The Federal Budget 2026-27 focuses on economic resilience, cost-of-living relief, fuel security, housing supply, tax reform and fiscal consolidation in the context of global uncertainty and rising pressures on households. The government said the Budget responds to the economic impact of the conflict in the Middle East and a global oil shock while also addressing longer-term challenges including productivity, intergenerational equity and access to housing.
A major component is a fuel resilience package valued at $14.8 billion aimed at strengthening near-term and long-term fuel and fertiliser security. The package includes a $7.5 billion Fuel and Fertiliser Security Facility through Export Finance Australia and a $3.2 billion Australian Fuel Security Reserve, alongside measures to promote clean fuel production, electrification and a 20 per cent gas reservation. Temporary cost-of-living relief includes more than halving the fuel excise and reducing the heavy vehicle road user charge to zero for three months.
Shortly after the budget delivered by Treasurer Jim Chalmers, PM Anthony Albanese said in a video that “help with the cost of living is our number one priority”.
The Budget introduces new income tax relief for workers, including a $250 Working Australians Tax Offset and a $1,000 Instant Tax Deduction. Previously legislated tax cuts will continue this year and next year, and Medicare levy low-income thresholds will increase. Medicare Urgent Care Clinics will become a permanent part of the health system, while the government reiterated support for higher wages for low-paid workers.
Productivity reforms form a central pillar of the Budget, with a package designed to reduce regulatory burden by $10.2 billion annually, boost long-run GDP by around $13 billion and lift young firms’ research and development investment by $400 million per year. The government says reforms will streamline approvals, establish a single national market, promote artificial intelligence adoption and implement energy market changes, alongside new investments in science and innovation.
Tax changes include reforms to negative gearing, capital gains tax and discretionary trusts, with the stated aim of improving fairness and funding income tax cuts. The Budget also includes more than $3.5 billion in new measures to lower taxes for businesses and start-ups, including loss refundability, venture capital support and a permanent $20,000 instant asset write-off for small business.
Housing is a major focus, with the government lifting its total housing commitment to more than $47 billion. Measures include limiting negative gearing to new builds from 1 July 2027, replacing the 50 per cent capital gains tax discount with inflation-adjusted indexation from the same date, and extending the ban on foreign investors purchasing existing homes until mid-2029. The government says the tax changes are expected to help around 75,000 homeowners enter the market over the next decade.
A further $2 billion will be invested in housing-enabling infrastructure through a new Local Infrastructure Fund, supporting up to 65,000 homes over ten years. Additional funding will accelerate environmental approvals, streamline building standards, support skilled migrant trades assessments and invest in construction workforce initiatives. Commonwealth Rent Assistance increases of more than 50 per cent for over 1.4 million households will continue, alongside funding for social and affordable housing and support for young people at risk of homelessness.
The Budget includes $63.8 billion in savings and reprioritisations. The government states the budget position is $44.9 billion stronger than at the mid-year update and $264 billion better than previously inherited settings. Gross debt is projected to be $18 billion lower in 2026-27 than forecast at the mid-year update and $173 billion lower than earlier projections, with revenue upgrades returned to the bottom line for a second consecutive update. The government says these measures aim to reduce deficits, lower debt and build fiscal buffers while supporting households and economic reform.
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