Time to read : 5 Minutes
It's no surprise that the cost of living dominated the run up to the budget. But will Treasurer Jim Chalmers' announcements on Tuesday night actually make a difference to our day-to-day finances, with bills causing more of a squeeze on household budgets?
We've asked three of our experts about some of the biggest headlines and whether they go far enough.
Got a HECS debt, high energy bill, or a specific health need? Here's what our experts made of the related budget announcements.
Education: HECS-HELP indexation cap
The government will cap the annual indexation of its student loan schemes. Moving forward it will be calculated on whichever is lower – Consumer Price Index (CPI) or Wage Price Index (WPI).
Under the new policy, indexation will be dropped to 3.2%.
The government is promising to backdate the change to June 1, 2023.
$3 billion in student debt will be removed from more than three million people with student loans.
“After copping a 7.1% rise in indexation last year – the biggest jump since 1990 – it’s a big win for students to have the indexation reduced and get a credit,” said Kate Browne, Head of Research and Insights at Compare Club.
And according to Kate, this change could also be crucial for graduates looking to get on the property ladder or refinance their mortgage.
"Lower HECS debt should give people more options when it comes to getting a mortgage as they may be able to get a lower rate or avoid having to pay LVR. This is very much down to the banks, lenders and APRA, but it would seem like a sensible move."
“That said, if you’ve got HECS debt and a home loan, your first action today should be to call your mortgage broker and see if you can lower your rate,” said Kate.
Verdict: initial relief for graduates but home loan lenders need to follow suit.
Energy: solar and wholesale price caps
Compare Club’s Bill Stress Index has consistently shown Australians paying for their energy is an ongoing concern for households, so it’s good to see energy bill relief being extended in the form of a $300 rebate to all households.
State and federal governments previously offered annual rebates as well as strong incentives for homeowners to install rooftop solar.
The newly-announced $1 billion Solar SunShot program will allow more solar panels to be manufactured on home turf.
Australia has the highest per capita use of solar panels however only 1% of the panels are made locally. Imported solar panels cost around 15% more just to get here.
Australian manufactured panels should in theory make it a more affordable option to install.
Paul Coughran, Compare Club’s General Manager of Utilities, believes these are good initiatives but renters risk being left behind.
“Solar energy typically benefits an owner-occupier, and that’s because the cost of installing solar typically takes 3-4 years to pay itself back. This has meant renters have been missing out on cheaper power prices,” he said.
“While the Solar SunShot program may help reduce costs for switching to solar, it would be great if the government were to introduce a national incentive. The Victoria government for instance is offering incentives for landlords to install solar panels on their rental properties, and it benefits both parties.”
“This is a missed opportunity to help all Australians, not just those who own their own home. Knowing you'll have lower energy bills because of solar could be a sweetener when selling the property or attracting tenants in the future,” said Paul.
But Paul also says it’s surprising the government hasn’t extended the wholesale price cap on coal, given this helped bring prices down two years ago.
“It’s clear that the caps would help avoid any wholesale market blowout which would be passed on to customers in the form of high energy prices’, said Paul.
Verdict: well-intentioned initiatives, but renters will be left disappointed.
Health care
Women's health
The government is promising to invest more than $107 million to support women with endometriosis and other gynaecological conditions such as chronic pelvic pain and polycystic ovary syndrome (PCOS).
From 1 July 2025, two new items will be added to the Medicare Benefits Schedule (MBS).
A higher fee of $168.60 will be paid for longer initial gyno consultations of 45 minutes or more.
That’s an increase of $73 from the standard rate of $95.60.
Longer follow-up consultations of 45 minutes or more would be paid at $84.35, an increase of $36.30 from the standard $48.05.
“Endometriosis is estimated to affect at least 1 in 9 Australian women so this funding is a step in the right direction for many women,” said Kate Browne.
“It’s rarely acknowledged by governments that women are having to spend thousands of dollars on menstrual and reproductive system conditions, so this policy will help chip away at this cost.”
Verdict: a much needed saving for women.
Mental health
One of the budget’s biggest misses was in mental health according to a Compare Club senior health insurance advisor.
The government will introduce a national digital mental service offering free support to 150,000 Australians a year, without the need of a referral. But the service won’t commence until 1 January 2026 and there’s not much detail about how it works. So where does this leave people needing mental health support in the meantime?
Mental Health Australia stats show rising rates of mental ill-health in young Australians, as well as the cost of living having a significant impact on people’s wellbeing.
Currently there is a medicare rebate for up to 10 psychology or counselling services.
Six with a GP referral and another four with a second GP referral, if more sessions are needed.
This was reduced from the pandemic where people were able to get 20 sessions.
Yes, but… there are additional costs:
The Medicare rebate on these services is $109.80.
Most psychology sessions will cost anywhere between $200 and $250.
Patients who have private health insurance with psychology extras are unable to ‘double claim’. They can only claim through their fund after the 10 sessions, and this amount is roughly half of what Medicare pays.
Eli Boroda, Senior Health Insurance Advisor says that the current system is failing Australians who need mental health support.
“What I would like to see is the Medicare benefit indexed with inflation so that patients seeking counselling sessions pay less out of pocket,” he said.
“The feedback I receive from many people is that it can be unaffordable to go even a few times because of the out of pocket cost per visit. It would also be great if the rules can be changed to allow private health insurance and Medicare to complement each other much more.”
“My suggestion is that private health members that have psychology cover in their extras should be able to claim on the gap between the cost and the Medicare rebate.”
“I would also like to see the government put pressure on the health funds to have psychology in a more basic level of extras. Most funds only include this item on medium or high extras policies,” said Eli.
Verdict: a missed opportunity.
Bottom line
Yes, our experts think that government’s changes to help ease the cost of living pressure can make a difference. But there’s some obvious areas such as solar for renters and the cost of mental health that was a miss.
Anything else?
The main changes that were already announced are the Stage 3 tax cuts rework and super being paid on parental leave.
Other initiatives include reducing the financial burden for tertiary students, increasing medicare rebates for women’s health, extending energy bill relief, and supporting the Australian solar panel industry – to name just a few.
There can always be more tabled to relieve the cost of living. We may need to wait until the election year to see if the government is making progress.
