The second term
The policy priorities and Senate politics likely to shape Labor’s second term in government
Labor went into the 2025 federal election expected to struggle to keep its majority, and came out with its largest majority in the House of Representatives in eight decades. In August 2025 the brief looked at the policy issues likely to matter in the second Albanese term, and at how the government would manage a large new caucus and a Senate it didn’t control.
It expected continuity rather than a change of direction, from a government more confident in its agenda. Promises such as cheaper PBS scripts and a ban on non-compete clauses were likely to pass with the Greens, who would use their Senate position to push for more, and the Prime Minister’s fraught relationship with them meant he would sometimes work with the Opposition instead.
The full report · 7 pages, with every chart.
Get the full reportWhat we found
1. Labor’s headline election promises were likely to pass with the Greens
The government had already legislated a 20% cut to HELP debts from 1 June 2025, expected to wipe $16 billion, on top of $3 billion from changes to indexation. Still to pass were a $25 cap on PBS scripts for general patients, down from $31.60, and a ban on non-compete clauses for workers earning under a threshold, then $175,000. The brief expected the Greens to back them, but to use their Senate position to insist on bigger changes.
2. Only the Greens or the Opposition could give Labor a Senate majority
Including Dorinda Cox, who defected from the Greens to Labor shortly after the election, the government held 29 Senate seats and needed ten more to pass legislation. As long as the Greens voted as a bloc of ten, they were the only crossbench path to a majority: the other crossbenchers could neither pass bills without them nor were needed alongside them. The alternative was the Opposition, which had more than enough votes.
3. Pressure from the Trump administration on trade and defence would run all term
The US had imposed a 10% baseline tariff on Australian goods and 50% on Australian steel, aluminium and copper, and was pressing Australia over PBS prices after it lifted biosecurity restrictions on American beef. US defence secretary Pete Hegseth had demanded defence spending of 3.5% of GDP, at a cost of about $40 billion a year, which the government had not agreed to. Australia kept making AUKUS payments while the US considered whether to continue the agreement.
4. A reform roundtable and a 2035 emissions target were next on the agenda
The Economic Reform Roundtable, set for 19–21 August 2025 at Parliament House, focused on productivity and a more sustainable budget, with a session on “a better tax system”, and was expected to give the government new policy ideas for the term. Later in 2025 the government was due to set its emissions reduction target for 2035, on the path to net zero by 2050, with a review of the national electricity market under way.
What’s in the report
- The election promises the Prime Minister named as priorities, and what they cost
- Trade, defence and China under a second Trump administration
- Where industrial relations, climate and energy policy go next
- How the government might manage its large caucus and a Senate it doesn’t control
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