energy, and tax reform, the Albanese government seeks to address immediate challenges while laying the groundwork for a more resilient future.
Although the initiatives are likely to provide relief for many Australians, questions linger over whether the ambitious targets for housing construction and green economy investments are feasible within their proposed timelines. Additionally, some may criticise the absence of broader structural reforms to deliver lasting change.
Nevertheless, for Australians navigating an uncertain global landscape, this budget appears focused on providing support where it is needed most while keeping an eye on a more sustainable future.
If you would like more information on the Federal Budget measures announced, or if you want to discuss the impact on your portfolio, contact our office today.
DISCLAIMER: Information in this article has been sourced from the 2025-26 Budget Speech and Budget overview – Building Australia’s Future. It is important to note that the policies outlined in this article are yet to be passed as legislation and therefore may be subject to change.
All information on Focus Wealth Advisers is general in nature and does not take into account your personal objectives, financial situation or needs. You should consider your personal circumstances and seek professional advice before making any decisions based on this information.
