Federal Budget 2025: Peter Dutton set to deliver his budget reply to Labor’s tax cuts

Peter Dutton will attempt to counter Labor’s marginal tax cuts by committing to halving fuel excise rates in a move the Coalition believe will convince voters on greater cost-of-living relief.

Opposition Peter Dutton in the House of Representatives at Parliament House in Canberra. Picture: NewsWire / Martin Ollman

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Peter Dutton will commit to ­halving fuel excise for millions of families and workers in a $6bn pre-election pledge that he will sell as providing immediate cost-of-­living relief in contrast to Labor’s “70c-a-day in a year’s time” tax-cuts commitment.

In his budget-in-reply speech on Thursday night, the Opposition Leader will promise motorists that a Coalition government will reduce petrol and diesel excise rates from 50.8c to 25.4c per litre in a cash splash for votes weeks out from the May election.

Mr Dutton’s proposal to slash fuel excise, which targets outer-suburban and regional voters in seats the Coalition must win and retain, is intended to be temporary and limited to 12 months.

The Liberal leader is also expected to use his speech to commit the Coalition to lowering power bills, provide more details on measures to unlock gas, make deeper migration cuts to free up homes and outline plans for a sizeable increase in defence spending.

Mr Dutton is expected to face accusations from Labor and economists that the fuel excise policy will put upward pressure on inflation and make the Reserve Bank’s efforts to lower interest rates ­harder. He has recently come under pressure after matching big-spending Labor election policies, including boosted Medicare funding, cheaper medicines and energy rebates worth a combined $11.5bn.

The Coalition estimates that a fuel excise cut, which would be introduced on the first parliamentary sitting day of a Dutton government, will save households up to $28 a week on average. A household with one vehicle filling up a 55-litre tank once a week would save about $14 a week or an average $700-$750 over a year. Households with two cars would save up to $1500 in the same period.

Former Liberal prime ministers John Howard and Scott Morrison cut fuel excise ahead of the 2001 and 2022 elections. The fuel excise cut helped Mr Howard, who was under pressure following the introduction of the GST, recover in the polls.

Mr Dutton, who has been accused by Anthony Albanese and Jim Chalmers of blocking Labor’s cost-of-living measures, said the Coalition was “committed to ­supporting families and businesses and alleviating the cost-of-living pressure that everyone, right across the country, is feeling right now”.

“If elected, we will halve fuel ­excise for 12 months,” Mr Dutton said. “And if elected, we will deliver this cost of living relief immediately – whereas people have to wait fifteen months for Labor’s 70c-a-day tax tweak.

“This cost-of-living relief will make a real difference to families and small businesses – everyone from tradies, to mums and dads, to older Australians, and to transport delivery workers.

“The commute to work, taking the kids to school or sport, the ­family drive, or the trip to the shops will all cost less under the ­Coalition. Our plan will save many hundreds of dollars for families across Australia.”

Shadow Treasurer Angus Taylor and Mr Dutton speak following Labor’s 2025 federal budget. Picture: NewsWire / Martin Ollman

Mr Dutton on Thursday will argue that lowering costs for small businesses means “lower costs for goods and services at the checkout”. “This announcement is all part of our plan to ease the cost-of-living pressures facing Australian families and to get our country back on track”.

Asked about energy bill rebates and income tax cuts earlier this month, Mr Dutton said there would be upward pressure on inflation and higher interest rate rises if government spending remained high and warned that “we don’t want to … fuel inflation, which is what Labor’s done”.

After thre years of spending sprees in Jim Chalmers’ four budgets, Coalition powerbrokers believe they can make significant funding commitments and remain well under Labor’s expenditure, while banking savings from measures including reducing a public service headcount that has grown by 41,000 since 2022.

It remains unclear whether Mr Dutton will commit to sweeping tax cuts to combat bracket creep.

In his speech on Thursday, Mr Dutton is expected to amplify Coalition plans to ­tackle worsening structural budget pressures, as the Coalition targets spending in priority areas including defence to shield ­Australia from rising global ­security threats.

After the Treasurer this month described the May election as a “battle of the ’burbs”, Mr Dutton is gearing his election plan to Get Australia Back on Track around economic development, cheap and reliable energy, turbo­charging the housing sector and supporting struggling small business owners.

In question time on Wednesday, Mr Dutton attacked the Prime Minister for giving struggling Australians “just 70c a day in 15 months time” and failing to help them with mortgage, energy, insurance and grocery bills. Opposition Treasury spokesman Angus Taylor also pressed the Prime Minister on Labor’s “hoax of a budget”, which he said had failed to provide immediate ­support for Australians whose mortgages were $50,000 worse off since 2022.

After Dr Chalmers announced his $17.1bn budget centrepiece tax relief package on Tuesday night, the Coalition immediately rejected the tax cuts as an “election bribe”. Under the changes, Australians earning $45,000 or more would pocket an extra $5 a week from July next year and $10 a week from 2027-28.

The Australian understands Mr Dutton’s budget reply speech is not expected to be finalised until Thursday afternoon, as Coalition strategists review polling and focus groups conducted over the previous two nights. Final edits and decisions on policy announcements are understood to involve only Mr Dutton’s office, Mr Taylor and finance spokeswoman Jane Hume.

Coalition MPs expect Mr ­Dutton to provide further details on the short-to-medium-term energy plan anchored by a ­ramping-up of gas supply before nuclear power comes online. Mr Dutton in December announced his plan to build seven nuclear power plants, under which reactors would come online from 2036 and require 65 per cent of ageing coal-fired power stations to keep operating until the zero-emissions generation is available.

After the budget revealed Australia would add 335,000 migrants this financial year, Mr Dutton said a Coalition government would address the migration explosion. “We’ll have … more to say on that on Thursday night, but we do want to help families address the cost-of-living crisis, we do want to address the energy crisis that has been created in this country and we do want to make sure that we can keep Australians safe,” he said.

“The Prime Minister keeps saying that we live in the ‘most precarious period since the Second World War’ and last night did nothing in relation to that. I think Australians would find it hard to reconcile the two positions.”