Australia Introduces Major Cost-of-Living and Policy Changes From January 1, 2026

Australia has entered 2026 with a wide range of significant policy, pricing and welfare changes that will affect millions of households nationwide. From cheaper prescription medicines and increased Centrelink payments to toll caps, childcare reforms and new health services, January 1 marks a major reset across essential sectors.

Key Changes Rolling Out Across Australia in 2026

As the calendar turned to a new year, Australians began experiencing a series of reforms aimed at easing cost-of-living pressures while reshaping access to health, transport and social support.

Centrelink Payments Increased
More than one million welfare recipients will receive higher payments due to indexation. Youth Allowance for single adults living away from home has increased to $677.20 per fortnight, while Carer Allowance payments have risen to $162.60 per fortnight. Income thresholds for student payments, Youth Allowance and ABSTUDY have also been adjusted upward.

Cheaper Prescription Medicines
From January 1, the maximum price of a Pharmaceutical Benefits Scheme (PBS) prescription for non-concession card holders is capped at $25. Pensioners and concession card holders will continue paying $7.70 per script until at least 2030, with the change expected to save Australians more than $200 million annually.

Launch of 1800MEDICARE
A new nationwide health advice line, 1800MEDICARE, is now live. The free service allows Australians to access registered nurses for medical advice and referrals, including after-hours telehealth GP consultations for urgent care, prescriptions and minor treatments.

Mental Health Support Expansion
The Medicare Mental Health Check-In service has launched, providing free early mental health support and digital resources. From March 30, Australians will also be able to access low-intensity cognitive behavioural therapy via phone or video sessions.

Permanent $60 Toll Cap in NSW
New South Wales has made its $60 weekly toll cap permanent, with an annual limit of $5,000. Additional reforms include the introduction of a tolling ombudsman and future two-way tolling on Sydney Harbour crossings once the Western Harbour Tunnel opens.

Toll Price Increases Nationwide
Despite relief measures, toll prices have risen across NSW, Victoria and Queensland in line with indexation. Sydney’s Eastern Distributor now has the highest minimum passenger toll, while CityLink and AirportlinkM7 users will also see increases.

Cash Payments Mandated for Essentials
Retailers selling groceries and fuel must now accept cash payments for in-person transactions under $500 between 7am and 9pm. The rule applies to major retailers, while most small businesses remain exempt.

Energy Rebates End
The federal energy bill rebate has officially expired, ending the $150 relief previously offered to households and eligible small businesses.

Passport Fees Rise Again
Australian passport application fees have increased by $10, making them among the most expensive globally. The increase reflects annual CPI-linked indexation.

Childcare Subsidy Overhaul
The Child Care Subsidy activity test has been replaced with a new three-day guarantee, ensuring eligible families receive at least 72 hours of subsidised care per fortnight, with higher entitlements available under specific circumstances.

A New Policy Landscape for 2026

Together, these changes mark one of the most comprehensive January policy shifts in recent years. While some measures aim to reduce household expenses, others reflect the government’s broader transition away from temporary cost-of-living relief toward longer-term structural reforms.