What You Need to Know—and Why It Matters
The Mid-Year Economic and Fiscal Outlook (MYEFO) is one of the most significant checkpoints in Australia’s economic calendar. It’s where the Government updates its forecasts, budget position and policy priorities halfway through the financial cycle. For most households and investors, the question isn’t “What’s in the report?” but it’s “What does this mean for me?”
This year’s MYEFO paints a picture of cautious optimism: steady growth, easing inflation, and targeted measures to support households. Below, we break down the key themes.
1. The Big Picture: Economic Outlook
Treasury forecasts a steady “soft landing” for the economy:
- Real GDP: 2.25% in 2025–26 and 2026–27
- Inflation (CPI): 3.75% in 2025–26, easing to 2.75% in 2026–27
- Unemployment: 4.5% across both years
The Government expects inflation to return to the target band by the end of 2026.
Why this matters:
These settings influence wage growth, job security and interest-rate expectations.
2. Budget Position: Smaller Deficits, Lower Debt
MYEFO shows improvement:
- Underlying cash deficit: $36.8b in 2025–26 (-1.3% of GDP), down from $42.2b
- Gross debt: $993.0b; Net debt: $587.5b
- Savings and reprioritisations: $20.0b
- Tax receipts: Revised up by $32.6b over forward estimates
Why this matters:
A stronger budget position gives the Government more flexibility for future spending and tax decisions.
3. Cost-of-Living Measures
MYEFO confirms further personal income tax cuts:
- From 1 July 2026, the 16% rate drops to 15%
- From 1 July 2027, it drops further to 14%
Practical takeaway:
Individuals in the workforce will have additional cash flow.
4. Student Debt (HELP)
Two key changes:
- A 20% reduction applied to 3.2 million accounts in Nov–Dec 2025
- From 1 July 2025, repayment changes could boost take-home pay by up to $55 per fortnight
Practical takeaway:
If you have HELP debt, serviceability and loan term have improved.
5. Housing: More Pathways for First Home Buyers
MYEFO introduces two major initiatives:
- First Home Supply Program: $2b in grants + $8b in concessional loans for up to 100,000 homes (construction starts 2026–27)
- Expanded 5% Deposit Scheme: From 1 Oct 2025, no caps on places or income limits
Practical takeaway:
These measures may help some buyers enter earlier, but fundamentals still matter—income, deposit, affordability and rate resilience.
6. Energy and Consumer Measures
- Solar Sharer Offer: At least three hours of free electricity during peak solar generation
- Ban on supermarket price gouging: From 1 July 2026
Practical takeaway:
These changes offer modest relief.
7. Medicare and PBS
- $23.5b investment to strengthen Medicare
- PBS co-payment: Drops to $25 per script from 1 Jan 2026
- 1800MEDICARE: 24/7 advice and after-hours GP telehealth from 1 Jan 2026
Practical takeaway:
For those managing chronic conditions or high healthcare utilisation, small cost changes add up.
Need clarity? If you’d like more detail on how the changes affect your situation, please contact your Adviser.
Source: https://budget.gov.au/content/myefo/download/myefo-2025-26.pdf
General information only. Consider whether this information is appropriate to your circumstances and seek advice.
