The great election wash up - and what we’re watching next…

The announced – and legislated – income tax cuts for individuals will come into effect as follows:

• from 1 July 2026, the 16% individual rate will reduce to 15% (for income between $18,201 and $45,000); and
• from 1 July 2027, the 15% rate will reduce to 14%.

The Government also announced during the election campaign that, if re-elected, it would:

• introduce a $1,000 instant tax deduction from 1 July 2026 for individual work-related expenses without the need for receipts
• extend the $20,000 small business instant asset write-off (IAWO) threshold for a further 12 months to 30 June 2026 (compared with a permanent $30,000 IAWO threshold proposed by the Coalition).

It remains to be seen whether the new Government will re-introduce the measure to impose an additional 15% tax on particular ‘earnings’ on superannuation balances above $3 million.  However, with a majority in the House of Representatives and the prospect of a Labor/Greens majority in the Senate, this cannot be ruled out despite the ongoing criticism of aspects of the design of the measure.

With an increased majority in the House of Representatives and the prospect of a further two terms in power, this provides the new Government with an opportunity to engage in significant tax reform.  Such reform was not flagged by either side of politics during the election campaign.

Labor returns to government with a clear mandate to continue a renewables-led approach to Australia’s energy transition – particularly household electrification, grid reform and green generation investment. 

What we’re watching:

Renewable and fossil fuel energy mix:  Despite its continued commitment to the Capacity Investment Scheme (CIS) and 2050 net zero target, Labor hasn’t detailed specific measures and timelines to phase out fossil fuel generation. As Australia’s east coast risks gas shortfalls, there has been a recent push for the Australian Energy Market Operator (“AEMO”) to underwrite importing LNG into Australia for the first time. Given the Coalition’s campaign promises to delay the closure of coal-powered plants and to expand gas projects, and the Greens’ pledge to fight for a moratorium on new fossil fuel developments, key decisions on coal and gas strategies are likely be hotly debated in the next political term.

Energy, cost-of-living & politics:

As Labor seeks to secure parliamentary support for its decarbonisation agenda, expect to see continued and further support for household installation of solar and battery technology, ownership of electric vehicles, and energy bill relief for Australian homes and small businesses – measures generally supported by the Greens and Teal independents.

Nuclear no-more?

The failure of the Coalition’s nuclear-focused campaign to gain traction puts the Coalition at a critical crossroads.  Will it modify its energy position or double down on the nuclear strategy? 

A link to our deeper analysis of the energy market implications can be found here. 

The Government has re-committed to its stated decarbonisation objectives and an overhaul of federal environmental laws.

Successive Governments have understood the need to change Australia’s system of environmental stewardship highlighted by the 2021 Samuel review of the Environmental Protection and Biodiversity Conservation Act.

In its first term, the Albanese Government did attempt to pass a package aimed at strengthening compliance and enforcement of federal environmental laws, including the establishment of a Federal EPA. However, this failed due to opposition from the Senate crossbench and Greens.

Since winning re-election, the Prime Minister has confirmed that he will pursue a revised approach to environmental decision-making in the coming term. The major question will be its scope and alignment with the Nature Positive agenda.

The Prime Minister has acknowledged significant concern on project approval processes and timelines from resources industry stakeholders, which he has indicated any fresh initiative will address.

Building on the Government’s existing $22.7 billion Future Made in Australia agenda – including the enactment of the Future Made in Australia legislative framework and legislating $13.7 billion in hydrogen and critical minerals production tax incentives in late 2024 / early 2025 – the Government can proceed with announcements in the 2025-2026 Federal budget:

• additional investment in renewable energy and low emissions technologies, and
• private investment in the priority areas, principally green metals.

Additional supports under Labor’s Future Made in Australia framework can now be considered and implemented with minimal (if any) opposition.  Much like the hydrogen and critical minerals production tax incentives, the tax system might have a role to play in providing any such supports. 

We also expect further consultation in respect of the community benefit rules that are required to be developed regarding the critical minerals and hydrogen production tax incentives.

The re-election of Labor has some positives for institutional investment in housing. The Housing Australia Future Fund will continue to provide funding for affordable and social housing, a sector where we are seeing increasing investment from institutional capital. The build-to-rent sector will also continue to be supported by the extension of the MIT (managed investment trust) regime to BTR that includes a portion of affordable and social housing.

Conversely, the 2-year ban on foreign residents buying existing properties has created some roadblocks for institutional investors seeking to buy existing BTR assets.

On the first home buyer front, the Government is committed to:

• Investment of $10 billion toward 100,000 new homes that can only be bought by first home buyers
• Expand the Home Guarantee Scheme to all first home buyers, meaning that any first home buyer with a deposit of at least 5% buying eligible property will not need to obtain lender mortgage insurance.
• Continuing the Help to Buy Scheme, where the Government provides up to 40% of the cost of buying a home.

Recognising the challenges in unlocking supply, the Government’s housing policy also includes:

• $54 million for investment into advanced manufacturing of prefabricated and modular homes
• $120 from the National Productivity Fund to incentivise states to remove red tape and help more homes be built faster
• $78 million to establish the Advanced Entry Trades Training programme to help tradies who are experienced but not qualified obtain formal qualifications faster

The Government may need to work with the Greens in the Senate to implement these initiatives. The Greens’ approach to legislative negotiations will be closely watched. Following criticism for its hardline approach in the last parliament, the party has indicated it will continue to push for housing reform, including rent freezes and introducing a social and affordable housing levy on developers.

After making ‘Strengthening Medicare’ a central pillar of its re-election bid, we anticipate the returning Albanese Government will follow through on the key promises it made in the health sector, namely:

• Providing an additional $8.4 billion in Medicare funding
• Increasing the number of Medicare Urgent Care Clinics to 137
• Capping PBS scripts at $25
• Increasing hospital funding nationally

The Albanese Government has indicated the health sector will be front of mind for the government over the next term. Specifically, we will be watching how this will impact:

• The pharmaceutical industry continued efforts to reduce the cost of medicine and expand pharmacy services will have significant implications for pricing strategies and service delivery models
• The aged-cared sector the new Aged Care Act will be rolled out in the second half of this year, which will likely mean changes in compliance requirements and funding structures for aged care providers and
• Digital health advancements the push towards digital health integration and the government’s efforts to modernise My Health Record and electronic prescribing infrastructure (with increased funding promised for the Australian Digital Health Agency).

Labor’s infrastructure funding from the 2025-2026 budget is set at $60.7 billion over four years, reflecting a slight increase in funding from the previous year.

The Government announced as part of their election campaign the following infrastructure initiatives:

1. Prioritisation of road and rail infrastructure through a $17.1 billion commitment over ten years from 2024-2025, including a record $7.2 billion for upgrades to Queensland’s Bruce Highway.
2. Major upgrades to transport corridors, such as a $1 billion rail corridor in Western Sydney and a further $2 billion for the upgrade of Melbourne’s Sunshine Station.
3. A promise to construct 100,000 new homes for first home buyers through a $4.5 billion investment, in partnership with State and Territory governments.
4. Investment in water infrastructure set at $87.7 million over three years to deliver new water infrastructure projects.

The Government’s re-election ensures continuity in its long-term infrastructure commitments. The strong Labor majority in the House of Representatives may fast track infrastructure funding commitments and allow the Government to push for approvals for more significant infrastructure projects, particularly in the renewables sector.

Successful delivery on these commitments may be complicated by the scale of key infrastructure projects and the lengthy implementation process for these projects. Key areas to watch will include the transmission upgrades required to support their 82% renewable energy target by 2030, the effectiveness of integrating local manufacturing into the procurement process and whether the Government’s promises on housing delivery keep pace with demand.

A link to our deeper analysis of the infrastructure can be found here. 

The Government announced during the election campaign that, if re-elected, it would:

• Introduce a ban from 2027 on ‘non-competes’ for those earning under the high-income threshold ($175,000), which it has subsequently indicated is a priority reform; and
• Legislate to prohibit the Fair Work Commission from removing penalty rates from modern awards, which is in response to a number of applications by employer groups to introduce ‘exemption rates’ (which have the effect of buying out penalty rates and other entitlements in return for a higher annual salary) into modern awards.

The full impact of the Government’s significant industrial relations reform agenda during the previous term is only starting to be revealed, with a number of test cases and union campaigns playing out across:

• Multi-employer bargaining in sectors such as mining, retail, fast-food and early education;
• ‘Same job, Same Pay’ regulation of labour-hire in mining, aviation and warehousing; and
• The modern award system, including in relation to gender-undervaluation, delegates rights, WFH, consultation and part-time employment. 

Although the Government did not otherwise have an extensive industrial relations policy platform, it is clear that it will come under pressure from unions and the Greens to take action in a number of areas, with the stated wish-list of those groups including:

• The introduction of a national ‘portable’ leave scheme;
• The introduction of a national labour hire registration scheme;
• Banning or restricting the use of lock-outs by employers;
• Providing a statutory entitlement to reproductive leave and increasing paid parental leave; and
• Restrictions on the use of artificial intelligence and automation, and obligations to consult with employees about their use in the workplace.

Employers can also expect a renewed focus on compliance with their regulatory obligations with the Fair Work Ombudsman seeking to enforce the new ‘wage theft’ legislation and the Australian Human Rights Commission focusing on the ‘positive duty’ on employers to prevent sexual harassment and sex-based discrimination.