Young People and the Federal Budget 2025-2026: AYAC Summary
Despite investments which centre on easing cost-of-living pressures, improving access to healthcare and reducing student debt, this Federal budget will do little to meaningfully improve the everyday lives of many young people. Young people reliant on income support appear to have been forgotten in the budget. Many will struggle to identify a path to affordable rent and home ownership in the announcements around housing. There is also very little detail on how key youth services will be funded. In fact, specific references to ‘youth’ and ‘young people’ do not appear in key budget documents.1
This short summary outlines AYAC’s position on some important measures outlined in the budget and signals areas where more progress can be made to improve outcomes for young people.
AYAC on Tax Cuts
The budget delivers what the Treasurer Jim Chalmers himself describes as “modest” changes to how much income earners will be taxed.
Key takeaways:
The Government committed to implementing tax cuts from 1 July 2026.
People earning an average income of $79,000 will receive an additional $268 off their tax payments in 2026, increasing to a $536 tax cut in 2027. Combined with the previously announced tax cuts, the total tax cut from 2027-28 onward would be $2,190 per year.
Those earning an annual income of $18,201-$45,000 will get a combined tax cut of up to $1,340 by 2027-28.
To calculate how these tax cuts will affect you check out the tax estimate calculator on the Budget website.
What this means for young people:
Young people are more likely to be in insecure or casual work, or to be underemployed. As a result, these promised tax cuts may not have much impact on young people’s take-home earnings and fail to deliver the cost-of-living relief promised by this budget.
AYAC on Education
The budget delivers some support for students and follows on from the previously announced cap on HELP indexation backdated to June 1, 2023. However, it makes limited investments in the Australian Universities Accord recommendations.
Key takeaways:
Labor’s free TAFE program will become permanent. This includes 100,000 free places to be offered each year from January 1, 2027.
HECS debts (including all University, VET, and apprenticeship support loans) will be cut by 20% - this will cut about $5520 off an average debt of $27,600.
The repayment system will be moved to a "marginal repayment system" with a higher minimum repayment threshold.
The threshold will increase from $54,435 to $67,000 from July 1 2025 and will be calculated through the portion of income that exceeds $67,000. Click here for more info on this.
What this means for young people:
Most of these changes require legislation before coming into effect so it won’t provide immediate relief for current students. The budget also does not go far enough to remove barriers to education such as increasing income support payments for students.
AYAC on Housing
This budget delivers some investments to remove barriers for first home buyers, but buying a house still feels unfeasible for many young Australians.
Key takeaways:
The Help to Buy program, which supports Australians to buy homes with lower deposits and smaller mortgages, will be expanded. Click here for more info.
The Build to Rent tax concessions program will be refined. This program was announced in the 2023–24 Budget to increase the amount of rental housing, including the supply of affordable rentals, and to increase stability for renters, such as introducing 5‑year tenancies.
Commonwealth Rent Assistance’s maximum rate was pre-announced by Chalmers to be increased by 45 per cent.
A ban on foreign buyers for the next two years will start from 1 April 2025 to attempt to ease housing market pressure.
Homelessness Australia has welcomed $6.2 million in funding over the next three years to support their homelessness advocacy.
What this means for young people:
These changes may provide some support for a minority of young people who are financially established by age 25, but it fails to provide prevention and early intervention support for those who are financially insecure and/or at risk of homelessness. An increase in Rent Assistance is welcome, however it still falls short of recommendations made by peak body advocates who call for a minimum 60% increase.
AYAC on Health
Key takeaways:
The Medicare levy low-income threshold will be increased for singles, families, seniors and pensioners. This means those earning $27,222 and below will be exempt from paying the Medicare levy.
Labor has invested $8.5 billion to expand bulk-billing to make visiting the doctor more accessible.
The standard cost of medications included in the Pharmaceutical Benefits Scheme (PBS) will be lowered from $31.60 to $25 per script.
Contraceptive pills such as Yaz, Yasmin and Slinda have been added to the PBS.
Digital mental health services have received $46m over four years to continue their programs and more than $650m over three years has been invested in 50 Medicare urgent care clinics around the country.
What this means for young people:
This budget delivers some support which could benefit some young people, however none of this is youth-specific, and only includes marginal support for mental health services with a specific focus on urgent care rather than industry-recommended preventative and early intervention care.
AYAC on Youth Services
There is very little detail in the budget on how key youth services will be funded. As alluded to above, specific references to ‘youth’ and ‘young people’ are missing from key budget documents. AYAC believes that a well-resourced youth sector is imperative to ensuring that young people are supported and able to achieve their goals.
Where does AYAC want to see progress?
In line with its pre-budget submission, AYAC would like to see progress on the following areas:
A commitment to increasing income support payments to $88 per day to meet young people’s basic needs and surpass the Henderson Poverty Line of $87.32 per day.
Increases the amount of income that can be earned before Youth Allowance and Aus Study payments are reduced.
Substantially increases in Commonwealth Rent Assistance to address housing insecurity.
An expansion in mental health services for young people, including prevention and early intervention services and acute and crisis care.
Increases in Commonwealth Prac Payments to at least the minimum wage and expand payments to all courses which require practical placements to alleviate placement poverty and encourage educational equity.
The removal of junior pay rates to reduce additional intergenerational inequity and relieve cost of living pressure.
Increases funding for youth workers and youth work organisations who work in both formal education settings, and in informal community settings to engage with young people to develop political awareness and political identities, increase participation and connection in their communities, and provide opportunities to contribute to the development of youth policies, programs, and services.
A commitment to Maintaining the Australian Government Youth Steering Committee and Youth Advisory Groups.
Resource an annual national youth policy expert forum to boost research outcomes and develop a national youth strategy response. We estimate the cost of this to be $60,000 per annum.
Fund AYAC to achieve full national peak body activities to aid sector collaboration and improve outcomes for young people. This would involve a multi-year funding contract for 5 years of $12.5 million ($2.5 million per annum).