Australia

Australian Election Issue: Cost of Living

MAR 20 2025·Updated MAY 2 2025

Context

Above: Australian $50, $20, and $5 banknotes are displayed alongside an Australian Medicare card in a wallet on March 25, 2025 in Sydney, Australia. Image credit: Lisa Maree Williams/Stringer/Getty Images News via Getty Images

The Facts

Overview: Australians are currently facing a cost of living crisis. In terms of housing, sale prices are at nearly nine times annual income on average, while rents have doubled since 2020. The average age of first-home buyers is 35, and 224,000 are currently waiting for social housing. Although unemployment is at 3.9% and over 330,000 jobs were added in 2024, employment fell in February, hinting at persistently high interest rates. The highest rises in consumer goods in Q1 2025 were witnessed in areas including recreation and culture (+1.5%) and alcohol and tobacco (+2.4%).
Australian Bureau of Statistics
The University of Sydney
ABC
Wsj
Current State: Although inflation has peaked at 7.8%, interest rates have eased from 4.35%. The Trump administration's recent trade war has injected new uncertainty, even though Australia escaped with relatively modest 10% tariffs. Despite its US exports amounting to less than 5% of the country's total, the global market fluctuations affected Australia. The IMF has, besides warning of higher inflation, forecast that the tariffs will cost Australia $13 billion in 2025 and has also said that the Australian economy will grow 1.6% — down from the 2.1% forecast previously.
Guardian
Treasury.gov.au
ap
Australian
Cost of Living as an Election Issue: Data from Vote Compass published in April showed that cost of living was by far the most significant issue among voters, with roughly 25% of more than a quarter of a million respondents citing it as their top concern. Inflation hit 2.5% in January 2025, adding pressure to an incoming government to act amid anticipated rate slashes and further economic uncertainty under Trump’s policies.
ABC
Guardian
Australian Bureau of Statistics
Labor Party Pledges: Australia's Labor Party pledges to address the cost-of-living crisis through tax cuts for all taxpayers, energy bill relief ($300 for households, $325 for small businesses), and wage growth via higher minimum wages. Their manifesto includes pledges to make medicines cheaper by capping PBS prescription costs and freezing prices for pensioners. Other steps include $3 billion in HELP loan relief, increased rent assistance, expanded Paid Parental Leave, and stronger consumer protections against supermarket price hikes.
Cost of living relief
Coalition Party Pledges: Australia's Coalition plans to ease cost-of-living by curbing government spending to reduce inflation and interest rates, lowering energy bills through renewables, gas, and nuclear power, and ensuring fair supermarket competition. They aim to boost housing supply, protect retirement savings, and help older Australians work without pension penalties. Their plan includes lower taxes, streamlined mining approvals, and trade expansion. Health care proposals feature a $9 billion Medicare boost and affordable essential services.
Liberal Party of Australia

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The Spin

Liberal/National Coalition narrative

Despite Labor's economic rhetoric, Australians overwhelmingly view the recent interest rate cut as insufficient, with more than half believing it reveals the government's economic mismanagement. This growing disillusionment threatens Prime Minister Anthony Albanese's re-election prospects in the upcoming 2025 federal poll.

guardian

Futurework

Australian Labor Party narrative

Inflation has retreated from its peak, with consumer sentiment improving and Australians feeling more financially resilient. Labor's targeted fiscal strategies and budget management have helped stabilize living costs, offering hope for economic recovery in 2025. But there is more work to be done, and only Labor's manifesto plans will truly help support ordinary Australians through the cost of living crisis.