federal budget 2025

With an election announcement imminent, the March Federal Budget delivered no new measures or surprises for super.

In positive news for many HESTA members, the Budget puts cost-of-living relief at its centre, and forecasts a resilient domestic economy with inflation subsiding, and strong employment and wages growth, amidst the heightened global economic uncertainty.

The Government has promised further personal income tax cuts, energy bill relief, more subsidised childcare, further pay rises for aged care nurses, more bulk billing, reduced pharmaceutical benefits scheme (PBS) co-payments, as well as cuts to student debt and reforms to the student loan repayment system to provide cost of living relief.

However, HESTA encourages more government measures to close the gender super gap, which sees women retire with around 25% less super than men on average.

federal budget key themes

Super: Payday super reforms are on track to start from 1 July 2026

Cost-of-living: Modest tax cuts and energy relief

Work: Removal of the Child Care Subsidy Activity Test, pay rises for aged care nurses

Housing: Making it easier to buy and rent a home

Note, many of these Budget measures are proposals only and are subject to passage of legislation.

the full budget breakdown

Superannuation

Payday super

This Budget confirmed investment to support the introduction of ‘Payday super’ from 1 July 2026. This means employers will be required to pay their employees’ Superannuation Guarantee entitlements at the same time as their salary and wages.

This change, in addition to super being paid on Commonwealth Paid Parental Leave from 1 July 2025, will particularly benefit workers in the lower paid, casual and insecure workforce, who are more likely to miss out when super is paid less frequently.

Enhanced tax and super compliance

The Government has set aside $50 million over three years from 1 July 2026 to the ATO to broaden and strengthen its tax compliance activities under the Tax Integrity Program. This will enable the ATO to continue its engagement program to ensure the timely payment of tax and super liabilities by medium and large businesses and wealthy groups.

This measure is estimated to increase tax receipts for the government and see an increase of $31 million in unpaid super paid to employees.

Cost-of-living relief

Income tax cuts

The lowest income tax rate will reduce from 16% to 14% over the next two years, delivering around $5 a week in the 2025-26 financial year and $10 a week extra in the 2026-27 financial year to all Australian taxpayers.

Energy bill relief

The current energy rebate has been extended to 31 December 2025, giving households an extra $150 off their energy bills this year.

Health costs

The Government is investing $8.5 billion to lift bulk billing rates and to train and grow our health workforce. An additional $689 million will be allocated to reduce the maximum price for PBS scripts from $31.60 to $25 from 1 January 2026.

University students and graduates

In a move that will only be legislated if Labor wins the Federal election, all student loans will be wiped by 20% and reforms will be made to the repayment schedule to raise the minimum repayment threshold and reduce repayment rates.

Work

Funding pay increases for aged care professionals

With most of HESTA’s members working in the health and community services sector, we welcomed the Government’s investment of $17.7 billion over successive budgets to deliver on its commitment to support the Fair Work Commission’s decisions under the Aged Care Work Value Case. In the 2025–26 Budget, this includes $2.6 billion for further award wage increases for aged care nurses from 1 March 2025, resulting in pay rises for around 400,000 aged care professionals.

Removal of the Activity Test for the Child Care Subsidy

As a long-term advocate for the introduction of a universal early childhood education and care system, we welcomed the announcement oand legislated removal of the Child Care Subsidy Activity Test. This will ensure all parents can access a minimum of three subsidised days - making a significant difference for working parents and children. The change is expected to ensure around 100,000 more children can access early learning and almost 40,000 parents can return to work or increase their working hours.

Housing

The Budget includes some new funding for crisis housing support and also an expansion of the Help to Buy program. The Government will provide $8.9 million over three years from the 2025–26 financial year to improve and expand support services for vulnerable Australians, including Australians experiencing housing insecurity and family, domestic and sexual violence.

what's next?

HESTA continues to advocate for measures to drive a fairer super system, including cutting super taxes for low-income workers by lifting the Low-Income Super Tax Offset (LISTO) payment, aligning to the second marginal tax bracket of $45,000. Almost two-thirds of LISTO recipients are women, and lifting this threshold would be a targeted initiative to help close the gender super gap.

You can find more details on all the Federal Budget announcements at budget.gov.au.