The Federal Government handed down its 2025-2026 Federal Budget on the evening of 25 March. From personal and business tax to healthcare, energy costs, supermarkets, construction and infrastructure, and national broadband network. We provide you with a summary of the key budget points, and their implications across industries and businesses.

Key budget points

1. The budget reveals an estimated underlying cash deficit of $27.6 billion for 2024-25, slightly higher than the December midyear forecast of $26.9 billion.
2. The deficit is projected to widen to $42.1 billion in the following financial year, stabilising around $36 billion annually over the subsequent three years.
3. Despite a modest cumulative improvement of $1.6 billion over five years to 2028-29, the government plans to spend 96% of the anticipated budgetary gains from a stronger economy and lower-than-expected major expenses, such as the National Disability Insurance Scheme (NDIS) and infrastructure projects.
4. Consequently, the budget forecasts rolling deficits for a decade, delaying a return to surplus until 2035-36.

Market implications

We set out below a list of key budget measures and some of the potential impacts.

Taxpayers

Tax cuts promise a modest increase in disposable income for workers if Labor is re-elected. From fiscal year 2026-27, the tax rate for individuals earning between $18,201 and $45,000 will be lowered from 16% to 15%, with a further reduction to 14% the following year. Refer Table 1. Consequently, each taxpayer will benefit from a tax cut of up to $268 in the initial year, rising to $536 by mid-2027. The cumulative cost to the national budget over a five-year period is projected to be $17.1 billion.

Table 1: New Personal Tax Rates

Source: Commonwealth Government

Superannuation

New measures on superannuation were absent from the budget.

Healthcare

1. The Australian government has earmarked $8.4 billion over five years from 2024-25, with $2.5 billion annually thereafter, to improve bulk billing access. This includes $7.9 billion over four years from 2025-26 for broader incentives and a new Bulk Billing Practice Incentive Program. However, the impact on bulk billing rates remains uncertain, as general practitioners may still impose co-payments.
2. Diagnostic service providers, such as pathology and imaging, are unlikely to benefit in the near term.
3. The budget incorporates the previously announced $1.8 billion one-year funding increase for public hospitals. However, private hospitals, including Ramsay Healthcare, received no financial relief despite their plea for a taxpayer-funded bailout to mitigate escalating costs.

Prescriptions

1. The cost of prescription medicines under the Pharmaceutical Benefits Scheme (PBS) will be lowered from $31.60 to $25 per script, while prices for pensioners and concession card holders will remain fixed at $7.70. This initiative is projected to cost $784.6 million over four years.
2. A $793 million women’s health initiative will introduce new contraceptive pills and menopausal therapies to the PBS, alongside enhanced support for endometriosis sufferers.
3. Potential impact: Sigma Pharmaceuticals, Wesfarmers (API)

Aged care

1. An additional $82 million has been allocated to support pay increases for aged care nurses, as mandated by the Fair Work Commission.
2. Potential impact: Regis Healthcare

Energy costs

1. In a bid to maintain energy bill relief, electricity bills will be $150 cheaper after the government extended the $75 quarterly rebate until the end of this year, at a cost of $1.8 billion.
2. The Clean Energy Finance Corporation will receive an extra $2 billion to invest in renewable energy, energy efficiency and low-emissions technologies.
3. Potential impact: AGL Energy, Origin Energy

Supermarkets

1. The government has allocated $38.8 million to the Australian Competition and Consumer Commission (ACCC) to bolster its investigative and enforcement efforts against illegal practices in the supermarket sector.
2. Potential impact: Coles Group, Metcash, Woolworths

Alcohol & Tobacco

1. The government has announced a two-year suspension of the indexation of excise duties on draught beer from August 2025. The measure will cost $165 million over five years. This means in two years’ time you’ll save a whopping five cents on your pint.
2. The government is also throwing $156.7 million at the illicit tobacco trade, hoping to plug the revenue leak. Despite their efforts, tobacco revenue has nosedived and forecast to drop $6.9 billion over the next five years.
3. Potential impact: Coles Group, Endeavour Group, Metcash, Woolworths

Construction & Infrastructure

1. A decade-long investment of $17.1 billion will be directed towards road and rail infrastructure, but of that, only $4.7 billion will be spent in the next four years. The budget includes $1.5 billion for existing projects and $15.6 billion for new initiatives, many of which have already been announced. These include $7.2 billion for Queensland’s Bruce Highway, $2 billion for Sunshine Station upgrades, and $1 billion for Victorian roads. NSW will receive $2.8 billion, with over a third earmarked for the Southwest Sydney rail extension corridor. Tasmanian roads will benefit from $280 million of upgrades and extensions.
2. The government has earmarked $120 million to remove regulatory obstacles for modular and pre-fabricated housing nationwide. An additional $54 million will support modern housing methods, mainly through subsidies. The Help to Buy scheme’s price caps have also been raised to improve housing affordability for homebuyers.
3. Potential impact: Bluescope, Brickworks, Downer EDI, Maas Group, Monadelphous Group, Seven Group, SRG, Vulcan Steel

National Broadband Network

1. As previously announced, the government has committed $3 billion to complete the National Broadband Network, bringing total investment to $35 billion. This initiative aims to prepare 620,000 homes for faster fibre-to-the-premises connections, enhancing Australia’s digital infrastructure.
2. Potential impact: Service Stream, Ventia Services

Resources

1. The government will allocate $2 billion in grants to aluminium smelters transitioning to renewable energy by 2036.
2. Potential impact: Alcoa Corporation, Rio Tinto
3. Treasury has assumed a decline in key commodity prices from elevated levels over four quarters to the end of the March quarter of 2026: the iron ore spot price is assumed to decline to US$60/tonne; the metallurgical coal spot price declines to US$140/tonne; the thermal coal spot price declines to US$70/tonne; and the LNG spot price converges to US$10/mmBtu.
4. Potential impact: BHP, Fortescue, New Hope, Origin Energy, Rio Tinto, Santos, South32, Stanmore, Whitehaven Coal, Woodside