Federal Budget 2025: Five-minute guide to Treasurer Jim Chalmers’ fourth Budget

It was the Budget we weren’t supposed to have.

But nevertheless, Jim Chalmers claims to have delivered a “responsible” and measured set of books to help ease the cost of living in his fourth Budget.

Against a backdrop of global economic uncertainty, the Treasurer insists the Australian economy is turning a corner and that “the worst is behind us”.

Key takeaways

TAX CUTS: Australians will receive two new tax cuts, but the first won’t kick in until July next year and people will only save $5.15 a week, when the tax rate is reduced one per cent to 15 per cent. It will be reduced to 14 per cent the following year.

ENERGY: Cost of living relief also includes energy rebates worth $150. The subsidies will be applied to electricity bills in quarterly instalments, starting July 1.

CHILD CARE: The childcare subsidy activity test will be replaced with a new “three day guarantee” worth $427m to ensure families receive at least three days of subsidised childcare. Up to 200,000 early childhood educators will enjoy a pay bump through a $3.6b pledge under the worker retention payment, while $1b will be spent on building or expanding centres in areas of need.

PROPERTY: Getting more Australians into homes of their own is another focus of the Budget. The income and price caps for the “Help to Buy” shared equity scheme will be expanded so more first home buyers are eligible to purchase a home with a smaller deposit.

HEALTH: Medicines will be made cheaper, with the maximum price for a script under the Pharmaceutical Benefits Scheme to be capped at $25. Meanwhile, $1.8b will go towards listing more life-saving medicines on the PBS.

Medicare will get an $8.5 billion boost to lift bulk billing rates, which have fallen in recent years, while aged care nurses will get a pay rise from March this year under a $2.6b pledge.

Public hospitals across the country will share in an extra $1.8b to reduce waiting times. 50 new urgent care clinics have also been promised at a cost of $644m.

Women’s health – considered a “national priority” – will receive $793m. The money will help women save on contraception and fund new clinics to support the treatment of endometriosis, pelvic pain and menopause.

EDUCATION: Student loan debts will be slashed by 20 per cent, while the minimum repayment threshold will be raised and repayment rates reduced pending the passing of legislation.

INDUSTRIAL RELATIONS: So-called “non-compete” clauses that restrict workers’ ability to move around and find a new job will be banned for low and middle-income employees from 2027, subject to new laws.

Key forecasts:

Deficit

2024-25: $28.3b

2025-26: $42.8b

2026-27: $26.7b

2027-28:$24.3b

Gross debt

2024-25: $940b

2025-26: $1.02t

2026-27: $1.1t

2027-28: $1.2t

Real GDP growth

2024-25: 1.5%

2025-26: 2.25%

2026-27: 2.5%

2027-28: 2.75%

Unemployment rate

2025-25: 4.25%

2025-26: 4.25%

2026-27: 4.25%

2027-28: 4.25%

Inflation rate

2024-25: 2.5%

2025-26: 3%

2026-27: 2.5%

2027-28: 2.5%

Wage growth

2024-25: 3%

2025-26: 3.25%

2026-27: 3.25%

2027-28: 3.5%

2028-29: 3.75%

Where your money will be spent

Social security and welfare: 37%

General public services: 4%

Defence: 6.6%

Education: 6.9%

Health: 15.9%

All other functions: 10.6%

Other purposes: 19.1%

Iron ore price

The long-running iron ore price is assumed to decline to $US60 a tonne. The steel-making ingredient was trading at $US104/t on Tuesday.