At 7:30pm tonight, Jim Chalmers delivered his fourth budget announcing that this budget builds on the progress that we have made together, that it’s a plan to build Australia’s future, and that our economy and our budget are in a better shape than they were 3 years ago.

The Treasurer said that this budget is the Government’s plan for a new generation of prosperity in a new world of uncertainty. The budget’s 5 main priorities are helping with the cost of living, strengthening Medicare, building new homes, investing in every stage of education, and making the economy stronger, more productive, and more resilient.

Key Forecasts

• $27.6B deficit for 2024-25, $42.1B deficit for 2025-26, $35.7B deficit for 2026-27, $37.2B deficit for 2027-28 and $36.9B deficit for 2028-29;
• 1.5% GDP growth for 2024-25, 2.25% GDP growth for 2025-26, 2.5% GDP growth for 2026-27, 2.75% GDP growth for 2027-28, 2.75% GDP growth for 2028-29;
• Forecast inflation for 2024-25 is 2.5%, 3% for 2025-26, 2.5% for 2026-27, 2.5% for 2027-28 and 2.5% for 2028-29;
• 4.25% unemployment is expected for 2024-25, 4.25% for 2025-26, 4.25% for 2026-27, 4.25% for 2027-28, and 4.25% for 2028-29;
• 3% wages growth is expected for 2024-25, 3.25% for 2025-26, 3.25% for 2026-27, 3.5% for 2027-28, and 3.75% for 2028-29.

Key Announcements

The Treasurer said that the budget is a plan to help with the cost of living and announced the following measures:

• From 1 July 2026, the 16 per cent tax rate, which applies to taxable income between $18,201 and $45,000, will be reduced to 15 per cent. From 1 July 2027, this tax rate will be reduced further to 14 per cent;
• The Medicare levy low-income thresholds will increase by 4.7% from 1 July 2024. This means that single taxpayers with incomes below $27,222 won’t pay the Medicare levy, families with incomes below $45,907 won’t pay the Medicare levy and for taxpayers entitled to the seniors and pensioners tax offset, the threshold will be $43,020;
• The $300 energy bill relief implemented in the 2024 budget will be extended to the end of 2025. Every household and around 1 million small businesses will receive an additional two $75 rebates off their electricity bills until 31 December 2025;
• Non-compete clauses in employment contracts will be banned for employees earning less than $175k per year enabling them to move to more productive higher-paying jobs.

The Treasurer said that “tonight we make the single biggest commitment to Medicare since its creation”, and announced the following:

• From 1 January 2026, the maximum cost for a Pharmaceutical Benefits Scheme medication will reduce from $31.60 to $25 and will remain frozen at $7.70 for pensioners and concession card holders;
• $1.8m will be invested to list new medicines on the Pharmaceutical Benefits Scheme;
• GPs will receive higher incentive payments to bulk bill patients resulting in 9/10 GP visits being free by 2030;
• An extra 50 Medicare urgent care clinics will be opened, providing free services to ease pressure on emergency departments.

The Treasurer explained that a university education is a life changing opportunity, but it shouldn’t leave Australians with a lifetime of debt. The Government will invest in every stage of education with the following measures:

• All student debts will be cut by 20% with effect before indexation is applied on 1 June 2025;
• The minimum student debt repayment threshold will be raised, and repayment rates will be reduced;
• From January 2026, the Childcare Subsidy activity test will be replaced with a new 3 day guarantee enabling families to access at least 3 days per week of subsidised early childhood education. This means parents will no longer have to work, study or be looking for work for at least 16 hours each fortnight to access childcare subsidies.

The Treasurer announced that the Government is tackling the housing shortage from every angle and will achieve this with the following measures:

• Foreign persons (including temporary residents) will be banned from buying established dwellings for 2 years from 1 April 2025, unless an exception applies;
• The Government will help build 1.2 million new homes by the end of this decade;
• The help to buy scheme will be expanded by lifting the property price and income caps for accessing this scheme. Under this scheme, the Government provides an equity contribution of up to 40% to support eligible home buyers buy a home with a lower deposit and smaller debt.