Albanese concedes savings needed before December budget update
Prime Minister Anthony Albanese has conceded that savings are needed ahead of the federal government's mid-year budget update, which is due in mid-December 2026. He also ruled out major cuts to health, education and essential services in that update, according to The Guardian.
The mid-year update is a review of the federal budget partway through the financial year, in which the government can announce changes to spending and revenue. At a press conference in Canberra, a question put to Albanese asked whether the planned measures would be net savings and which areas of spending they would target, according to the prime minister's transcript.
One proposal already on the table is a reduction in the private health insurance rebate for people aged 65 and over. The rebate is a government payment that lowers the cost of private health cover, and under current arrangements, older Australians with private cover receive a larger rebate than younger people. Albanese said the opposition Coalition was hypocritical for not supporting existing savings proposals, including this one.
The government's plan would save about $3 billion over four years, and the money saved would be directed to aged care services, according to The Guardian. The ABC has reported that almost 80,000 older Australians are expected to give up private health cover under the proposal.
The savings debate is taking place against a cost-of-living squeeze. Australia's headline inflation rate rose to 4.3%, as reported on 28 October 2026. Food prices were up 3.2% over the year, housing costs rose 5.2%, and transport costs climbed 8.7% over the past 12 months, according to The Guardian.
Interest rates have also risen. The cash rate, the benchmark interest rate set by the central bank that influences borrowing costs across the economy, stands at 4.6%. That is its highest level in 15 years, after four rate hikes in 2026. A potential rise to 4.85% would take rates to their highest level in 18 years.
Former industry minister Ed Husic has called for price controls, which are government-set caps on what certain goods can cost, on bread, milk, meat and fresh produce.
