The key issues that will define the election – and where the major parties stand

Australians will head to the polls on May 3. Before then, Prime Minister Anthony Albanese and Coalition Leader Peter Dutton will crisscross the country spruiking their plans for the future.

The cost-of-living will be the defining issue of this year’s federal election campaign. From health to housing, energy and education, much of what the leaders say will come back to a promise to help household budgets. Turbulent global affairs have also put a spotlight on foreign policy, while debate over nuclear energy will keep climate change in the conversation.

Here are the key policy issues that will dominate the campaign, and where Labor and the Coalition stand on them.

Taxes and cost-of-living relief

Tax is a latecomer to the campaign agenda but promises to be a significant talking point. Both parties will retain the Albanese government’s restructured stage three tax cuts, announced last year.

But Labor this week introduced an extra cut, reducing the lowest marginal tax rate from 16 to 14 per cent over two years, starting in July 2026. It means workers will get a $268 tax cut in 2026-27, which becomes $536 a year from 2027-28 onwards.

The Coalition says it will repeal those changes in government, effectively reinstating the higher 16 per cent tax rate. Instead, it will halve the fuel excise for 12 months, saving Australians 25.4¢ per litre of petrol.

Labor has also extended its $150 energy bill rebate for households and businesses until the end of the year, which the Coalition has supported, although it voted against the government’s previous two rounds of power bill rebates.

Healthcare

Health has been at the centre of the unofficial election campaign so far. Labor will spend $8.5 billion encouraging GPs to bulk-bill all their adult patients, reduce the maximum medicine co-payment from $31.60 to $25, and spend $573 million on a women’s package improving access to reproductive health and menopause services.

The Coalition says it will match those pledges, while also promising to lift the number of psychology sessions each person can access under Medicare. Labor will open another 50 urgent care clinics across the country; the Coalition will open another four.

Labor will continue its vaping crackdown while the Coalition says vapes should be regulated and sold like cigarettes.

Social issues: the NDIS, aged care and education

Labor and the Coalition have taken a bipartisan approach to reforming the National Disability Insurance Scheme and aged care services. However, the Coalition recently indicated it wants the growth in NDIS spending curtailed further.

There are points of difference on education. On childcare, Labor will abolish the activity test (which says parents must work or study to get subsidies) and give all families earning under $533,280 access to three days of subsidised childcare. The Coalition wants the activity test to stay and has no other childcare plans.

The parties are also split on higher education. Labor says it will fund 100,000 fee-free TAFE spots each year, which the Coalition does not support. Labor will also wipe 20 per cent off student loans for all students and graduates, which the Coalition has rejected.

Housing and home ownership

Labor says it will build 1.2 million homes by the end of the decade. Its $10 billion Housing Australia Future Fund will raise money for new builds, including 40,000 social and affordable rental homes.

The Coalition says it will abolish the housing fund and instead invest $5 billion to deliver infrastructure – such as water, power and sewerage – at development sites, which it says will help build 500,000 new homes.

For first home buyers, Labor is helping 40,000 households purchase a home by contributing up to 40 per cent of their deposit. The Coalition, on the other hand, will allow Australians to withdraw up to $50,000 from their superannuation accounts to buy their first home. Both parties will ban foreign investors from buying existing homes for two years – a Coalition policy that Labor has adopted.

Energy and climate change: nuclear vs renewable

The starkest difference between the two parties’ policy offerings is their vision for where Australia gets its energy. The Albanese government wants 82 per cent of Australia’s electricity to come from renewable sources – solar, wind, hydro – by 2030.

The Coalition will scale this back and instead says it will build seven government-owned nuclear power plants by the mid-2040s. Until then, it will rely on running coal plants for longer and ramp up domestic gas production. It wants gas companies to divert more supply to the Australian market, rather than ship it offshore.

Both parties have committed to net zero greenhouse gas emissions by 2050, but Labor has also set a legally binding target to cut emissions by 43 per cent by 2030. The Coalition has indicated it would be less ambitious for the end of the decade, but said it would set interim targets in government.

Population and immigration

Both parties say immigration has been too high since the pandemic and needs to come down. Labor has forecast net overseas migration will slow to 255,000 in 2026-27. The Coalition is promising deeper cuts than Labor but is yet to unveil its figures or policies, after Dutton walked away from his initial vow to cut net arrivals down to 160,000.

For Labor, a key part of reducing immigration is slowing international student arrivals. The Coalition says it will also introduce foreign student caps, but it blocked Labor’s bill to do so last year.

The parties last year formed a unity ticket when it comes to how they manage people Australia doesn’t want in the country: they teamed up on three new laws, including paying third-countries to take non-citizens. However, Dutton has also pledged to go harder on this issue – he is considering a referendum on allowing politicians to strip criminal dual nationals of their Australian citizenship, and wants questions on antisemitism in the citizenship test.

Public service and workplace rights

The Coalition wants to cut 41,000 of 213,000 jobs from the federal public service to save about $7 billion each year. It has name-checked the federal health, education and veterans’ affairs departments in these plans. The Coalition also says it wants Canberra public servants back in the office full-time to improve productivity.

Labor has defended public servants’ right to work from home and justifies the extra jobs as having improved government services, with about a quarter of them being former consultants hired permanently.

Labor’s industrial relations changes this term have included the right to disconnect, pathway to permanency for casual workers, and “same job, same pay” laws that entitle labour hire workers to the same payment as permanent staff if they do the same work.

The Coalition has said it will abolish the first two policies and review the third. Its policy for tax-deductible business lunches will allow small businesses to claim up to $20,000 off their taxable income for meal expenses. It will also raise the instant asset write-off for small businesses from $20,000 to $30,000.

Foreign affairs and defence

Australian political parties are generally aligned on foreign policy but some differences between Labor and the Coalition have emerged. Both support a two-state solution for Israel and Palestine. But where Labor has voted in favour of Palestinians at the United Nations several times, the Coalition will restore Australia’s pro-Israel voting record. The Coalition will also cut funding UNRWA, the UN agency for Palestinian refugees.

Both parties support Ukraine in the war with Russia, although Labor has expressed openness to sending peacekeepers to the region while the Coalition has not.

Labor will campaign on its success in restoring trading ties with China after relations soured under the Morrison government. The Coalition has vowed to have a productive relationship with Beijing while more forcefully calling out its efforts to expand its influence in the region.

Both say they will defend Australia’s interests in their relationship with United States President Donald Trump.

Labor will increase defence spending from 2 per cent of gross domestic product to 2.3 per cent by the early 2030s. The Coalition says it will go further, potentially to 2.5 per cent, but it has not confirmed a number. Both parties support the AUKUS nuclear submarine agreement.

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