Economic outlook and Implications

What did the budget deliver?

Agriculture 

The budget delivered new initiatives specifically for agriculture as follows:

• $3.5 million for a National Food Security Strategy

• $6.8m for international engagement and market access

• $20m for a Buy Australian campaign
• $2.9m to help fresh produce suppliers better negotiate with supermarkets.

Disaster support and recovery 

An additional $1.2 billion has been allocated to the Contingency Reserve towards rebuilding affected communities impacted by ex-tropical cyclone Alfred

Infrastructure 

An additional $7.2 billion has been put towards upgrading and fixing the Bruce Highway in Queensland, to bring it to a minimum three-star safety rating.

NBN 

A further $3 billion over 7 years will be provided to finish the rollout of the national NBN skewed to regional Australia, with NBN Co to contribute $800 million.

Tax cuts 

New tax cuts were a surprise policy announcement in this Budget. Under the policy, the 16% tax rate applicable to incomes between $18,201 and $45,000 will be reduced to 15% from 1 July 2026 and then further reduced to 14% from 12 July 2027.

The tax cuts are described by some as “modest” and a ‘top-up’ to previous tax cuts. These tax cuts are estimated to cost $17.1 billion over the five years from 2024-25.

Health and Medicare 

The headline policy announcement ahead of the Budget and upcoming federal election was the $7.9 billion put towards expanding bulk billing incentives from 1 November 2025. Public hospitals will receive an additional $1.8 billion in 2025-26 as part of the extension to the National Health Reform Agreement.

The Pharmaceutical Benefits Scheme (PBS) will receive $1.8 billion over 5 years for new and amended listings, along with a further $689 million has been announced to reduce the maximum cost of most medicines listed on the PBS from $31.60 to $25.

Energy bill relief 

The electricity rebates announced in the previous budget will be extended until the end of 2025, with households and eligible small businesses receiving $75 per quarter in Energy Bill Relief.  This will cost $1.8 billion over the forward estimates (mostly in 2025-26).The electricity rebates announced in the previous budget will be extended until the end of 2025, with households and eligible small businesses receiving $75 per quarter in Energy Bill Relief. This will cost $1.8 billion over the forward estimates (mostly in 2025-26).

Defence 

$1 billion of the previously announced $10.6 billion increase for defence spending over the next four years has been pulled forward to accelerate Australia’s capability and development.

Student debts 

Announced as part of MYEFO, a one-off 20% student debt reduction for over 3 million Australians will cost approximately $16 billion. This in addition to the $3 billion change to student debt indexation (announced in the previous budget).

Childcare 

Announced as part of MYEFO, an additional $1 billion was put towards building new early childcare centres across Australia.

Around $427 million was also announced for the 3 Day Guarantee (which will replace the current Activity Test from January 2026).

Education funding 

Though this has been in the works for some time, all states and territories have now signed the Heads of Agreement, with the Commonwealth to contribute an additional $16.5 billion to funding public schools across the country over the next 10 years.

This funding will be tied to education reforms, which include providing more individualised support for students, mandating evidenced-based teaching practices and more mental health support in schools.

Read more here – NAB Federal Budget 2025-2026