Photography by Ibrahim Muan Abdulla

Treasurer Jim Chalmers delivered the Albanese government’s fourth federal budget on 25 March 2025—just 39 days before the country heads to the polls.

In a move as calculated as the budget forecasts, Prime Minister Anthony Albanese called the 2025 Federal Elections on 8 March, days after the Federal Budget was scheduled.

Framed as a cost-of-living rescue package with education at its heart, Budget 2025–26 attempts to win back younger voters, working families, and those seeking a better deal on student debt and access to education.

A Universal Vision for Early Childhood Education

At the top of the budget’s education priorities is a $5 billion investment into early childhood education and care. This includes a $3.6 billion Worker Retention Payment to lift wages for up to 200,000 early educators, an effort to combat a sector-wide retention crisis and increase the number of qualified teachers in early learning settings.

Alongside this is a $1 billion Building Early Education Fund to establish and expand 160 childcare centres across outer suburbs and regional areas. Crucially, many of these will be co-located on school sites to ease transition points for families and educators alike.

However, perhaps the most transformative shift is the $426.6 million ‘3 Day Guarantee,’ replacing the previous Child Care Subsidy Activity Test. From 2026, families will be eligible for subsidised early education at least three days per week, regardless of work or study hours—a policy shift expected to benefit 100,000 families in its first full year.

Schools on the Path to Full Funding

The 2025/26 federal budget lays the groundwork for the ten-year Better and Fairer Schools Agreement, pushing public schools towards full funding under the Schooling Resource Standard (SRS) by 2034. Backed by $407.5 million over the next four years and $7.2 billion from 2029 onwards, the policy addresses decades-long funding shortfalls that have seen public schools lag behind the private sector.

In exchange, states and territories must commit to national reforms that include phonics checks in Year 1, early numeracy testing, evidence-based teaching practices, and improved mental health support.

For public education advocates, it is a watershed moment. For critics, it is a costly ambition made more precarious by the budget’s broader fiscal outlook.

Free TAFE: Permanently

With nearly 90% of new jobs over the next decade expected to require post-secondary qualifications, the government is locking in its popular Free TAFE program.

Initially introduced in 2023 as a temporary cost-of-living and skills initiative, the scheme will now provide 100,000 fee-free places each year from January 2027. The budget justifies this permanency not only through labour market needs but also as a method of easing financial pressure on young Australians.

For university students considering switching to vocational pathways or combining TAFE with university study, this marks a significant shift towards greater flexibility and accessibility in Australia’s post-school education ecosystem.

Universities Accord and Student Debt Relief

The highlight of the budget for current university students and recent graduates is the government’s response to the Universities Accord, the landmark review of higher education funding.

The budget commits an additional $2.5 billion over 11 years to overhaul university funding systems, prioritising Commonwealth-supported places and access initiatives for disadvantaged students.

But the headline grabber is the long-awaited student debt relief.

From 1 June 2025, all HELP student loans will be cut by 20 per cent, regardless of whether repayments have begun. 

The move will wipe $16 billion off outstanding student loans. Combined with earlier reforms to reduce indexation in 2023 and 2024, total debt reductions would amount to nearly $19 billion, affecting over 3 million Australians.

The changes also include a fairer repayment system, with a raised income threshold and lower repayment rates. While the Opposition has dismissed the student loan policies as fiscally reckless, for university students—particularly those facing ballooning debts under previous CPI-linked indexation—it’s a lifeline.

Beyond Education: Budget Sweeteners and Surprises

Tax Cuts: All taxpayers will receive a tax cut starting from July 2026. For low- to middle-income earners (between $18,201–$45,000), the tax rate will drop from 16% to 15% in 2026 and 14% in 2027. This will save individuals up to $536 annually by 2027.

Medicare and Bulk Billing: $8.5 billion will go towards increasing bulk billing incentives. The government claims this will support 18 million additional bulk-billed GP visits annually, aiming for 90 per cent of GP visits to be free by 2030. That’s potentially $859 in savings annually for those who regularly see a doctor.

Energy Relief: Households will receive a further $150 rebate on their energy bills as part of the continuation of the cost-of-living relief scheme.

Disaster Response: $1 billion has been allocated towards recovery from Ex-Tropical Cyclone Alfred, part of a broader $13.5 billion national disaster fund.

Closing the Gap: $1.3 billion has been earmarked for Indigenous housing, employment, business support, and digitisation of cultural assets, including protection against climate-driven coastal erosion.

First Home Buyers: Labor’s Help to Buy scheme received a $800 million boost, increasing income and property value caps to match rising housing prices. The shared equity scheme will help up to 40,000 buyers over four years with government contributions of up to 40 per cent of home value.

Melbourne Airport Rail: A win for Victorian students and commuters—$2 billion will go towards upgrading Sunshine Station as part of the long-awaited airport rail link.

A Budget in Deficit and an Election in Sight

Despite the spending, this year’s budget is far from balanced. A $42.1 billion deficit is forecast for 2025–26, reversing the rare surplus of $15.8 billion last year. The national debt is expected to grow to $620 billion, prompting criticism from economists and the opposition alike.

Peter Dutton’s budget reply described Labor’s measures as ‘inflationary spending’ and labelled the tax cuts a ‘cruel hoax’. Instead, the opposition has promised lower taxes long-term but offered little in terms of immediate policy alternatives, instead proposing a national gas reserve to prioritise domestic supply over exports—an idea that reportedly angered mining magnates like Gina Rinehart.

What Does This Mean for Students?

For university students at the University of Melbourne and beyond, Budget 2025–26 is about affordability and accessibility.

From wiping thousands off student debt to permanently funding Free TAFE, boosting mental health support in schools, and improving access to affordable childcare for student-parents, the measures paint a vision of a more equitable, opportunity-driven education system. 

The question now is whether voters—and particularly younger voters—will see it as enough.

With the federal election set for May 3, the budget acts as both a final offering and a first salvo in what’s shaping up to be a fiercely contested campaign.

If Labor’s strategy pays off, students might see these promises become a policy reality. If not, the future of this ambitious education agenda hangs in the balance.