Money
Budget 2025: All the hip-pocket help for over 50s
Pre-election sweeteners help the deficit go down… Nicole Pedersen-McKinnon breaks the Budget down for us.
By Nicole Pedersen-McKinnon
With a May election a certainty, the government splashed billions in Tuesday night’s Budget to salve your cost of living… and secure your vote.
And we are guaranteed to get some of the pre-election sweeteners, with the Coalition already saying that it, too, will deliver a few of Labor’s announced ‘sugar hits’.
Here’s the bottom line from the Budget, for you.
Read Nicole's breakdown of the Coalition's Budget reply here.
Tax cuts for all
The government has pulled a rabbit out of its hat and announced surprise tax cuts for all… effectively on 2 fronts.
The first is a permanent reduction in the rate of the lowest tax rate. This means that, although everyone will get this cut, the benefit will be felt more strongly at the lower income levels…after all, it affects a larger share of their income.
The rate of tax that will apply on income from $18,001 to $45,000 will fall from the current 16% to 15% from July 2026.
Then, from July 2027, the rate will go down from 15% to 14%.
The cut will deliver, to more than 12 million Aussies, $268 next year and $536 the following year. The full effect will be felt by everyone earning over $45,000.
The cost is $17billion over three years.
The Coalition has come out immediately and rejected the move, saying it’s both a hoax that wouldn’t buy “a beer” and also fiscally irresponsible.
Labor’s second, quasi tax cut is an increase in the threshold at which the Medicare levy kicks in.
For singles, it goes from $26,000 to $27,222.
For couples, it increases from $43,846 to $45,907.
The government says that will mean more than 1 million Australians on lower incomes will continue to be levy-exempt or pay the levy at a reduced rate.
Energy cashback
In the third extension of the giveaway, Labor will keep the $75-a-quarter energy rebates for a further six months.
The $150 will be given to all households, with no means testing… and that blanket approach, which even sees wealthy Aussies get the rebate, is what opposition parties don’t like.
But we also know that prices in the eastern states are set to rise by as much as $200 a year.
And in an election year, the Coalition has grudgingly supported this $1.8billion measure.
More bulk billing
Federal Treasurer Jim Chalmers has said multiple times that the election “will be a referendum on Medicare”.
However, here the Coalition has shown initial support for some of Labor’s $8.5billion policy announcements… and they are extensive.
Central among them is an increase to the bulk-billing incentive for GPs.
The government says this will mean 9 out of 10 visits to the doctor will be entirely covered by Medicare by just 5 years’ time.
The money will fund 18million extra bulk-billed visits a year, as the government moves to widen free GP consultations from children and pensioners to a near universal system.
But – with increased difficulty seeing a doctor, Labor is increasing its commitment to one of its flagship health policies: urgent care clinics.
More emergency care clinics
These clinics provide emergency bulk-billed access to medical treatment for non-life-threatening conditions.
They’re both designed to deal with access problems to GPs and overloading problems for hospitals (for which there is also an extra $1.7billion).
Fifty more clinics will be added to the 78 that already exist, at a cost of $644million, with the aim of having them open by the end of the financial year.
Cheaper medicine
Help is also at hand for the cost of medicine.
The out-of-pocket price of the majority of products listed on the Pharmaceuticals Benefits Scheme will come down, and not insignificantly.
The cost will be capped at $25 rather than the current $31.60.
For concession card holders, the cap will remain at $7.70.
The measure will cost $689million.
Money for women’s health
In recognition of concerns women are not receiving adequate care for common conditions, $573million will be allocated for women’s health.
This will go towards specialist treatment clinics for endometriosis and pelvic pain.
It will also cover the cost of the PBS listing of more birth control and menopause hormone replacement drugs and “better support through menopause”.
Because Chalmers told the house: “Women’s health is a national priority.´
HECS debts cut
This one is for your kids, or even grandkids… and it will absolutely be decided at the election – and by the result – as the Coalition opposes it.
It’s a $16billion measure that will forgive 20% of the accrued debt of university and TAFE graduates with some left to repay.
That means, roughly, it will help out graduates from the past 10 years – is that a member of your family?
Speaking of your family – and particularly if you are worried about or thinking about helping them with home ownership – the government has also announced a welcome expansion to the Help to buy housing accessibility scheme.
Help to Buy
Help to Buy is the shared equity scheme that passed parliament late last year and for which applications open later this year.
It will allow people who don’t currently own a home (you can previously have owned) to pay just 70% of an existing property or 60% of a newly built one.
The government will chip in the rest and be repaid either when the property is sold or, voluntarily, earlier.
They also only need to put in a 2% deposit.
But I’ve said often that eligibility was far too restrictive. Households needed income below $120,000 (a level at which it would be difficult to get a loan) and could only buy a home with a value capped at the median dwelling price.
That last scheme setting – which was dragged down by unit prices – meant a way-too-low cut-off that ruled out most houses.
It will be sensibly adjusted to median house price.
And the allowable household income will go all the way up to $160,000 now.
This adds almost $1billion to the now $6.3 billion scheme cost.
But note there are still only 10,000 places a year over 4 years… so it’s going to be an absolute scramble for places when they are released through Housing Australia.
But unlike the home guarantee schemes for first homebuyers and single parents, this one is attractive in that the loans themselves are significantly less and therefore the risk is lower.
Budget deficit
After years of deficits, Labor was able to declare a surplus in each of the past 2 years.
But with dual wars overseas, unexpected tariffs and rising protectionism from the United States, slowing growth in China, and – domestically – Cyclone Alfred, we are currently staring at deficits for the foreseeable future.
In Jim Chalmers’ words though: “This year’s deficit is still $207billion better than we inherited [from the Coalition].”
He went on to say that half of that was achieved by spending restraint and cuts.
The deficit this year will be $27.6billion, and is forecast to be $42.1billion in 2025-26, $37.2billion in 2027-28 and $36.9billion in 2028-29.
But economic growth is forecast to lift from 1.5% to 2.5% and the government – or more likely the Reserve Bank’s strict monetary policy – has avoided a recession.
What’s more, Labor says the inflation genie is safely back in the bottle and that wages growth will continue – finally – to outpace it.
Let’s wait and see the Coalition’s response, in Thursday’s Budget reply.
Feature image: iStock/FreshSplash
Read the full budget details at budget.gov.au. Care has been taken to check the figures quoted in this article but all information should be verified with the source material.
More money advice from Nicole: