Aussies to get $5 per week tax cut as Treasurer hands down election-year budget
Jim Chalmers has revealed plans to put pennies back in every Australian’s pocket, in a budget night speech marked as much by what was not said than was.
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Treasurer Jim Chalmers’ fourth budget will provide a new tax cut to all Australians, worth on average $5 per week in its first year, as he puts cost-of-living pressures front and centre in a bid to convince voters the Albanese government has their back “in a world of uncertainty”.
Mr Chalmers pushed Labor’s economic performance in its first term of government and its mission to improve cost of living pressures, health care, education and homegrown manufacturing, in his budget speech on Tuesday night.
Many of the measures in the budget had already been announced before the Prime Minister was forced to delay an April 12 election before Tropical Cyclone Alfred messed up those plans.
Anthony Albanese is now expected to call on election for May 3 or 10 within days.
The centrepiece of the Treasurer’s suite of cost-of-living measures was a “modest” tax cut which is projected to deliver savings of about $5 per week in the first year for the average earner bringing home $79,000, before rising to about $10 during 2026 to 2027.
Joining first-round tax cuts already implemented by the Labor government, the new package will bring the first tax rate – for earners between $18,201 and $45,000 – to “its lowest level in more than half a century”, Mr Chalmers.
“These additional tax cuts are modest but will make a difference,” Mr Chalmers said.
“The average earner will have an extra $536 in their pocket each year when they’re fully implemented. Combined with our first round of tax cuts, this rises to $2190.”
Mr Chalmers said the average total tax cut would be about $2548, or about $50 per week, with increases also set for the Medicare levy low-level threshold, and a previously announced $150 energy rebate for all Australian households and small businesses.
Those promises drew the ire of Shadow Treasurer Angus Taylor.
In a fiery rebuttal, Mr Taylor accused Mr Chalmer’s budget as being a “budget for the next five weeks, not the next five years”.
“This is a Budget for an election, not one for our country’s future prosperity,” Mr Taylor said.
“Labor’s cruel hoax tax changes in 2026-27 fail to restore the standard of living you have lost after three years of Labor.
“The Coalition will not support these tax changes that do nothing to address the collapse in living standards under Labor.
“Seventy cents a day, in a year’s time, is not going to help address the financial stress Australian families are currently under.
“This is an election bribe by a weak Prime Minister.”
Mr Taylor accused the Albanese government of failing to address the “biggest collapse on record” in living standards.
In a statement, he also took aim at what he said were 41,000 new public servants in Canberra under Labor and international migration.
“A Coalition government will always better manage the economy so we can pay for essential services and keep our country safe and secure,” he said.
“And a Coalition government will increase Defence spending to keep our country safe and secure in an uncertain world.
“Australians deserve better than this weak and incompetent Labor government.
“The Coalition will show leadership and take the necessary decisions to get our economy and our country back on track.”
Greens leader Adam Bandt did not say if the party would support the tax cuts, but that they “would not stand in the way”.
Asked for clarification, Mr Bandt told the ABC “If the government folds this up as stand alone legislation, and it’s up for conversation about bringing it forward, then yes, we’ll support it.
“But, I think this coming election is best chance in a generation to get the big corporations to pay their fair share of tax and fund things like dental into Medicare, mental health into Medicare, wiping student debt, and ensuring that education is genuinely free in this country.
“These are the kind of real cost of living relief measures that we will be putting on the table in a minority parliament – keep Peter Dutton out and get Labor to act on real cost of living relief.”
Independent senator Jacqui Lambie described the tax changes as “nothing to brag about”.
Speaking to the ABC, Ms Lambie said the government and the Liberals had “backed the wrong side” in supporting controversial salmon farming in her home state of Tasmania.
In a speech marked as much by what wasn’t said than was, Mr Chalmers declared the budget would “help finish the fight against inflation” and keep Aussies’ earnings in their own pockets, as two back-to-back surpluses plunged into a projected $42bn deficit.
Mr Chalmers said the budget was nonetheless “$207bn better than we inherited”, with the deficit lower than what was forecast at the mid-year update and at the last election, as Australians gear up to return to the polls in would will be a tough race for the PM.
In his address, the Treasurer did not mention the election, which must be held on or before May 17.
Nor did he directly mention US President Donald Trump whose trade tariffs on Australian steel and aluminium products united the government and the opposition in disappointment at the move.
Instead, Mr Chalmers labelled the budget a “plan new generation of prosperity in a new world of uncertainty”, despite the “global economy taking a turn for the worse” off the aftershocks of the war in Ukraine and fears of an all-out global trade war.
“The global economy is volatile and unpredictable,” Mr Chalmers said.
“The 2020s have already seen a global pandemic, global inflation and the threat of a global trade war. The whole world has changed as a consequence.
“Tariffs and tensions abroad have been accompanied by storms at home. Ex-Tropical Cyclone Alfred could wipe (one quarter) of a percentage point off quarterly growth.
“Storm clouds are gathering in the global economy too.”
Mr Chalmers said “trade disruptions were rising”, China’s economic growth was slowing, and with war still raging in Europe and the Middle East, Treasury expected the global economy to grow by 3.5 per cent over the next three years, the slowest rate since the 90s.
“Australia is neither uniquely impacted nor immune from these pressures, but we are among the best placed to navigate them,” Mr Chalmers said during his address.
“We’re emerging from this spike in global inflation in better shape than almost any other advanced economy.
“Growth is forecast to pick up from 1.5 per cent this year to 2.5 per cent in 2026–27.
“The private sector is resuming its rightful place as the main driver of this growth.
“Treasury is upgrading forecasts for growth in private demand to more than double next year, compared to this one.
“Unemployment is now projected to peak lower, at four and a quarter per cent.
“Employment and real wage growth this year will be stronger, and participation will stay near its record high for longer. Inflation is coming down faster as well.”
Mr Chalmers said Treasury now expected inflation to be sustainably back in the band six months earlier than expected, and that the “soft landing we have been planning and preparing for is looking more and more likely”.
He highlighted five main priorities for the Labor government in this year’s budget: helping with cost of living, strengthening Medicare, building more homes, investing in every stage of the education, and making the economy “stronger, more productive and resilient”.
That included previously-announced plans to cut 20 per cent off all student loan debts if re-elected this year, reducing the cost of a Pharmaceutical Benefits Scheme script from no more than $31.60 to $25, and $54m to accelerate the building of prefabricated new homes.
The Albanese government will also seek to increases wages of aged and childcare workers, increase funding to public schools in-line with existing targets of fully-funded every state school in the country, and making permanent free TAFE across the country.
Mr Chalmers also noted in his speech from Canberra that the government was “cracking down on supermarkets”, and that the country was well placed to respond to “seismic changes shaping this new world”, including AI, by focusing on a “Future Made in Australia”.
Originally published as Aussies to get $5 per week tax cut as Treasurer hands down election-year budget
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