Australian Federal Budget 2025-26: Marsh McLennan analysis
In a pre-election budget shaped by cost-of-living pressures and global uncertainty, Treasurer Jim Chalmers unveiled cost-of-living relief measures, including modest tax cuts for all workers and funding to lower the cost of healthcare.
Positioned by the Treasurer as "a plan for a new generation of prosperity in a world of uncertainty," the 2025-26 Budget addresses immediate challenges while acknowledging the looming "storm clouds" in the global economy. Despite confirming a deficit of $27.6 billion, Chalmers asserted that Australia is "among the best placed" to navigate global uncertainty.
Key highlights:
- Following consecutive surpluses, this year’s Budget returns to a deficit of $27.6 billion but projected debt levels remain low compared to other developed economies
- Cost-of-living relief measures include small tax cuts for all Australian taxpayers in both the 26-27 and 27-28 financial years and a 6-month extension of the energy rebate for eligible households and small businesses
- The government committed at least $1.2 billion to Ex-Tropical Cyclone Alfred recovery, with a short-term impact on growth and inflation.
- $500 million Clean Energy Manufacturing Fund aimed at bolstering the production of renewable energy components.
- Critical Minerals Production Tax Incentive, offering a 10% production credit on relevant processing and refining costs for battery production, green hydrogen, and critical minerals to bolster domestic supply chain resilience
- Significant investments in vocational education and training, including additional fee-free TAFE places, aimed to enhance skill development, and strengthen economic stability, equipping Australia to thrive in a transitioning global economy.
- The 2025–26 Budget did not introduce new superannuation measures, but key proposals like Payday Super, the $3 million super tax, and financial advice reforms remain in progress.
- Additional funding to the ATO to aid timely payment of tax including an estimated $31.0 million in unpaid superannuation to be disbursed to employees.
- Broader reforms continue to focus on improving access to financial advice, expanding retirement income options, and enforcing service standards.
- The abolition of non-compete clauses that hinder job mobility and suppress wages for affected workers is anticipated to increase wages.
- $793 million of funding targeting specific women’s healthcare and increased funding for childcare has the potential to assist in increasing female participation in the workforce.
- $46 million committed to improving digital mental health services - supporting both individuals and workplace wellbeing initiatives.
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