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The Australian federal budget for 2024-25 was presented by Treasurer Jim Chalmers on 14 May 2024, allocating an estimated A$715 billion across the federal government and state and territory governments. The budget is a comprehensive plan that outlines government spending and revenue collection, addressing various sectors such as social security, welfare, health, education, and defence, and economic growth. It includes significant allocations for social security and welfare, health services, education, defence spending, and managing public debt. The budget also factors in global economic factors, such as iron ore prices and the Chinese market slowdown, which can impact Australia's revenue and expenditure plans. The 2024 budget aimed to support Australians and foster a more robust, inclusive, and sustainable economy, with a focus on cost-of-living challenges, infrastructure investment, and emission reduction initiatives.
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Social security and welfare
In 2025, the Australian Taxation Office received nearly AU$1 billion in additional funding for compliance activities. However, the budget did not signal any tax reform, which may be needed to fuel Australia's future growth and protect its competitive position globally.
The 2025-26 Federal Budget has been a balancing act for the government, trying to appeal to voters before an election through personal income tax cuts and cost-of-living relief. The budget includes a reduction in personal income tax rates in two phases: the 16% tax rate will drop to 15% from 1 July 2026, followed by a further drop to 14% from 1 July 2027. The government has also committed AU$1.8 billion to combating cost-of-living pressures, in the form of additional quarterly energy bill rebates for over 10 million households.
The budget also includes AU$648 million in Medicare levy relief for low-income earners, and AU$19 billion has been wiped from existing HELP and student loan debts via a 20% reduction to all debts.
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Defence spending
Defence budgets in Australia provide information on the allocation of public resources to the portfolio's priorities. Defence spending in Australia has been increasing over the years, with defence funding for 2023-24 exceeding $50 billion for the first time. This accounts for about 2% of the country's GDP. The Australian government has committed to implementing the recommendations of the Defence Strategic Review and commencing work on Australia's nuclear-powered submarine program.
The 2023-24 Defence budget includes funding for various projects, including the acquisition of precision missile capabilities and anti-ship missiles. The budget for these projects is estimated to be in the hundreds of millions of dollars, with a significant portion being spent in the 2023-24 financial year. The Royal Australian Air Force (RAAF) is also boosting its war stocks of air-to-air missiles and acquiring additional uncrewed aircraft, with a total acquisition cost of $454 million.
The Australian government has also acknowledged spending for the initial implementation of the nuclear-powered submarine program over the next four years, although the specific amount has not been disclosed due to commercial sensitivities. The government has committed to investing more than $19 billion to implement the immediate priorities identified in the Defence Strategic Review (DSR), including $9 billion for the nuclear-powered submarine program, $4.1 billion for long-range strike capabilities, and $3.8 billion to enhance northern base infrastructure.
While the Australian government has made significant investments in defence spending, there are concerns about the lack of focus on productivity and business investment. The key to the nation's future prosperity is productivity, and it remains to be seen what further announcements and measures will be implemented to boost productivity and Australia's competitive position globally.
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Cost of living
The Australian Federal Budget for 2025-26 has been crafted to appeal to voters before the election, with personal income tax cuts and cost-of-living relief at its core. The budget does not include any tax reform, but it does provide tax cuts for all taxpayers, with additional cuts in July 2026 and July 2027.
The budget also includes $19 billion wiped from existing HELP and student loan debts, a reduction of 20%. $1.8 billion has been committed to easing cost-of-living pressures, with quarterly energy bill rebates for over 10 million households, and $648 million in Medicare levy relief for low-income earners.
The government has also extended the Energy Bill Relief Fund through to 31 December 2025, at a cost of $1.8 billion. This is expected to provide some relief to households, along with measures to increase Medicare bulk-billing and reduce the price of medicines under the Pharmaceutical Benefits Scheme.
The budget has also committed to supporting Australian manufacturing, with additional funding for the metals industry, including green iron projects and assistance for transitioning to renewables.
The previous Federal Budget for 2022-23 also focused on cost-of-living relief, with a $420 increase to the Low and Middle-Income Tax Offset, a one-off $250 bonus payment for social security support recipients, and a six-month halving of the fuel excise.
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Tax cuts
The 2025 Australian Federal Budget, unveiled by Treasurer Jim Chalmers, includes tax cuts for all taxpayers. The budget has a $42 billion deficit, which Chalmers attributed to global trade disruptions, the economic cost of weather events, and wars in Ukraine and the Middle East. He referred to ""storm clouds" in the global economy.
The tax cuts will take effect in 2026 and 2027, adding to the first round of tax cuts that began in July 2024. From July 1, 2026, the tax rate for the lowest bracket will be reduced from 16% to 15%. This applies to taxable incomes between $18,201 and $45,000. The rate will be further reduced to 14% on July 1, 2027. These cuts will cost the budget $17.1 billion. The tax system will now have consecutive tax brackets, with everyone receiving their first $18,200 tax-free.
The average worker earning $79,000 will receive a tax cut of $268 in 2026 and $536 in 2027, or about $10 in extra savings per week. Treasurer Chalmers stated that these tax cuts would ""top up" changes to the stage 3 tax cuts announced the previous year. He added that they would allow Australians to "earn more and keep more of what [they] earn."
However, the Coalition has stated that it will not support the tax cuts, deeming them a ""cruel hoax." Opposition treasury spokesperson Angus Taylor argued that the cuts are insufficient to address the financial stress that Australian families are currently facing. He claimed that the cuts would not help restore household budgets, especially for those with mortgages.
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Health
The Australian government has outlined its budget for health and aged care for the 2025-26 financial year. The budget includes funding for Medicare, digital health, and health and aged care.
In the 2023-24 budget, the Australian government provided A$6.1 billion in funding for Medicare, with nearly A$1 billion going towards digital health over four years. This investment in digital health includes modernising the 'My Health Record' system, making it easier for patients to access and securely share their health data.
The Queensland Government budget for 2024-25 allocated $26.739 billion to health, making it the largest component of budgeted expenditure. This is a slight increase from the 2022-23 budget, where health spending per person in Queensland was $9,739, higher than the national average of $9,597.
The proportion of health expenditure allocated to public health has increased from a decade ago (1.1% in 2012-13) but has decreased from the pandemic high of 3.9% in 2021-22. Nationally and in all states, public health spending remains below the 5% recommended by professional health organisations.
The Australian government's Health Portfolio Budget Statements outline how the government has allocated resources for health outcomes for all entities within its portfolio. These statements are available for the financial years 2014-15 to 2019-20.
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Frequently asked questions
The Australian budget for 2024-25 was A$715 billion.
Social security and welfare, which accounts for over a third of all spending.
Health is allocated around 15% of the budget, which amounts to $15.34 out of every $100 spent.
The annual deficit was originally thought to grow to A$42.8 billion for 2025–26, but that figure was revised to A$34.5 billion.
A surplus of around A$4 billion was recorded in the 2024 budget, but it is not expected to last, with a deficit forecast for the 2023-24 financial year.
