The Albanese Government’s new budget aims to ease pressure on Australians

On Tuesday 12 May, the Albanese government delivered its fifth budget.

It comes at a time of increasing economic pressure for many Australians, with rising costs for essentials amid a global oil crisis, and elevated interest rates.

“War in the Middle East has been pushing up prices, pushing down growth, and punishing Australians,” said Mr Chalmers.

“But how we respond is up to us. This budget is ambitious in the face of adversity.”

Relief

The budget is focused on delivering cost-of-living relief, housing affordability and supply, national security, energy security, and productivity.

“It makes the tax system fairer and stronger for workers, businesses, first home buyers and future generations.”

Tax

The budget includes a new tax break called WATO – Working Australians Tax Offset.

It will provide an extra tax cut of up to $250 a year (increasing the tax-free threshold to $19,985). It will come into effect from the next tax year (2027-28).

Meanwhile, individual tax rates announced in last year’s budget will begin this year, on July 1.

The lowest tax bracket (between $18,201 and $45,000) will drop from 16 per cent to 15 per cent, giving lower income earners up to an extra $268 a year.

Further, workers will be able to use a $1,000 instant tax deduction (no receipts needed), producing a guaranteed average annual saving of $205. The instant deduction is for those 6.2 million workers who claim under $1,000 in work-related expenses.

Homes

Through a major overhaul of “investor tax”, the government says the market will finally be tilted toward first home buyers.

The government estimates that these measures (see below) will help 75,000 Australians buy their first property.

Also, to encourage the building of new homes, the government is spending $2 billion over four years on critical infrastructure.

“This funding will support up to 65,000 homes over the decade and brings the Government’s total investment in housing‑enabling infrastructure to $6.3 billion,” said a government statement.

 There will also be an overhaul of planning and zoning regulations so homes can be approved and built more quickly.

(The government is also extending its ban on foreign buyers purchasing any established homes until mid‑2029.)

Investor tax overhaul

The first big change is to negative gearing. In what critics have described as a “broken promise” by the Coalition, the Albanese government has overhauled a system long prized by investors.

From the next financial year, investors can only negatively gear a property if that property is a brand new home (not a pre-existing one).

For those who currently negatively gear a rental property, nothing changes, and their negative gearing can continue.

Negative gearing enables investors to reduce their taxable income by claiming the difference between their expenses (mortgage repayments and other costs), and the rental income.

The other big change is to Capital Gains Tax. Up until now, there has been a 50 per cent discount on CGT (the taxing on any profit when an investment is sold). From the next financial year, the government is scrapping that discount for new investments, though the purchase price will be indexed for inflation, softening the blow a little. (The reforms apply to gains made after July 1, 2027.)

Mr Chalmers admitted that the changes to the system, which have long been geared toward investors, were “contentious”.

“There’s no use pretending otherwise, but it’s the right thing to do,” the Treasurer shared.

“The easiest thing that we could have done from a political point of view would be to see these challenges in the housing market, particularly for young people, and to see the issues in the tax system, and to leave everything exactly as it was.”

Homelessness

The government is investing $59.4 million to help those at risk of homelessness. The funding will provide social housing for over 4,000 young at-risk people aged 16–24.

The budget will also release a further $100 million from the Housing Australia Future Fund to improve the quality of housing for Indigenous Australians living in remote communities.

Fuel crisis

As most Australians would be aware, the fuel excise has already been halved amid the oil crisis, and the government will invest $10 billion to strengthen Australia’s fuel security.

Small business

The ATO is “streamlining” access to temporary relief from tax obligations until the end of the current financial year.

This includes more generous payment plans for tax, support in varying pay as you go (PAYG) instalments (when taxable income drops), and a new dedicated way for businesses to access relief.

Defence

The government is giving the military $53 billion over 10 years to modernise the defence force. This will include investing in drone and counter-drone technologies.

“Road of Reform”

Treasurer Chalmers claimed that no other budget in the 2000s has set out this much “responsible repair” and economic reform.

“Tonight, we choose the hard road of reform, not the path of least resistance,” Mr Chalmers told Parliament.

“By responding to the pressures Australians confront today. And fulfilling our obligations and responsibilities to the generations to come.”

Article supplied with thanks to Hope Media.

About the author: Michael Crooks is a senior journalist and former news editor of Who magazine. His work has appeared in People, Marie Claire, The Daily Telegraph, Herald Sun, news.com.au, Qantas magazine and more.

Feature image: Canva

The federal government has handed down its final budget ahead of the election.

And while it comes with a multi-billion dollar deficit, there is some good news, including a surprise tax cut.

It also delivers further relief for those affected by Ex-Tropical Cyclone Alfred.

“We’re delivering energy bill relief to every household, even cheaper medicines, historic investments in Medicare, higher wages and a fairer go for consumers,” said Treasurer Jim Chalmers as he handed down the budget last night.

On the back of this budget, the country will head into deficit (which means the government’s spending is greater than its income).

For this budget, the deficit will be $27.6 billion.

Here’s a guide to the best the budget has to offer for everyday Australians.

Easing the squeeze

Taxes are coming down (a little).

From July 1 next year, the 16 per cent tax rate (which applies to income between $18,201 and $45,000) will be reduced to 15 per cent (that’s worth $268).

And from July 1 in 2027, it will drop further to 14 per cent (bringing the total to $536).

“The Government’s new tax cuts will put more money in people’s pockets,” said the government in a statement.

In further cost-of-living relief, the Government has increased the Medicare levy “low‑income thresholds” by 4.7 per cent for singles, families, and seniors and pensioners.

While many have welcomed the tax cut, some have criticised the amount. Opposition treasury spokesperson Angus Taylor told the ABC’s 7:30 that a Liberal government would not support the cut.

“They are not a genuine tax cut,” he said. “70 cents a day, in a year’s time, when for a typical Australian family with a mortgage they are paying an extra $50,000 over and above what they expected.”

Energy

The government will provide every household and around one million small businesses $150 worth of energy rebates.

Households and businesses will receive two $75 rebates directly off their electricity bills through to the end of the calendar year.

“This is in addition to the $300 going to households in energy bill relief in 2024–25,” the government reported.

Health

The government had pledged $8.5 billion to making Medicare a better and fairer system for all Australians.

The Labor government claims the amount is “the single largest investment in Medicare since its inception more than four decades ago”.

The money will go towards making nine out of 10 GP visits free by 2030.

It will also fund 400 nursing scholarships and go toward training 2000 new GPs per year by 2028.

The government is also spending more than  $600 million to fund five new “urgent care” clinics.

The clinics will be bulk-billed GP services and be within reasonable range to 80 per cent of Australians.

Further, treasurer Chalmers has pledged $689 million over four years to reduce the cost of four out of five medications on the Pharmaceutical Benefits Scheme (PBS).

The medications will cost a maximum of $25 (down from $31.60).

(Pensioners will continue to pay $7.70 for PBS medicines.)

The government is also committing $573 million on women’s health treatments (reproductive health and menopause).

Education

In a move that will please many university graduates, the government will reduce all outstanding Higher Education Loan Program (HELP) and other student debts by 20 per cent.

The change will mean a graduate with an average debt of $27,600 would have approximately $5,520 wiped off their loan.

Treasurer Chalmers also reported that the government will increase the amount that people can earn before they must start paying back their student loans.

It will increase from $54,435 (in 2024–25) to $67,000 in 2025–26.

“These changes will deliver immediate cost‑of‑living relief for millions of Australians with student loan debts,” the government said.

Housing

To combat Australia’s ongoing housing crisis, the government has set a national target of providing 1.2 million new, “well‑located” homes over five years.

The National Housing Accord is “bringing together all levels of government, industry and investors to unlock supply,” said a government statement.

The Albanese government’s existing Help to Buy scheme will also support Australians with lower deposits and smaller mortgages to buy a home.

And already in effect is a ban on foreign purchases of existing homes.

Funding for homelessness services will also be doubled to about $400 million per year.

Childcare

The Labor government has committed $427 million to ensure three days of subsidised childcare for families earning up to $530,000.

And the government also pledged to create a $1 billion fund to build childcare services throughout Australia, should it win the election.

After Alfred

In the wake of Cyclone Alfred, the government will provide a further $1.2 billion towards recovery for those affected by the disaster.

The government as already provisioned $11.6 billion to the recovery over the next four years.

The money will go to social security costs and recovery support.

“The plan at the core of this budget is about more than putting the worst behind us, it’s about seizing the best of what’s ahead of us,” Mr Chalmers said.

“To build a stronger economy together, and to build a future that we can all be proud of.”

For a detailed look at the budget, visit budget.gov.au.

Article supplied with thanks to Hope Media.

Feature image: Photo by Towfiqu barbhuiya on Unsplash 

About the author: Michael Crooks is a senior journalist and former news editor of Who magazine. His work has appeared in People, Marie Claire, The Daily Telegraph, Herald Sun, news.com.au, Qantas magazine and more.