New year brings cheaper medicines, higher power bills
The cost of medicines on the Pharmaceutical Benefits Scheme will be the lowest in over a decade, but 2026 could spell bad news for borrowers. Find out what’s changing.
When Australians wake up to a new year, changes to government payments and policies will impact the finances of millions of households.
From Thursday, the maximum cost of medicines on the Pharmaceutical Benefits Scheme will be slashed from $31.60 to $25 — the lowest the co-payment has been since 2004.
The cost-of-living measure is forecast to save Australians more than $200 million each year.
Announced by the Albanese government in July, it kicks in at the same time as some support payments automatically increase in line with indexation.
Youth allowance and Austudy payments will increase by up to $17.60 a fortnight, while fortnightly payments will jump by up to $17.20 for youth disability pension recipients.
Eligible parents will also receive an extra $26 every two years for children’s dental costs, while from January 5, eligible families will get at least three days of subsidised childcare a week.
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A free 24/7 nationwide telehealth service, 1800MEDICARE, will also launch on Thursday.
With registered nurses available to provide advice around the clock to all Medicare card-holders, the service is expected to save about 250,000 Australians unnecessary trips to a hospital emergency department each year.
“There’s a reason the Medicare card is green and gold,” Prime Minister Anthony Albanese said.
“Medicare is the best of Australian values put into practice, people being looked after when they need it no matter who they are.
“We’re cutting the cost of PBS medicines because Australians shouldn’t have to worry about whether they can afford to fill a script.”
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But not all the changes will make households better off.
Commonwealth energy subsidies will come to an end in 2026, meaning households will pay the full price on power bills for the first time in more than two years.
Economists say rolling state and federal electricity rebates have contributed to underlying inflation staying higher for longer, even though they brought a mechanical reduction in the headline consumer price index.
The federal government has also sought to wind back some of its largesse regarding renewable energy after it was revealed the subsidy program for home battery systems had blown out by $11.6 billion over four years due to higher-than-anticipated demand.
The scheme will now be capped and eligibility tightened. The changes are estimated to trim the budget blow-out to $4.9 billion.
When it was announced earlier in 2025, the scheme was costed at $2.3 billion.
Sally Tindall, data insights director at financial comparison site Canstar, said the annual indexation of support payments would be welcomed by those who relied on it, but 2026 could spell bad news for borrowers with interest rate hikes on the horizon.
“If you have a mortgage, know that it might be a bumpy start to the year, with two major banks now forecasting an increase to the cash rate in February,” she said.
“The cost of living has started to re-accelerate and unfortunately, this is unlikely to turn around any time soon, impacting everyone across the country, but those on the lowest incomes the most.”
From Thursday, grocers and petrol stations will be required to accept cash, as a federal government mandate kicks in.
“It will ensure Australians who depend on cash for fuel and groceries aren’t left behind,” Treasurer Jim Chalmers said.
The change means businesses with an annual turnover of at least $10 million must accept cash for in‑person transactions of $500 or less between 7am and 9pm.
-AAP
