Treasurer Jim Chalmers’ fourth Budget – the last before an election focused on delivering cost-of-living relief to Australian households – contained no major surprises or changes.
Economically, Mr Chalmers view is “Inflation is down, unemployment is low, wages are up, interest rates have started to come down, growth has rebounded solidly”.
For most people, there will be a few small benefits to take advantage of, including tax cuts for low-income earners and assisting with housing affordability. The main good news is that there is nothing that will require a major rethink of financial plans or strategies, and the Budget was primarily focused on positioning the Albanese Government to take on the polls.
The government has left the superannuation sector largely untouched in this Budget, in line expectations of a pre-election Budget.
A startling fact from Budget papers is the prediction that tax paid by super funds is expected to reach $25.6 billion in 2025-26. Superannuation tax receipts have been revised up by $2.4 billion in 2025-26, and by just under $10 billion over the five years from 2024-25 to 2028-29.
This is due to higher-than-expected tax on investment earnings, and on contributions due to strong employment. It highlights the importance of the superannuation system to Australia’s economy, and the government, and it seems likely that there will be more changes in the future, even if there was little in this Budget.
In the 2025 Budget, the key proposals are:
- All taxpayers will receive modest tax cuts starting from 1 July 2026
- Eligible Australian households and small businesses will receive an additional energy rebate of $150
- The general co-payment for Pharmaceutical Benefits Scheme medicines will reduce to $25 for individuals who don’t hold a concession card
- All families will be eligible for at least 72 hours per fortnight (three days per week) of subsidised childcare without having to satisfy the activity test
- Concessions will be applied to reduce student debts and repayments
- The ‘Help to Buy’ program will be expanded to include higher income and property price caps.
With housing affordability being topical, the ‘Help to Buy’ scheme is of particular interest. The scheme assists with the purchase of a principal place of residence. It is open to a maximum of 10,000 places each year over four years, with places proportionally allocated to each participating State or Territory based on population size. The Federal government will provide an equity contribution up to 30 per cent of the purchase price of an existing home and up to 40 per cent of the purchase price of a new home.
The government is hoping more people will be eligible for the scheme, with an increase to the income caps and the price caps for properties. For singles, the income cap will increase from $90,000 to $100,000 and for joint applicants (and single parents), the income cap will increase from $120,000 to $160,000.
Property price caps (threshold) will also increase, for example:
- NSW – $1,300,000 from the current $950,000
- Melbourne – $950,000 from $850,000
- Brisbane – $1,000,000 from $700,000
- Perth – $850,000 from $600,000
- Adelaide – $900,000 from $600,000
As part of its attempt to improving housing affordability, the government has also announced a two-year ban on foreign investors purchasing established homes, effective from 1 April 1 2025. This measure aims to alleviate pressure on the housing market and improve affordability for Australian residents. During this period, foreign persons, including temporary residents and foreign-owned companies, will generally be prohibited from buying existing residential properties. In addition to the purchase ban, the government is targeting land banking practices by foreign investors. The Australian Taxation Office (ATO) and Treasury have been allocated $8.9 million over four years to implement an audit program and enhance compliance measures, ensuring that vacant land is developed within reasonable timeframes.
Many of the measures announced in the 2025 Federal Budget need to be passed as law to take effect, thus at this stage they are more policy announcements than actual changes.
This article was first published in the Autumn 2025 issue of Financial Times.