24/03/2025 04:28:52
Treasurer Jim Chalmers will deliver Labor’s fourth federal budget on Tuesday at 7:30pm, with promises of “substantial” cost-of-living relief and a pledge to maintain fiscal discipline amid ongoing global and domestic headwinds.
Originally, the government had planned to avoid handing down a budget at all. Prime Minister Anthony Albanese was widely expected to call an April 12 election, but the arrival of Tropical Cyclone Alfred earlier this month disrupted those plans. With the writs unsent, the government was forced to proceed with a full budget, now expected to serve as the launchpad for a May election.
Dr Chalmers has made clear the budget’s central theme: targeted relief for Australians still struggling under the weight of high prices — but without fuelling inflation.
Key measures include:
While the government has backed away from its 2022 pledge to cut power bills by $275, Chalmers defended the measures taken: “Electricity bills came off by 25% last year,” he said, citing last year’s $300 rebate and broader inflation data.
The budget is expected to forecast a cash deficit of $26.1bn for 2024–25, following a surprise surplus last year — Australia’s first in 15 years. Treasury has downgraded expected revenues by $11.3bn over the forward estimates, reflecting weaker commodity prices and a normalising labour market.
Wages rose 3.2% over the year to December, while inflation fell to 2.4%. Unemployment remains steady at 4.1%, and GDP grew 0.6% in the December quarter.
Despite these indicators, Chalmers warned that any revenue upgrade this year would be the “smallest of our four budgets by far.”
The fallout from Cyclone Alfred will be reflected in the budget, with Treasury estimating a $1.2bn hit to GDP, including the loss of 12 million work hours and potential upward pressure on fruit and vegetable prices. Overall disaster spending is now expected to rise to $13.5bn, up from $11.6bn in December.
The budget also factors in global risks, including escalating US trade tensions. Modelling by Treasury suggests that Donald Trump’s proposed steel and aluminium tariffs would cost Australia less than 0.02% of GDP directly, but indirect effects could raise that to 0.1% — equivalent to around $3bn.
Housing affordability remains a focus, with:
In health, the government is:
On infrastructure, Queensland’s Bruce Highway will receive $7.2bn, while Victoria and western Sydney will benefit from multi-billion-dollar transport and rail investments. A further $1bn has been set aside for future rail corridors in western Sydney.
Shadow Treasurer Angus Taylor has criticised the government’s spending trajectory and hinted at deep cuts if the Coalition is elected, including:
But Taylor declined to provide detailed costings for these proposals, saying more would be revealed after the budget.
The Coalition supports the government’s $1.8bn power bill rebate extension but argues it offers short-term relief only, labelling it “a bandaid on a bullet wound.” Opposition Leader Peter Dutton is expected to deliver his budget reply speech on Thursday, with promises of new energy supply plans and further cost-of-living proposals.
Treasury is expected to slightly downgrade growth forecasts from those issued in December, when GDP was tipped to grow 1.75% in 2024–25. Inflation is now tracking slightly below Treasury’s forecast of 2.75%.
Despite some fiscal improvements since Labor took office in 2022, the path back to a budget surplus remains uncertain. Chalmers has admitted a return to surplus “remains to be seen,” with structural pressures such as the NDIS (forecast to reach $60bn by 2030) weighing heavily on the budget outlook.
With most key policy measures already announced, Tuesday’s budget is expected to include “provisions” for additional spending to be revealed during the campaign. That includes potentially significant policies around childcare, where Labor has signalled aspirations for universal access, though details have been deferred.
Prime Minister Albanese is expected to call an election shortly after the budget is delivered, with May 3 or May 10 the most likely dates.