After delivering back-to-back budget surpluses, Treasurer Dr. Jim Chalmers has this year handed down a Labor budget in deficit. Watch key moments from his full 2025 budget speech.
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00:00This budget builds on the progress that we have made together. It's a plan to help with the cost
00:05of living, with two new tax cuts and higher wages, more bulk billing and more help with
00:11electricity bills, cheaper medicine and less student debt. It's a plan to build Australia's
00:18future with more homes, new investments in skills and education, competition reforms and a future
00:25made in Australia. This is a responsible budget with five main priorities. Helping with the cost
00:32of living, strengthening Medicare, building more homes, investing in every stage of education
00:39and making our economy stronger, more productive and more resilient.
00:46The global economy is volatile and unpredictable. The 2020s have already seen a global pandemic,
00:53global inflation and now the threat of a global trade war. The whole world has changed as a
00:59consequence. Tariffs and tensions abroad have been accompanied by storms here at home.
01:06Ex-tropical cyclone Alfred could wipe a quarter of a percentage point off quarterly growth.
01:12North and far north Queensland have flooded too. Storm clouds are gathering in the global economy
01:19as well. Trade disruptions are rising. China's growth is slowing. War is still raging in Europe
01:26and a ceasefire in the Middle East is breaking down. Treasury expects the global economy to grow
01:32three and a quarter percent for the next three years, its slowest since the 1990s. It's already
01:38forecasting the two biggest economies in the world will slow next year, with risks weighing more
01:44heavily on both. Australia is neither uniquely impacted nor immune from these pressures,
01:50but we are among the best placed to navigate them. We're emerging from this spike in global
01:57inflation in better shape than almost any other advanced economy. Growth is forecast to pick up
02:03from one and a half percent this year to two and a half percent in 2026-27. The private sector is
02:10resuming its rightful place as the main driver of this growth, with Treasury upgrading forecasts
02:17for growth in private demand to more than double next year compared to this one. Unemployment is
02:24now projected to peak lower at four and a quarter percent. Employment and real wage growth this year
02:30will be stronger and participation will stay near its record high for longer. Inflation is coming
02:37down faster as well. Treasury now expects inflation to be sustainably back in the band
02:44six months earlier than anticipated. Now, all of this means that the soft landing that we have
02:50been planning for and preparing for is now looking more and more likely. Because of our collective
02:57efforts, the worst is behind us and the economy is now heading in the right direction. But there's
03:05more work to do because we know that people are still under pressure. The cost of living is front
03:10of mind for most Australians, and it is front and centre in this budget. We know the welcome
03:17improvements in the aggregate numbers don't always immediately translate to how people are feeling
03:23and faring. We've made a lot of progress together, but we know that many people are still doing it
03:28tough. Our plan to rebuild living standards starts with cost of living help and wages growth.
03:35It includes more hip pocket help for households, two new tax cuts for every taxpayer,
03:41more energy bill relief, increasing wages and reforming non-compete clauses, more bulk billing
03:48and cheaper medicines, student debt relief and a fair go for families at the checkout
03:53and for farmers at the farm gate. Tonight, the government is proud to be delivering more tax
04:01relief. Every Australian taxpayer will get a tax cut next year and the year after to top up the
04:07tax cuts which began in July. This will take the first tax rate down to its lowest level in more
04:14than half a century. These additional tax cuts are modest, but they will make a difference.
04:20The average earner will have an extra $536 in their pocket each year when they are fully
04:26implemented. Combined with our first round of tax cuts, this is $2,190, and the average total tax
04:34cut will be $2,548, or about $50 a week. We will also increase the Medicare levy low income
04:44thresholds, which is extra tax relief for more than a million Australians.
04:50Our $17 billion in tax cuts are the biggest part of the responsible cost of living package
04:57in this budget, but they are not the only part. Electricity prices in the official data went down
05:0425 per cent last year, but they are still putting pressure on households around the world. Two
05:09rounds of energy rebates have helped take some of the sting out of energy costs.
05:15Tonight we are providing another $1.8 billion in energy bill relief. Every household and around
05:22one million small businesses will receive energy rebates until the end of 2025. This means cutting
05:28another $150 off bills this year. The government will also be using the powers and penalties of
05:36the energy regulators and the ACCC to help ensure that energy companies offer customers
05:42cheaper deals, that pensioners receive the discounts they are entitled to, and that
05:47Australians get the value they deserve. At the core of our economic plan and at the very heart
05:55of this Labor government is a simple objective—to ensure more Australians earn more and keep more
06:03of what they earn. In the five quarters before our first budget, real wages fell in annual terms.
06:10They have now grown for the last five. Real incomes per capita are now growing too.
06:16This is the dividend of our economic plan to get inflation down, wages up and tax cuts flowing.
06:22Tonight we are providing an additional $2.6 billion to fund pay rises for aged care nurses
06:29from March this year, so that the workers we trust to care for our parents and grandparents
06:36get paid properly for the work they do. We are reforming non-compete clauses to lift wages by
06:43up to $2,500 a year for workers covered by them. We have supported an historic wage increase for
06:50the early childhood educators and care workforce, and we have backed pay rises which ensure the
06:55national minimum wage has risen by almost $7,500 a year.
07:04We know that Australians, despite all of this, are still under pressure, and a lot of that pressure
07:09is felt at the checkout. That is why we are cracking down on the supermarkets by empowering
07:15the competition watchdog, making the Food and Grocery Code mandatory, increasing penalties
07:21and boosting competition. At the same time, we are targeting excessive surcharging and scams and
07:27unfair trading practices that harm consumers. A university education is a life-changing
07:35opportunity, but it should not leave Australians with a lifetime of debt. This year we will cut
07:4220 per cent of all student loan debts, raise the minimum repayment threshold and reduce
07:48repayment rates. Combined with our existing student debt relief, we will slash $19 billion
07:55in debt for more than three million Australians. Tonight we reduced the maximum price for a PBS
08:03script from $31.60 to $25. Pensioners and concession card holders will still pay $7.70 a script
08:12because we froze their costs as well. We are also investing $1.8 billion to list more life-changing
08:19and life-saving medicines on the PBS. For example, cutting the cost of a lymphoma treatment
08:26will save some Australians more than $600,000. The pharmaceutical benefits scheme is a great
08:35Labor creation, and it is a great Australian institution. We are strengthening it because
08:40Australians need us to, not weakening it because American multinationals want us to.
08:47A Labor government created Medicare as well, and only Labor governments strengthen it.
08:53Tonight we are proud to make the single biggest commitment to Medicare since its creation—a
09:00record $8.5 billion to lift bulk billing rates and build our health workforce.
09:06Because of this investment, nine out of 10 GP visits should be fully bulk billed
09:11by the end of the decade. More bulk billing will mean less pressure on families.
09:17These incentives mean there will be around 4,800 fully bulk billing practices around the country,
09:24making it easier to see a doctor and get the care that you need, and saving patients around
09:31$860 million a year. This budget also delivers new incentives for doctors to train as GPs,
09:39new scholarships for nurses and midwives and another 50 Medicare urgent care clinics.
09:46This is a $644 million investment in this budget to build on the 87 urgent care clinics
09:53that we have already opened. Four in every five Australians will live within a 20-minute drive
09:59of an urgent care clinic as a consequence—opening early, closing late, available on weekends,
10:06taking pressure off hospitals and emergency departments, and all you need is your Medicare
10:11card. Every single state and territory will also get more money for hospitals in this budget,
10:18funding that will reduce waiting times. Tonight we are locking in an extra $1.8 billion,
10:24taking our total contribution to public hospitals to $33.9 billion next year.
10:32We are proud to be investing $793 million in this budget in women's health to create
10:39more choices and lower costs and deliver better health care for women. This funding will help
10:46Australian women save on contraception, access more endometriosis and pelvic pain clinics,
10:52and receive better support through menopause. Because for our government,
10:57women's health is not a boutique issue or a question of special interest. It is a national
11:03priority. New plans for cost of living and health are accompanied by new investments in housing.
11:13We are tackling the housing shortage from every responsible angle, making home ownership more
11:19affordable for young Australians and for young families in particular. Our $33 billion plan will
11:26help build 1.2 million new homes before the decade is out. This includes $54 million to accelerate
11:35the uptake of modern methods of housing construction, which is all about building
11:40more homes more quickly. It supports our work to cut red tape and reduce financial barriers
11:46to more efficient construction methods. The first two rounds of the $10 billion
11:51Housing Australia Future Fund are helping to build about 18,000 social and affordable homes
11:58for those who need them most. Lifting the cap on Housing Australia's financial liabilities
12:05to $26 billion also helps in this regard. We are making sure new properties are well located
12:11and connected to the infrastructure that they require. Our housing support program
12:16is funding the crucial roads, water and power that these new homes need. Our national leadership
12:23is incentivising states and territories to reform their planning systems to accelerate
12:28new housing supply. To build more, we know that we also need to train more builders.
12:34That is why we are attracting more apprentices into the housing industry by doubling incentive
12:39payments so that eligible apprentices get up to $10,000 if they train up in the housing
12:45construction sector. A crucial part of this Labor government's economic plan relies on the
12:53transformational power of education—its power to turn aspiration and ambition into reality. This
13:00is why we are investing in every stage of education—to lay the foundation for a better and
13:06fairer system and to teach and train Australians for the jobs of the future.
13:13This all starts with early childhood education and care. We believe every child has the right
13:20to an early education to ensure that they do not start school behind. Cheaper childcare is also a
13:26cost of living relief with an economic dividend. A key part of our plan to rebuild living standards
13:33is to help people work more and earn more if they want to. That means breaking down
13:38the barriers to workforce participation. From January 2026, we are replacing the
13:44childcare subsidy activity test with a new three-day guarantee. This will make sure families
13:52are entitled to at least three days a week of subsidised early childhood education and care.
13:59We are also building more childcare centres in areas of need,
14:03investing $5 billion to expand access across the country and lift the wages of early educators,
14:11and charting a path to universal early education and care, regardless of a child's background or
14:17no matter where they live. We are also putting billions into public schools in this budget
14:24to open the doors of opportunity for more Australian children. We are fully and fairly
14:30funding public schools to help students catch up, keep up and finish school. This means public
14:37schools will finally be on track to reach the funding standard recommended in the Gonski review
14:43almost 15 years ago. On top of this, our fee-free TAFE program will help equip Australians for the
14:51jobs of the future. Over the next decade, nine out of 10 new jobs will require post-secondary
14:58qualifications. Almost half of these will be from vocational training. We have introduced
15:03legislation to lock in 100,000 free TAFE places annually from 2027, and we have committed $1.6
15:12billion to fund these places until 2035 to make it easier for Australians to train,
15:18retrain and upskill. We see this as an important way, or one way, to ensure Australians
15:26can be primary beneficiaries of all this churn and change that we are seeing around the world.
15:32Another is by investing in our comparative advantages, or by looking for opportunities
15:36to join with our partners in new, more resilient global supply chains, by becoming an indispensable
15:43part of the global net zero economy, by preparing our people to adjust to and succeed in the new
15:50world being created right in front of us, by building a future made in Australia.
15:57A big part of this depends on boosting productivity the right way,
16:00to lift living standards over the long term. Our plan for productivity growth
16:06does not mean making Australians work longer for less. It is about investing in our people
16:12and doing more to unlock our potential by boosting dynamism and competition in our economy.
16:19We have created a $900 million fund to reward state governments for implementing reforms
16:24that promote competition, and tonight we are advancing this substantial economic reform
16:30agenda. We will abolish non-compete clauses for most Australian workers. Non-competes are holding
16:38too many Australians back from switching to better, higher-paying jobs. More than three
16:44million Australians are captured by these clauses, including childcare workers,
16:48construction workers and hairdressers. People should not need to hire a lawyer to take the
16:53next step in their career, or permission from their old boss if they want to be their own boss
16:59and turn an idea into a small business. The Productivity Commission estimates that this reform
17:05could lift productivity, reduce inflation and improve GDP by $5 billion, and boost wages by up
17:13to 4 per cent. We are also introducing a national licensing scheme to allow electricians to work
17:19seamlessly across borders. This will be a template for expanding national licensing to other
17:25occupations when and where we can. The PC suggests that these broader licensing reforms could boost
17:31GDP by up to $10.3 billion. Australia is well placed to respond to the five seismic challenges
17:41shaping this new world of uncertainty—the shift from globalisation to fragmentation,
17:46from hydrocarbons to renewables, from information technology to AI, from a younger population to an
17:53older one, and all of the changes in our industrial base. All of this puts a premium on resilience,
18:00and that is what a future made in Australia is all about. In this budget, we are investing more
18:05than $3 billion to support the production of Australian-made green metals like aluminium and
18:11iron, building on the tax incentives for critical minerals and green hydrogen that we legislated
18:18last year. We are also backing clean technologies through our Future Made in Australia Innovation
18:23Fund and by recapitalising the Clean Energy Finance Corporation. This will help develop
18:29new industries in clean energy manufacturing, green metals and low-carbon liquid fuels, and
18:35unlock more private investment. This agenda is about recognising that our future growth prospects
18:41lie at the intersection of our industrial resources, skills and energy bases and our
18:46attractiveness as an investment destination, so that we can grasp the jobs and opportunities
18:52of the net zero transformation. In difficult conditions, around 25,000 new businesses
19:00have been created each month on average since we came to office. We respect and admire the hard
19:07work, aspiration and sacrifice behind those record numbers, which is why we are going into
19:13bat for small and local businesses in this budget, protecting them from unfair trading practices,
19:19funding our Buy Australian campaign to support local producers, providing new
19:23resources for the regulator to level the playing field for smaller players, and delivering tax
19:28relief for hospitality venues, brewers, distillers and wine producers as well.
19:36Building Australia's future also means building on the strength of our regions. That is why
19:41we are securing banking services in country towns and flights in the bush. It is also why
19:46we are investing up to $3 billion in additional equity to complete the rollout of the National
19:52Broadband Network. Infrastructure like the NBN is essential for communities, students and businesses
20:00and to the productivity of our nation. So are the roads and railways connecting our regions to our
20:06cities and supporting economic growth. This budget provides $17.1 billion over 10 years
20:14for these projects, including $7.2 billion to upgrade the Bruce Highway in Queensland,
20:20the biggest ever investment in the Bruce, $2.3 billion for Western Sydney, with $1 billion of
20:26that for the rail network alone, and $2 billion towards transforming Sunshine Station, taking
20:32our Melbourne Airport rail investments to $7 billion. In total, we are investing more than
20:39$120 billion in infrastructure in every state and territory over the decade, improving the
20:45productivity, resilience, liveability and sustainability of our cities, regions and
20:51communities, accompanied by $262 million to preserve and conserve our natural land and our
20:58ocean assets. In these uncertain times, economic security and national security are increasingly
21:06intertwined. We are supporting stability and prosperity in our region by helping to shore up
21:12banking services in the Pacific. We have invested an extra $50 billion in defence by the mid-2030s
21:20to help keep Australians safe. It means defence funding will grow beyond 2.3 per cent of GDP
21:27by the early 2030s. And we are investing $45 million in our initial response to the
21:33independent intelligence review. In our first two years, we posted the first back-to-back
21:39surpluses in nearly two decades. Our deficit this year has almost halved since we came to office.
21:46Next year's deficit is $42 billion, lower than what was forecast at the last election,
21:52and lower than at the mid-year update. Gross debt will hit $940 billion this financial year,
22:00$177 billion lower than what we inherited.