A stronger than expected budget position gives Labor room to extend energy bill relief ahead of the may federal election, intensifying the economic battle with Peter Dutton’s coalition

Prime Minister Anthony Albanese has confirmed his government will deliver the federal budget on 25 March before heading into a May election, setting the stage for a high-stakes economic showdown with Opposition Leader Peter Dutton. With a surprise revenue windfall boosting Treasury’s outlook, Labor is poised to announce fresh energy bill relief to appeal to voters struggling with cost-of-living pressures.

The move follows weeks of speculation over whether Albanese would call an early election in April. However, after ruling that out, he has settled on a budget-driven strategy, banking on economic policies—including direct energy subsidies—to shore up support before voters head to the polls.

At the centre of Labor’s economic pitch is the potential extension of the $3.5 billion energy relief package, which previously granted households $300 towards electricity bills. Without an extension, the final $75 instalment would be paid in June, leaving millions without further support. Treasurer Jim Chalmers has positioned the policy as a stark contrast to the Coalition, which opposed the original subsidy in Parliament.

Labor’s spending agenda also includes an $8.5 billion boost to Medicare bulk-billing, funding for 50 urgent-care clinics, and more than $7 billion for public schools. Meanwhile, Dutton has framed the government’s spending as reckless, vowing to rein in what he calls “waste” and warning that Labor is using short-term revenue gains to paper over structural budget weaknesses.

Economist Chris Richardson estimates that a stronger jobs market, high commodity prices, and inflation-driven tax revenue have added $24.3 billion to the budget bottom line over two years. However, Treasury remains more cautious, warning that economic growth could slow. In December, Chalmers projected a $26.9 billion deficit for this financial year, widening to $46.9 billion in 2025-26. However, recent monthly data suggests this year’s deficit may be closer to $16.1 billion, with 2025-26 improving to around $41.2 billion.

The economic landscape will be crucial to Labor’s re-election chances. A recent YouGov poll shows the party maintaining a lead over the Coalition, though Dutton’s team disputes any significant shift in support. The Resolve Political Monitor last month placed the Coalition ahead at 52-48 on a two-party preferred basis.

With the budget now locked in, all eyes turn to Albanese’s likely election date—3, 10, or 17 May. His challenge will be convincing voters that the government’s economic management has stabilised the nation’s finances while delivering relief to households. Dutton, meanwhile, will hammer home his message of fiscal restraint, betting that Australians are ready for a change.

As the campaign kicks off, both leaders will need to navigate a complex political and economic landscape. For Labor, the budget is a final opportunity to cement its economic credentials; for the Coalition, it is a chance to expose vulnerabilities and push for a reset.