Federal Budget 2025: What Developers Need to Know

Housing, the cost of living, industry investment and concern about how US President Donald Trump’s tariffs will impact our economy all figured highly in Federal Treasurer Jim Chalmer’s fourth budget. The Budget is forecast to, after several surpluses, deliver a deficit of $10.7 billion over the next four years. The Urban Developer has unpacked the measures in the Budget, delivered as we head towards a Federal election, that will most affect the development and property sector. The financials Chalmers has forecasted a decade of deficits after back-to-back surpluses. For 2024-2025, that deficit is $27.6 billion, rising to $42.1 billion for 2025-2026. It is then forecast to fall to $35.7 billion for 2026-2027, rise slightly to $37.2 billion for 2027 and fall again, to $36.9 billion, for 2028-2029. “We’re emerging from this spike in global inflation in better shape than almost any other advanced economy, growth is forecast to pick up from one and a half percent this year to two and a half percent in 2026-27,” Chalmers said. Budget actual and estimated figures for 2023-2029 2023-24 ($bn) Actual figures 2024-25 ($bn) Estimates 2025-26 ($bn) 2026-27 ($bn) 2027-28 ($bn) 2028-29 ($bn) Total(a) ($b) Underlying cash balance $ bn 15.8 -27.6 -42.1 -35.7 -37.2 -36.9 -179.5 Per cent of GDP 0.6 -1.0 -1.5 -1.2 -1.2 -1.1 Per cent of GDP at PEFO -2.4 -1.9 -1.6 -1.4 -1.4 -1.4 Gross debt $ bn 906.9 940.0 1,022.0 1,092.0 1,161.0 1,223.0 Per cent of GDP 33.9 33.7 35.5 36.5 36.9 36.8 Per cent of GDP at PEFO 44.6 44.9 44.7 44.6 44.5 44.0 --> ▲ Source: Budget 2025-26, The Treasury Chalmers acknowledged the context in which the budget was being delivered. “This budget is our plan for a new generation of prosperity in a new world of uncertainty,” Chalmers said. Housing The national target of 1.2 million homes over five years has been reintroduced after nearly 45,000 new homes were delivered in the first quarter of the National Housing Accord. ▲ The government has recommitted to its National Housing Accord. A pipeline of 55,000 social and affordable homes will be supported through the Housing Australia Future Fund (HAFF) and the Social Housing Accelerator with 18,000 homes expected to be delivered through Round 1 and 2 of HAFF and Round 1 of the Accord. Urban Taskforce chief executive Tom Forrest said that Australia was not meeting its Housing Accord targets of 240,000 completed homes each year and that the budget needed to have measures to deliver more housing. “The latest data published by the ABS showed that in the 2024 September quarter, there were only 43,328 new dwellings commenced (seasonally adjusted),” Forrest said. “The real concern comes from the annualised data. “In the 12 months until the completion of the September quarter, there were only 161,557 new homes commenced.” Another $800 million will be added to the $6.3-billion Help-to-Buy scheme where the government will take ownership of 30 per cent of an existing home or 40 per cent of a new build with the homebuyer buying the stake back over time. The scheme however has not yet begun. Applications are expected to open up later this year, depending, of course, on the result of the Federal election. PEXA chief economist Julie Toth pointed out that affordability was still a concern as was supply. “Despite the recent cash rate cut, we’re yet to see a significant uplift in building approvals or home purchase activity,” Toth said. “The market remains cautious, and affordability pressures continue to weigh on prospective buyers. “There is strong demand for housing across Australia, but supply remains a critical issue.” Chalmers revealed $9.3 billion provided to states and territories to combat homelessness, doubling the funding of such services to $400 million per year. The funding is to be used to provide crisis support and maintain and repair social housing while another $6.2 million is earmarked for homelessness research, advocacy and co-ordination. Another $1 billion will be provided to the National Housing Infrastructure Facility to support crisis and transitional housing for those experiencing domestic violence and homelessness. The Commonwealth Rent Assistance will also be increased by 45 per cent. Foreign investment Chalmers announced a ban on foreign buyers purchasing existing homes for two years from April 1, 2025—the ATO will get $5.7 million to help enforce that ban. Another $8.9 million will be given to the ATO and the Treasury to prevent land banking by foreign buyers and to ensure vacant land can be used productively as soon as possible. But overseas investors will find it easier to invest in Australia with a new single-entry point front door created for major transformational proposals from September to be guided by an investor council. There will also be $16 million for a new Australia-India Trade and Investment Accelerator Fund. Construction jobs Chalmers announced a $54-million investment in modern construction methods including pre-fabrication and modular. ▲ Modular housing is among modern construction methods to be funded. Another $120 million, through the National Productivity Fund, will be used as incentives for states and territories to make it easier for modern methods of construction to be used to build homes faster. A new Housing Construction Apprenticeship stream will be created within the Key Apprenticeship Program. Eligible housing construction apprentices will receive up to $10,000 during their apprenticeship from July 1, 2025. Employers of these apprentices could be eligible for up to $5000 as a Priority Hiring Incentive, settings which have been extended until December 31, 2025. There will also be a ban on non-compete clauses for low and middle-income workers to allow people to move to higher paying work and to start businesses. Loopholes in competition law that cap pay and conditions for workers and block the hiring of staff by competitors will also be closed. A national occupational license for electrical trades is on the cards to allow workers to move where the work is, removing barriers to completing projects. The Federal Government also wants to establish 100,000 permanent free TAFE places every year from January 1, 2027. Industry South Australia’s Whyalla steelworks will receive $2.4 billion to keep it operating. The measure to keep local steel production going will help alleviate construction cost issues for Australian projects, according to Ai Group chief executive Innes Willox. “We need to retain and build our steel and iron-making capabilities in Australia to ensure our economic resilience through what are increasingly uncertain economic times,” Willox said. “We cannot allow ourselves to become overwhelmingly reliant on steel imports to meet all our industrial needs.” The Budget promises $2 billion for production credits to help push for a green aluminium sector. Chalmers wants to also advance the existing $22.7 billion Future Made in Australia plan to promote and build manufacturing in the country. The Clean Energy Finance Corporation will be expanded with another $2 billion—$36.9 million to improve existing grid infrastructure and $10 million to reduce grid bottlenecks through the Accelerated Connections Fund. ▲ The Whyalla steelworks will receive $2.4 billion. There is $13.7 billion in hydrogen and critical minerals production tax incentives with $1.5 billion to support priority areas including $750 million for green metals, $500 million for clean energy technology manufacturing capabilities and $250 million for low carbon liquid fuels. The $900-million National Productivity Fund, part of a decade-long reform plan agreed to in November of 2024, was included in the Budget. A revitalised National Competition Policy was estimated to potentially boost annual GDP by up to $45 billion and reduce prices up to 1.5 percentage points. Healthcare and childcare For developers focused on healthcare assets, $644 million is allocated for 50 urgent care clinics to be opened before mid-2026. Around $1 billion has been set aside to deliver 160 early childcare centres across the country with another $1.8 billion for funding public hospitals. Infrastructure The budget includes $17.1 billion during the next 10 years for road and rail projects. There will be $1 billion provided for the South West Sydney Rail Extension, $580 million to upgrade Townson Road, Burdekin Road and Garfield Road West, and $500 million to upgrade Fifteenth Avenue in New South Wales. In Victoria, the Budget includes the $2 billion promised for upgrading Sunshine Station as well as $1 billion for the Road Blitz project. ▲ A rendering of the planned Sunshine Station upgrade in Victoria. Upgrades to Queensland’s Bruce Highway have been allocated $7.2 billion and there is $350 million for the Kwinana Freeway upgrades in WA. There will be $125 million for the Curtis Road Level Crossing removal project in South Australia, $200 million for Arthur Highway upgrades in Tasmania, $50 million for Monaro Highway upgrades in the ACT, and $200 million for duplicating Stuart Highway between Darwin and Katherine in the Northern Territory. Trunk infrastructure across the states is becoming more important to getting more housing completed, according to Forrest. “For many years, planning has been the bottle neck,” Forrest said. “But the states have taken the problem seriously and the real problem is now shifting to infrastructure.” Another $1.5 billion has been committed to the Housing Support Program to deliver necessary trunk infrastructure, build more social housing and improve planning capabilities. “The New Housing Support Program is funding the crucial goal: the crucial roads, water and power that these new homes need,” Chalmers said. The Federal Government will also provide up to $3 billion in equity to finish the rollout of the National Broadband Network with 54 per cent of the 622,000 homes getting faster and more reliable broadband services based in regional Australia. The Federal Government will also provide up to $130 million in secured loans to keep Rex Airlines operational during the extended voluntary administration until June 30 before holding a competitive sale process. Defence and disaster relief The Budget will increase by $1 billion to $10.6 billion defence spending over the next four years, part of a commitment to spend $50 billion over the next decade. To assist Australia’s manufacturing industry, $272 million will be spent on Australian-made radars Willox said this was welcome news. “[Defence] has had to absorb a huge range of funding pressures, including the additional costs of the AUKUS nuclear-powered submarine enterprise (including putting around $9 billion into the industrial bases of the US and UK), Ukraine support, infrastructure upgrades and spiralling workforce costs,” Willox said. Willox also made the point that the ADF contributes during disaster relief operations and that if it was not adequately supported, it would also fail on this front. Overall, the Defence Integrated Investment Program has $330 billion taking it to 2033-2034—defence funding will exceed 2.3 per cent of GDP by the early 2030s. That investment includes $159 billion over a decade for maritime capability. There will be $36 million provided to the Australian Embassy in Kyiv, Ukraine in addition to the more than $1.3 billion in military assistance already committed. There will be an additional $44.6 million invested in defence initially in response to the 2024 Independent Intelligence Review. The government promised $11.6 billion in disaster support in the mid-year budget update, crucial for those seeing assets and current projects affected by climate events. On top of that, Tropical Cyclone Alfred’s damage is expected to cost $1.2 billion to clean up, with Chalmers confirming that this is in the Budget.

Federal Budget 2025: What Developers Need to Know

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