Australian Federal Budget March 2025-26

The 2025-26 Pre-Election Budget contains a major focus on taxpayer ‘pinch points’ and recognises a world in flux - with measures addressing cost of living, housing, health, education and defence. It’s numbers and narrative neatly reflect the conflict between global economic uncertainty and domestic politics. Falling commodity prices and weaker global economic growth push the Budget into deficit for the foreseeable future and increase net debt. Conversely, the Budget’s biggest announcements are $17 billion in personal tax cuts and significant on-going spending measures.

While inflationary pressures have eased and interest rates have begun to fall, these will take some time to take effect and are offset by the global upheaval of existing economic norms stemming from major changes in US trade policy. Further unpredictable events such as Cyclone Alfred and the US Tariff changes have made forward estimates difficult to calculate.

While many measures have already been announced, the key Budget focus points are;

• Personal Tax Cuts (modest reductions in tax rate and higher Medicare thresholds)
• Cost of Living (Electricity (rebate), Housing (help-to buy scheme) and Childcare (subsidy))
• Medicare (Bulk billing support, PBS caps, public hospital spending)
• Defence (significant increase due to geopolitical factors)
• Education (funding of TAFE, HECS relief, early childcare and school education support)
• Energy (Future Made in Australia initiatives including Green Energy support)
• Infrastructure (Roads – particularly QLD))
• Industry Assistance (Buy Australia, support for Whyalla and Rex, introduction of non-compete clauses)
• Tax Changes – minor strengthening of avoidance measures but nothing major (recent changes still to be implemented include MITS, denial of aged debt interest, 15% tax on super over $3m, digital assets (Government response to Board of Taxation recommendations, EV Luxury Car Tax alignment))

Arguably, the prevailing uncertainty has favoured the Government, allowing them to justify significant election spending as necessary to combat external pressures like cost of living and geopolitical risk. Whoever forms Government after the coming election will undoubtedly require a further Budget later in the year once a more stable economic environment prevails. It may be at this time when more unpopular ‘hard’ decisions may arise in order to fund election promises and tackle the broader issues of wage growth, the increasing budget deficit, productivity and  tax reform.

All Budget documents are available to download here.

1. Cost of living

Authored by: Jane Ma

One of the key priorities of this Budget is helping Australians with the rising cost of living.  This Budget delivers two new tax cuts for every Australian taxpayer, increases to the Medicare levy low‑income thresholds, more energy bill relief, more bulk billing and cheaper medicines, and additional student debt relief.

Two new tax cuts for every Australian taxpayer

The Government will deliver two new tax cuts to every Australian taxpayer:

• from 1 July 2026, the 16% rate will be reduced to 15% (for income between $18,201 and $45,000); and
• from 1 July 2027, the 15% rate will be reduced further to 14%.

This will take the first tax rate down to its lowest level in more than half a century.

These tax cuts are in addition to the first round of tax cuts legislated last year, which have been rolling out since 1 July 2024.  

Every Australian taxpayer will receive an extra tax cut of up to $268 from 1 July 2026 and up to $536 every year from 1 July 2027, compared to 2024–25 tax settings.

Combined with the first round of tax cuts, the average annual tax cut will increase to $2,229 in 2026–27 and $2,548 in 2027–28 (or around $50 per week).

Table A: New personal tax rates for 2026–27 and 2027–28 by thresholds ($)

Table B: Combined annual tax cut* compared to 2023–24 tax setting by income

*The combined annual tax cut is the reduction in an individual’s tax liability in a given income year from the new tax cuts and the Government’s first round of tax cuts compared to 2023–24 tax settings. The new tax cuts take effect from the 2026–27 income year.

Source: Fair Work Ombudsman; ABS, Employee earnings, Aug 2024; ABS, Average Weekly Earnings, Nov 2024.

Increasing the Medicare levy low‑income thresholds

The Government will increase the Medicare levy low‑income thresholds by 4.7% for singles, families, and seniors and pensioners from 1 July 2024 to provide cost‑of‑living relief for more than one million Australians.

The increase to the thresholds means over one million low‑income Australians will continue to be exempt from paying the Medicare levy or pay a reduced levy rate.

More energy bill relief

The Government will provide $1.8 billion over two years from 2025–26 to continue energy bill rebates of $75 per quarter for eligible Australian households and small businesses until 31 December 2025 as part of its cost-of-living relief measures.

More bulk billing and cheaper medicines

The Government will provide additional funding of $8.4 billion over five years from 2024–25 (and $2.5 billion per year ongoing) to increase access to bulk billing, including $7.9 billion over four years from 2025–26 (and $2.4 billion per year ongoing) to expand eligibility for bulk billing incentives to all Australians and introduce the new Bulk Billing Practice Incentive Program for general practices if they bulk bill every visit under Medicare.  This is the largest single investment in the Medicare Benefits Schedule (MBS) to increase access to bulk billing.

In addition, the Government will provide $784.6 million over four years from 2025–26 (and $236.4 million per year ongoing) to lower the Pharmaceutical Benefits Scheme (PBS) general patient co‑payment (being the maximum PBS script) from $31.60 to $25.00 on 1 January 2026.

Additional student debt relief

The Government is making changes that will reduce Higher Education Loan Program (HELP) and other student debts for more than 3 million Australians by around $19 billion and is continuing to make the student loan system fairer.  The Government will reduce outstanding student debts by 20%, which will remove $16 billion in debt, and will make the repayment system fairer by moving to a marginal repayment system with a higher minimum repayment threshold.

The Government has already legislated a cap on HELP indexation based on the lower of the Consumer Price Index or the Wage Price Index. The change was backdated to 1 June 2023, and has reduced outstanding student debt by around $3 billion.

The cost of living changes in this Budget is aimed at delivering significant cost-of-living relief to all Australians, and forms the Government’s core economic plan to help Australians ‘earn more and keep more of what they earn’.

What to watch

The Government’s new tax cuts are modest yet meaningful, and together with the other cost of living relief measures, benefit more than one million Australians.  The impact of the cost living measures is expected to be reflected through increased labour supply to the equivalent of more than 30,000 full time jobs and increased household disposable income by 1.9% by 2027-28, and hopefully end the battle against inflation and fulfil the Government’s objective of a stronger economy.

2. Tax

Authored by: Peter Scott

As expected, this Budget is light on tax measures (and surprises). However, the Budget does include some important announcements (and re-announcements) including:

• Previously announced managed investment trust (MIT) changes to ‘captive MITs’ will have a start date of 13 March 2025.
• Start dates have been deferred for previously announced foreign resident CGT measures and clean building MIT measures.
• Personal tax cuts (see cost of living measures section)
• Increased funding for the ATO’s Tax Avoidance Taskforce (targeting large taxpayers) and the Shadow Economy Compliance Program.
• Ban foreign investors from buying established homes for at least two years and crack down on foreign land banking.

Managed investment trust changes

The Government has restated their intention to make amendments to the MIT rules, which are now stated to apply to fund payments from 13 March 2025.

• On 7 March 2025 ATO issued a new Taxpayer Alert (TA 2025/1) regarding restructures to access the MIT regime, which raised concerns about captive MITs. The Alert was quickly followed by a 13 March announcement by the Assistant Treasurer that amendments would be made to ‘make clear that trusts ultimately owned by a single widely‑held investor (e.g. a foreign pension fund) are able to access the MIT concessions’.
• Based on the Assistant Treasurer’s announcement and the Budget restatement, it seems that changes will be made to ensure captive MIT structures (i.e. MITs essentially owned by a single qualifying entity), at least those owned by foreign pension funds, can satisfy the MIT withholding requirements – but the devil will be in the detail.

Deferral of start dates for important previously announced measures

The Government will also defer the start dates of the following measures:

• Clean building MITs. The 2023–24 Budget measure Extending the clean building managed investment trust withholding tax concession from 1 July 2025 to the first 1 January, 1 April, 1 July or 1 October after the Act receives Royal Assent. Broadly, that measure included extending the clean building MIT withholding tax concession to data centres and warehouses and will increase minimum energy efficiency requirements for existing and new clean buildings (see more here).
• Foreign resident CGT changes. The 2024–25 Budget measure Strengthening the foreign resident capital gains tax regime from 1 July 2025 to the later of 1 October 2025 or the first 1 January, 1 April, 1 July or 1 October after the Act receives Royal Assent (it was announced to cover CGT events occurring on or after 1 July 2025). That announcement was expanded on in a consultation paper released in July 2024 (see further detail in our update here), and is slated to include measures to expand the scope of taxable Australian property, modify the indirect Australian real property test and introduce notification requirements for non-residents selling shares or units for over $20m irrespective of the nature of underlying assets held through the investment.

Restricting Foreign Ownership of Housing

The Government will take the following steps in respect of foreign residents and residential land:

• Banning foreign persons (including temporary residents and foreign‑owned companies) from purchasing established dwellings for two years from 1 April 2025, unless an exception applies (such as investments that significantly increase housing supply or support the availability of housing on a commercial scale, and purchases by foreign‑owned companies to provide housing for workers in certain circumstances). This measure is supported by additional ATO funding of $5.7 million over four years from 2025–26 to enforce the ban.
• Providing the ATO and Treasury $8.9 million over four years from 2025–26 and $1.9 million per year ongoing from 2029–30 to implement an audit program and enhance their compliance approach to target land banking by foreign investors

Other key measures

• Strengthening Tax Integrity. $999 million will be provided over four years to the Australian Taxation Office (ATO) to extend and expand tax compliance activities, including funding for a two-year expansion and a one-year extension of the Tax Avoidance Taskforce and an expansion of the Shadow Economy Compliance Program targeting behaviours such as worker exploitation, under‑reporting of taxable income, illicit tobacco and other shadow economy activity that enables non‑compliant businesses to undercut competition.
• Enhancing Tax Practitioner Regulation and Compliance. The Government will strengthen the sanctions available to the Tax Practitioners Board, including funding for additional compliance targeting high-risk tax practitioners over four years from 1 July 2025.
• Hospitality Sector and Alcohol Producers. The Government has restated previous announcements
• Freeze on draught beer excise. A freeze the indexation on draught beer excise for two years, in a win for beer drinkers, brewers and hospitality businesses.
• Tax relief to support investment and jobs. Increase the excise remission cap to $400,000 for all eligible alcohol manufacturers. The Government will also increase the Wine Equalisation Tax (WET) producer rebate to $400,000.

What to watch

There are some important measures that have been introduced but not yet passed by Parliament. It is unclear whether these will be passed before the election given that the focus of Parliament will be on passing the Budget, noting that the House of Representatives will sit from 25 to 27 March 2025 and the Senate will sit from 25 to 26 March. Key pending measures include:

• Treasury Laws Amendment (Tax Incentives and Integrity) Bill 2024 ­– Introduces several changes, including modifications to the luxury car tax to tighten the definition of fuel-efficient vehicles, deny deductions for GIC and SIC. Status: still before the House of Representatives.
• Treasury Laws Amendment (Better Targeted Superannuation Concessions and Other Measures) Bill 2023 – The controversial measure to impose an additional 15% tax on particular ‘earnings’ on superannuation balances above $3m. Status: before the Senate.

3. Health

Authored by: Suzy Madar

Given the commitments that have already been made, it was unsurprising to see that ‘Strengthening Medicare’ and ‘Even Cheaper Medicines’ were key pillars of the Budget. The Budget confirms a commitment to reducing the cost of medicines and expanding access to bulk-billing, as well as improving access to public health services more broadly through significant investment in public hospitals, Medicare and the training of health care professionals.

The announced measures are likely to have bi-partisan support given the Opposition has promised to match increases to Medicare funding and invest $500 million in mental health services.

Key measures announced by the Government include:

• Expanding bulk billing incentives to cover all Australians: additional funding of $8.4 billion over five years (and $2.5 billion per year ongoing) to increase access to bulk billing, including:
  • $7.9 billion over four years (and $2.4 billion per year ongoing) to expand eligibility for bulk billing incentives to all Australians and
  • introducing a new Bulk Billing Practice Incentive Program that provides an additional 12.5% in Medicare rebates for GPs if they bulk bill every consultation.
• PBS scripts capped at $25: $784.6 million over four years (and $236.4 million per year ongoing) to lower the Pharmaceutical Benefits Scheme (PBS) general patient co‑payment from $31.60 to $25.00 on 1 January 2026.
• Improving access to medicines and pharmacy programs: funding over six years to improve access to medicines and to trial an expansion of the range of services delivered by community pharmacies. This will include:
  • $539.4 million over five years (and an additional $98.8 million in 2029–30) to establish the First Pharmaceutical Wholesalers Agreement with the National Pharmaceutical Services Association to secure access to medicines across Australia
  • $109.1 million over four years to support two national trials to increase access to contraceptives and treatment for uncomplicated urinary tract infections.
• Increased funding for women’s health: $240.4 million over five years (and $42.3 million per year ongoing) to support women’s health, including:
  • $134.3 million over four years (and $35.3 million per year ongoing) to increase the scheduled fee to implant four long‑acting reversible contraception (LARC) items on the Medicare Benefits Schedule (MBS).
  • $26.3 million over three years for health assessments for women of all ages experiencing perimenopause and menopause.
• Increased funding for public hospitals: $33.9 billion to extend the 2020–2025 Addendum to the National Health Reform Agreement (NHRA) to 30 June 2026, including:
  • $32.2 billion in 2025–26 for Commonwealth funding under the NHRA and
  • $1.8 billion in 2025–26 as one‑off funding for public hospitals and related health services (including a one‑off uplift for the Northern Territory) to better align the Commonwealth contribution rate with other states and territories.
• Increasing the number of Medicare Urgent Care Clinics to 137: $657.9 million over three years to expand the Medicare Urgent Care Clinics Program. This will include an additional 50 Medicare Urgent Care Clinics across Australia, which will take the total number of Medicare Urgent Care Clinics to 137.
• Increased funding for nursing and GP training: $662.6 million over five years (and $230.9 million per year ongoing) to strengthen Australia’s health workforce. Funding will include $606.3 million over four years (and $226.3 million per year ongoing) to deliver more Australian doctors and nurses.
• New and amended PBS listings: $1.8 billion over five years to support the listing of new medicines on the PBS, Repatriation Pharmaceutical Benefits Scheme, and associated schemes, including:
  • estradiol and progesterone (micronised) co-pack (Estrogel Pro®), estradiol (Estrogel®) and progesterone (Prometrium®) for use has hormone replacement therapy
  • drospirenone with ethinylestradiol (Yaz® and Yasmin®), the first PBS listing for new oral contraceptives in more than 30 years and
  • talazoparib (Talzenna®) for treatment of patients with prostate cancer who have the BRCA1 or BRCA2 mutations.

What to watch

Health has been a major pillar of the Budget and looks to a key voter concern regarding Medicare and access to affordable health care. The Coalition has already matched the proposal so it is likely to pass Parliament.

4. Defence

Authored by: Sean Field 

No particular surprises in the 2025 Defence Budget, with a 2025-26 budget of $51.5 billion and projected growth to 2.3% of Gross Domestic Product (GDP) by the early 2030s. 

The 2025 Defence Budget represents around 6.6% of total expenses in the Budget.

The Defence budget will climb to $52.6 billion in 2026-27, $456.5 billion in 2027-28 and $461.2 billion in 2028-29, or an increase by 18.9 per cent over the period 2025-26 to 2028-29.

The Defence Budget demonstrates strong support for capital investment in capabilities for the Australian Defence Force (ADF), rising from $5.9 billion in 2024-25, to $7.0 billion in this Budget and then to $8.6 billion (2026-27); $11.2 billion (2027-28); and $11.7 billion (2028-29).

The 2025 Budget allocates $330 billion out to 2033-34 – an additional $50.3 billion - for the Integrated Investment Program.

To put the Defence Budget into context, expenses for Education in the 2025 Budget are at 6.9%; Health - 15.9%; and Social Security and Welfare - 37%.

On the other side of the ledger, the recently announced sale of an Over-The-Horizon-Radar (a la Jindalee OTHR) to Canada will bring in significant Defence export revenue (some $6.5 billion).

There is little to divide the two major parties in terms of Defence spending policies, with both Labor and the Coalition committed to lifting Defence spending as a proportion of GDP.  The current Labor Government has now confirmed in this Budget that it has a policy aspiration that Defence spending will grow to over 2.3% of GDP by the early 2030s. 

The Federal Coalition is reportedly contemplating lifting Defence spending to 2.5% of GDP by 2029 – significantly faster than Labor.  The Coalition has already publicly committed to purchase a fourth squadron (28 copies, to bring the total fleet size to 100) of the highly capable Lockheed Martin F-35 fighter, which will help to the tune of some $3 billion.

A significant uplift in Defence spending would be constrained by a number of factors, including, potentially, the ability of the Defence Organisation to actually spend the money on the necessary timetable.  Operationalising the sorts of platforms contemplated such as the nuclear powered (conventionally armed) submarines will carry some material challenges, including the recruitment and training of ADF personnel to crew them.

Key measures

• Defence Budget for 2025: $51.5 billion
• 6.6% of total Budget
• Labor policy goal of Defence expenditure at 2.3% of GDP by early 2030s, cf Coalition policy goal of 2.5% by 2029
• Strong support for Defence capability investment – an additional $50.3 billion for the Integrated Investment Program over the next decade
• OTHR sale to Canada will be handy injection to Defence bottom line.

What to watch

Following the May Federal election, which must occur on or before May 17, 2025, whoever holds power may be faced with a hung Parliament and may also face challenges in the Senate to future big-spending Defence budgets.

In the interim, it remains to be seen whether the Coalition will pull the camouflage covers off its Defence policy and spending proposals pre-Election

5. Jobs and education

Authored by: Wendy Miller

The Budget is focused on increasing wages and/or workforce numbers in all levels of key care industries.  Construction industry incentives support the Government’s plan to build more homes for Australians.  Other measures are aimed at easing cost pressures or removing impediments to income-earning: banning non‑compete clauses for low- and middle‑income earners which restrict movement to higher‑paying jobs; cutting student and graduate debt; and guaranteeing 3 days a week of subsidised early education and care to increase parents’ workforce participation. 

Key measures announced by the Government include:

• Ban on non-compete clauses: legislate a ban on non-compete clauses for workers earning less than the high-income threshold in the Fair Work Act (currently $175,000), to remove restrictions on workers that restrict their ability to move to more productive, higher-paying jobs
• Wage increases for key care industries: wages increases for key care industries, including $2.6 billion for further increases to the award wages of aged care nurses and $3.6 billion to support wage increases for early childhood education and care workers;
• Support for growth of key care industries: $662.6 million to grow the primary care workforce, including providing a pathway for 2,000 more doctors in the workforce each year by 2028 and 400 more postgraduate scholarships to upskill nurses and midwives
• Boosting the construction workforce: from 1 July 2025, eligible apprentices in housing construction occupations will receive up to $10,000 in financial incentives over the course of their apprenticeships, to encourage more people into housing construction trades and ensure Australia has the workforce needed to deliver on the Government’s target of building 1.2 million homes over the next 5 years
• Improve affordability of early childhood education and care: replace the Child Care Subsidy activity test with a new 3 Day Guarantee, so that every child is eligible for at least 3 days per week of subsidised early education – this is also aimed at increasing parents’ workforce participation by minimising career disruptions and enabling accumulation of work experience
• Invest in every stage of education, including:
  • Early childhood: $1.0 billion to establish the Building Early Education Fund to increase the supply of high-quality early childhood education and care places across Australia, especially in priority and under-served markets, including the outer suburbs and regional Australia
  • Public schools: the Government is providing $407.5 million over four years from 2025–26 (and $7.2 billion from 2029–30 to 2035–36) to jurisdictions that have signed Better and Fairer Schools Agreement (Full and Fair Funding 2025–2034) bilateral agreements, and finalising agreements with other jurisdictions to put all Australian public schools on a pathway to full and fair funding
  • TAFE: legislate to make permanent 100,000 Free TAFE places every year from 1 January 2027
  • Universities: implement reforms to the university funding system that will provide more Commonwealth Supported Places and extra support for students from under-represented backgrounds to enrol in universities and complete their degrees
• Cutting student and graduate debt: the Government will cut student debts by 20 per cent with effect before indexation is applied on 1 June 2025 (wiping $16 billion from outstanding student loans) and make the repayment system fairer by moving to a marginal repayment system with a higher minimum repayment threshold.

What to watch

We will monitor, in particular, the progress of the proposed ban on non-compete clauses which, if enacted, may require businesses to review their employment contracts.  At this stage, it is not known whether such a ban would affect existing contracts, or only prospective contracts.  More will be known following the release of draft legislation.

6. Energy

Authored by: Aditya Shivam

The Budget continues to support the government’s goals of reducing cost of living pressures, protecting retail consumers and transitioning Australia’s mining and manufacturing industries towards being more environmentally friendly.

Key measures

Energy Bill Rebate – Reducing headline inflation and cost of living measures

Every Australian household and around one million small businesses will receive $150 worth of rebates ($75 for the last two quarters of 2025) to their electricity bill which will be automatically applied in quarterly instalments to consumers’ retail bills. The new rebate will add to existing rebates that have been provided to consumers and will cease at the end of 2025.

Whilst there has been significant discussion as to the efficiency of these subsidies, and whether the appropriated funds:

• would be better directed to electrification measures for households or grid infrastructure projects that will provide long-term energy bill relief; and
• should be means tested to ensure the rebates provide the greatest marginal benefit to consumers,

the government has pursued these rebate mechanisms to directly target and reduce headline inflation figures (~0.5%) in the short-run whilst simultaneously providing cost of living relief to households and certain small business customers.

Green Aluminium Production Credit – Energy transition

The Budget seeks to appropriate $2 billion (over 19 years) to assist aluminium smelters to transition to renewable energy, with payments to be made available from 2028-29 for a period of 10 years. The credits will be issued pursuant to an emissions-linked credit contract, which will be tied to the amount by which aluminium smelters reduce scope 2 emissions with the intention of the regime to encourage smelters to shift to renewable electricity before 2036.

It is expected that the proposed credit-scheme will utilise the recently announced product guarantee or origin framework passed in the Future Made in Australia (Guarantee of Origin) 2024 (Cth) to track emissions related to aluminium production.

Focus on regulatory compliance – Energy Market Compliance

The Treasurer has flagged further funding for the Australian Consumer and Competition Commission (and through it the Australian Energy Regulator) to ensure, and further enforce protections for retail energy consumers. Particular emphasis was made in the Treasurer’s speech to supporting enforcement and protections to help ensure that “energy companies offer customers cheaper deals; pensioners receive the discounts they are entitled to; and Australians get the value they deserve”.

To that extent, the Government has appropriated $3.9 million in budget year 2025-26 for the ACCC to extend its National Electricity Market Inquiry and enforcement activities to protect consumer price outcomes.

Green Iron Investment Fund – Energy transition

The Budget appropriates $1 billion over seven years from 2024-25 to fund green iron project through capital grants to support producers to establish or transition into low emission facilities in Australia. $500 million has been attributed to the Whyalla steelworks.

Whyalla Steelworks – Energy transition and critical infrastructure

Further clarity has been provided about the extent of support being provided as part of the joint State and Federal support package for the embattled Whyalla steelworks. Budget papers suggest that the government will contribute $192 million over two years from 2024-25 (in addition to the $500m appropriated in the Green Iron investment Fund) for the administration costs of the Whyalla Steelworks.

CEFC

The Government has ‘reannounced the $2b re-capitalisation of the CEFC to invest in renewable energy, energy efficiency and low emissions technologies (see here).

What to watch

Look out for potential announcements relating to domestic gas supply which have been flagged in the media but have yet to be announced.

7. ESG / Future Made in Australia

Authored by: Jason Barnes

Building on the Government’s existing $22.7 billion Future Made in Australia agenda – including the enactment of the Future Made in Australia legislative framework and legislating $13.7 billion in hydrogen and critical minerals production tax incentives in late 2024 / early 2025 - this Budget unlocks:

• additional investment in renewable energy and low emissions technologies, and
• private investment in the priority areas, principally green metals.

Compared to the Future Made in Australia measures announced prior to, and as part of, last year’s Federal budget, these measures are relatively modest and focus on green metals of varying forms.  Many had also been announced earlier this year, or the Government has already provided funding for them. 

However, given the Coalition’s opposition to many aspects of the Future Made in Australia agenda, these measures may act as a further political wedge ahead of the upcoming Federal election.

Key measures

• The Government is unlocking $8 billion of additional investment in renewable energy and low emissions technologies through a $2 billion recapitalisation of the Clean Energy Finance Corporation
• The Government has allocated $1.5 billion in support for priority areas through the Future Made in Australia Innovation Fund, including $750 million for green metals, $500 million for clean energy technology manufacturing capabilities and $250 million for low carbon liquid fuels
• The $2 billion Green Aluminium Production Credit will support Australian aluminium smelters to transition to renewable energy, and the $1 billion Green Iron Investment Fund will accelerate the development of this new industry. More details of these measures are provided under “Energy”
• The Government is establishing a new Front Door for investors with major transformational proposals to make it simpler to invest in Australia and attract more global and domestic capital. From September 2025, the Front Door will begin to act as a single‑entry point for investors, providing priority projects with coordinated facilitation services, guided by an Investor Council

What to watch

We will continue to watch and monitor the progressive implementation of supports under Future Made in Australia, including the development of community benefit rules in respect of the hydrogen and critical minerals production tax incentives.  More will be known following the upcoming Federal election.

8. Infrastructure

Authored by: Jane Ma

The Government will build a better future through considered infrastructure investment, prioritising on road and rail infrastructure, new housing infrastructure and new water infrastructure projects.

Road and rail infrastructure

Notably in this Budget, the Government will provide $17.1 billion over ten years from 2024-25 for road and rail infrastructure priorities to support productivity and jobs.

Funding includes $15.6 billion over ten years from 2024-25 for new Infrastructure Investment Program projects across Australia, including:

• $7.2 billion for safety upgrades on the Bruce Highway in Queensland;
• $2.0 billion to upgrade Sunshine Station and $1.0 billion for the Road Blitz in Victoria;
• $2.8 billion for projects in NSW, including $115.0 million to upgrade Terrigal Drive and the following projects in Western Sydney:
  • $1.0 billion to preserve the corridor for the South West Sydney Rail Extension;
  • $580.0 million for upgrades to Townson Road, Burdekin Road and Garfield Road West to support housing growth and flood resilience; and
  • $500.0 million to upgrade Fifteenth Avenue.
• $1.5 billion over eight years from 2024–25 for existing Infrastructure Investment Program projects or corridors, including:
  • $1.1 billion for the Western Freeway in Victoria;
  • $200.0 million for the Rockhampton Ring Road in Queensland;
  • $50.0 million for Homebush Bay Drive in New South Wales; and
  • $30.0 million for the Monaro Highway Upgrade in the Australian Capital Territory.

This measure builds on the 2024-25 MYEFO measure titled Building Australia's Future - Building a Better Future Through Considered Infrastructure Investment.

Building more homes more quickly

The Government has committed $1.5 billion through the Housing Support Program to State and Territory and local governments to fund projects, including additional social housing.

With the Government also offering $3 billion in incentive payments under the New Homes Bonus, up to $4.5 billion in funding is committed for states to address infrastructure backlogs and reduce barriers to new housing.

National Water Grid Fund - Responsible investment in water infrastructure

The Government will provide $87.7 million over three years from 2025-26 to deliver new water infrastructure projects.

Funding includes $87.5 million over three years from 2025-26 in additional funding for the Cairns Water Security Project in Queensland to secure long-term water security for Cairns.

What to watch

Whilst there is significant funding in various infrastructure projects in this Budget, it may take years for the Government’s infrastructure projects to be implemented.

9. Industry assistance

Authored by: Jason Barnes 

The Government has announced a range of measures designed to assist specific businesses, as well as a potentially significant labour market structural reform.

Key measures

• The Government will provide $20.0 million in 2025–26 to the Department of the Prime Minister and Cabinet for initiatives to encourage consumers to buy Australian‑made products.
• The Government will ban non‑compete clauses for workers earning less than the high-income threshold in the Fair Work Act (currently $175,000). This could increase affected workers’ wages by up to 4 per cent or $2,500 per year by freeing many Australian workers to move to more productive, higher‑paying jobs and start their own business.
• The Government will close loopholes in competition law that currently allow businesses to:
  • fix wages by making anti-competitive arrangements that cap workers' pay and conditions, without the knowledge and agreement of affected workers; and
  • use 'no-poach' agreements to block staff from being hired by competitors.
• In addition to other measures directed towards the Whyalla Steelworks, the Government is also backing in the future of steelmaking in Whyalla by working with the South Australian Government to provide immediate support for the Whyalla Steelworks, local business creditors and the longer-term transformation of the Steelworks. $219.3 million over two years from 2024–25 will be provided to provide immediate on the ground support and to stabilise the Whyalla Steelworks during administration.
• The Government is providing up to $130 million in secured loans to keep Rex Airlines operational during its extended voluntary administration to 30 June 2025, while a competitive sale process is held. This will help maintain critical aviation services for regional and remote communities.

What to watch

Look out for further details on how the “Buy Australia” measure, as well as the Coalition’s response to the non-compete clause and competition law announcements.

Also, one of the Government's key tax measures that is currently still outstanding is the proposed extension of the instant asset write-off measures for 2024-25.  There is no mention in the Budget papers of the measure, though it is alluded to in some media releases.  It is possible this measure will be passed this week before the election is expected to be called.

10. Technology / Digital

Authored by: Capucine Hague

Outside of clean energy technologies, the Budget does not outline significant new funding allocations for technology or digital infrastructure projects. The headline item is the Government’s commitment to invest up to $3 billion to ‘complete the NBN’ by upgrading up to 662,000 premises from ‘fibre-to-the-node’ to ‘fibre-to-the-premises’ connections, which was announced earlier this year. The Budget also reiterates the Government’s commitment to support small businesses to uplift their digital and cyber security capabilities, through continued funding of existing programs, noting that $60 million has been allocated to these projects since the 2023-24 Budget.

We would expect that, broadly speaking, these headline measures will attract bipartisan support.

When the NBN funding was originally announced in January, the Coalition indicated that, if elected, they would not seek to block the upgrade project going ahead (although since then, the Coalition has criticised funding allocations towards the NBN, including continued funding for upgrades to the NBN Fixed Wireless network, citing limited uptake of upgrade opportunities from end users). The major parties have also recently expressed opposing views on whether nbn Co should be eligible for privatisation in future, with Labor introducing a Bill in late 2024 seeking to prevent privatisation from occurring.

The Coalition has also expressed support for digital and cyber security support programs for small businesses in the past.

Other key measures

• Completion of the NBN. Up to $3 billion equity investment over 7 years from 2024-25, to ‘complete’ the NBN, by offering the remaining 622,000 premises on the ‘fibre-to-the-node’ network the opportunity to upgrade to the ‘fibre-to-the-premises’ network technology. This upgrade process will involve replacing legacy copper lines between the premises and the node with fibre cables. 54% of the impacted premises are located in regional Australia. This project fulfils an election promise made in the last election by the Labor party.
• Funding for digital and cyber-related training. The Budget confirms continued funding for the Digital Solutions program, Cyber Wardens program, Small Business Cyber Resilience Service and Cyber Health Check – each of which supports small businesses to upskill in digital and cyber capabilities. It also allocates $3.4 million to the Australian Public Service Commission to continue its pilot APS Academy Campus program in regional Australia, to provide digital and data training and employment opportunities.
• Other technology upgrades. The Budget also allocates funding to specific Commonwealth agencies, to support technology upgrade projects, including $150 million over four years from 2025-26 to the National Disability Insurance Agency, to continue enhancing its fraud detecting information technology systems. As part of a broader disaster support package, $5.4 million has also been allocated in 2025-26 to support the National Emergency Management Agency’s continued engagement with states and territories to develop a Public Safety Mobile Broadband Program, a national high-speed and high-capacity mobile broadband emergency response capability (this funding covers discovery exercises, not network build or technology rollout).

Government response to the Board of Taxation’s Review of the tax treatment of digital assets and transactions in Australia

Ahead of the release of the Budget, on 21 March 2025, the Hon Jim Chalmers MP, Treasurer and the Hon Stephen Jones MP, Assistant Treasurer released the Government's response to the Board of Taxation’s Review of the tax treatment of digital assets and transactions in Australia dated February 2024 <Government response to the Board of Taxation’s Review of the tax treatment of digital assets and transactions in Australia | Treasury.gov.au>.  In response to the recommendations made by the Board of Taxation, the Government:

• agrees in principle with using the principles framework developed by the Board as a broad guide for assessing the suitability of any potential amendments to the tax laws in relation to digital assets and transactions;
• agrees that no crypto specific taxation legislation should be introduced at the current time; and
• notes that DAOs, DeFi, GameFi, and NFTs are four areas that may benefit from further consideration as the market develops.

What to watch

The Budget does not expressly address funding in response to the rise of artificial intelligence (whether directly, e.g. through investment in the technology or regulatory framework, or indirectly, e.g. through upskilling and retraining programs to address potential disruption to jobs). There is also no mention of new funding to satellite or mobile network projects, to support the Labor party’s proposed new universal service obligation for mobile.