2025-26 Federal Budget summary

On 25 March 2025, Treasurer Jim Chalmers delivered the 2025-26 Federal Budget, which the Government says is largely focused on the ongoing fight against inflation, providing responsible cost-of-living relief, and building a stronger economy.

Our key takeouts

The Government has committed to increasing the pay of workers providing care and early education, which will improve retirement outcomes in workforces traditionally dominated by women and help close the superannuation gap. We are proud to hold the highest pool of female retirement savings of all Australian funds, and support measures that will help ensure the adequacy of these savings for our members.¹

The Government also announced support for stronger outcomes for First Nations Australians, including for First Nations businesses and for building wealth and increased opportunities for First Nations Australians to buy their own home. This will help remove barriers and instil financial confidence, to ultimately improve financial and retirement outcomes.

The Government continued its focus of the National Housing Accord which brings together all levels of government, industry and investors to improve housing supply. We support the Accord and recognise our role as an institutional investor in examining opportunities for investments and barriers that we can help to clear.

Additional funding was announced for the Australian Taxation Office (ATO) to help facilitate the implementation of Payday Super from 1 July 2026, which will ensure employees are paid superannuation at the same time as their salary and wages and will see an additional $31 million in superannuation distributed to Australians.

And the Budget Papers show the ATO has worked with employers to action unpaid superannuation, with $932 million of previously unpaid superannuation reaching the retirement accounts of 797,000 employees in 2023–24.

Below is a summary of the key Budget announcements relevant to superannuation, members and employers. It’s important to note the announced measures are still to be legislated.

Snapshot of key measures

Announced measures for members

• Easing cost of living pressures with a range of measures to make healthcare, energy and child care more affordable and an income tax cut.
• Increasing wages for aged care nurses and early educators.
• Combatting scams.
• Growing the economy through the Future Made in Australia agenda.
• Closing the gap for First Nations Australians.

For employers

• Additional funding to the ATO to further support the timely payment of superannuation contributions by employers and the commencement of “Payday Super” obligations from 1 July 2026.

You can find out more about the superannuation and other Budget announcements by visiting budget.gov.au.

Announced measures for members

Easing cost of living pressures

As the cost of living continues to impact Australians, the Government has announced a range of measures to reduce income tax and reduce the cost of healthcare, energy and child care.

Every Australian taxpayer will receive an additional tax cut over the next two years, reducing the tax rate applied to the first $45,000 taxable income earned,

These cuts, along with the tax cuts announced in 2024, will see an average annual tax cut of $2,548 per year, or $50 per week in 2027-28.

The Government also proposed that the Medicare levy low-income thresholds will increase by 4.7% for singles, families, and seniors and pensioners from 1 July 2024.

This measure means more than 1 million Australians on lower incomes will continue to be exempt from paying the Medicare levy or continue to pay a reduced levy rate. In addition, an investment of $7.9 billion will provide more bulk billing to allow more people to see a general practitioner for free.

The Government is extending energy bill relief for every household and approximately one million small businesses until the end of 2025. All Australian households will receive $150 off their power bill via two $75 quarterly payments applied directly to each power bill.  

The Government is lowering the maximum cost of medicines on the Pharmaceutical Benefits Scheme (PBS) for everyone with a Medicare card and no concession card. From 1 January 2026, the maximum co-payment will be lowered from $31.60 to $25.00 per script – the lowest in 20 years – and remain frozen at $7.70 for pensioners. 4 out of 5 PBS medicines will become cheaper for general non-Safety Net patients, with larger savings for medicines eligible for a 60- day prescription.

Child care costs will also be reduced with $426.6 million to support the new 3 Day Guarantee which will replace the Child Care Subsidy Activity Test to ensure more families are eligible for at least 3 days a week of subsidised early childhood education and care. 100,000 families are expected to be eligible for additional hours of subsidised childhood education and care under the first year of the plan.

Increasing wages in early education and aged care

Some $2.6 billion will be provided to increase the award wages of aged care nurses from 1 March 2025, and $3.6 billion has been allocated to lift the wages of early educators through the Worker Retention Payment, benefitting up to 200,000 early childhood educators and teachers.

ART welcomes the Government’s commitment to increase the pay of workers in fields providing care and early education for our community, which is an important measure to help improve the retirement outcomes in traditionally female dominated workforces and close the superannuation gap.

Combatting scams

Measures to combat and protect consumers and businesses from scam activity have been increased, with $6.7 million allocated to extend the operation of the National Anti-Scam Centre within the Australian Competition and Consumer Commission.

Growing the economy through the Future Made in Australia agenda

The Government has announced a range of measures across clean energy, support for Australian producers and infrastructure including, among other measures:

• A $2 billion expansion of the Clean Energy Finance Corporation will unlock an additional $8 billion of additional investment in renewable energy and low emissions technologies.
• A legislated $13.7 billion in hydrogen and critical minerals production tax incentives and $1.5 billion in support for priority areas through the Future Made in Australia Innovation Fund.
• Australian producers will receive $20 million in support through the Buy Australian Campaign to encourage Australian-made products.
• And $17.1 billion over 10 years for road and rail projects across cities, regions and communities.

Improving housing supply

Housing shortages have also been addressed in the budget with a plan to build 1.2 million new, well-located homes over 5 years and drive investment and reforms needed to support housing supply.

The Government will also support a pipeline of 55,000 social and affordable homes through the Housing Australia Future Fund and the Social Housing Accelerator. The Help to Buy program will also support Australians buy homes with lower deposits and smaller mortgages.

These efforts continue the focus of the National Housing Accord which brings together all levels of government, industry and investors to improve supply. With more than 2.4 million members across Australia, ART supports the Accord and recognises our role as an institutional investor in examining opportunities for investments and barriers that we can help to clear.

Closing the gap for First Nations Australians

The Government has announced a range of measures to support stronger outcomes for First Nations Australians. Some $1.3 billion will be invested over 6 years from 2024-25 across a range of measures including supporting First Nations businesses and building wealth, critical services in remote communities in the Northern Territory, measures to address the delivery of prevention, early intervention and response services to address family, domestic and sexual violence and increased opportunities for First Nations Australians to buy their own home.

ART welcomes these measures and the impact they may have to help remove barriers and instil financial confidence for First Nations Australians, to ultimately improve financial and retirement outcomes.

Announced measures for employers

Payment of superannuation obligations

Recognising the importance of employer superannuation support to Australian employees, the Government has announced additional funding to the Australian Taxation Office (ATO) for:

• The expansion of compliance activities, ensuring the timely payment of superannuation liabilities by employers, which is estimated to see an additional $31 million in superannuation distributed to employees; and
• Working with industry and stakeholders on the implementation of Payday Super from 1 July 2026, which will ensure employees are paid superannuation at the same time as their salary and wages.

In addition, the Budget Papers show the ATO has also worked with employers to action unpaid superannuation, with $932 million of previously unpaid superannuation reaching the retirement accounts of 797,000 employees in 2023–24.
 

1. APRA quarterly fund-level statistics, December 2024.

This document has been prepared and issued by Australian Retirement Trust Pty Ltd (ABN 88 010 720 840 AFSL No. 228975), the trustee of Australian Retirement Trust (ABN 60 905 115 063) (Fund). This is general information only, so it does not take into account your personal objectives, financial situation, or needs. Before acquiring or continuing to hold any financial product, you should consider whether the product is right for you by reading the relevant product disclosure statement (PDS) and also the relevant Target Market Determination (TMD). For a copy of the PDS and TMD visit art.com.au or call 13 11 84.