2026-27 Federal Budget

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On Tuesday 12 May, Treasurer the Hon. Jim Chalmers MP delivered the 2026-27 Federal Budget, marking the fifth budget under the Albanese government. This Budget has been delivered during a period of global economic uncertainty and domestic cost-of-living pressures. Shifting geopolitical conditions and volatile international markets continue to influence Australia’s economic environment, informing the Government’s fiscal priorities and policy decisions.

The 2026-27 Federal Budget is focused around three broad themes: resilience, responsibility, and reform which underpin the Government’s approach to economic and fiscal management. The Budget is structured around the three pillars of productivity, tax reform, and savings.

The Budget contains measures aimed at reducing cost pressures on Australian households and businesses, including a reduction of more than half of the fuel excise and excise equivalent customs duties, a $250 Working Australians Tax Offset, a $1,000 instant tax deduction for working taxpayers, and the rollout of legislated income tax cuts for all Australian taxpayers. The heavy vehicle road user charge is also to be reduced to zero for a period of three months.

Beyond immediate cost-of-living measures, the Budget includes a $14.8 billion Strengthening Australia’s Fuel Resilience package, which includes a $7.5 billion Fuel and Fertiliser Security Facility, a $3.2 billion Australian Fuel Security Reserve, and a 20% gas reservation policy. These measures are directed at addressing near-term fuel and fertiliser supply risks, while also supporting longer-term domestic energy production and electrification.

The Budget outlines a productivity package estimated to reduce regulatory burden by $10.2 billion per year and boost GDP by approximately $13 billion through reforms undertaken in cooperation with the states and territories. This package includes reforms to approvals processes, the establishment of a single national market, measures to support the uptake of artificial intelligence, and energy market reforms. Investment in research and development is also supported by an additional $400 million per year.

On taxation and to level the playing field when it comes to housing, the Budget introduces reforms to negative gearing, capital gains, and discretionary trust tax arrangements, alongside over $3.5 billion in measures reducing taxes for businesses and start-ups. These include loss refundability provisions, venture capital support, and a permanent $20,000 instant asset write-off for small businesses.

Budget Outlook

The headline economic figures for the 2026-27 Federal Budget are as follows:

Deficit for the 2026-27 Budget has landed at $31.5 billion.
Gross debt will hit $1,051 billion this financial year
Growth in Australia’s GDP is forecast to slow from 2.25% in 2025-26 to 1.75% in 2026-27 due to the impact of elevated global oil prices and the broader disruptions arising from the Middle East. Growth is then expected to recover to 2.25% in 2027-28 as those pressures ease.
Unemployment is expected to stabilise at around 4.5%
Inflation is forecast to ease from 5% to 2.5% by the June quarter of 2027, which would bring it back within the Reserve Bank of Australia’s target range of 2-3%.

2026-27 Federal Budget Commitments

Governance & Cross Portfolio

Cross Portfolio

Research and Boosting Productivity

$508.5 million to increase disbursements from the Medical Research Future Fund, from $650 million in 2025–26 to $1 billion annually from 2030–31, with funding to be held in the Contingency Reserve pending finalisation of the National Health and Medical Research Strategy.
$387.4 million over four years (and $38 million per year ongoing) to support the financial sustainability of the Commonwealth Scientific and Industrial Research Organisation (CSIRO).
$40.1 million over four years from 2025–26 to establish the Neale Daniher MND Clinical Network.
$24.3 million to provide an uplift in operating resources for the National Health and Medical Research Council to continue to fund high quality health and medical research and build research capacity, and for a feasibility study for the establishment of a Research Grant Hub.
$21.7 million over two years to the Australian Space Agency.
$15.8 million over two years to continue the development of the National One Stop Shop to streamline approvals for clinical trials and human research.
$105.9 million over four years for the Department of Climate Change, Energy, the Environment and Water (DCCEEW) and the National Environmental Protection Agency (NEPA) to modernise environmental information, data and digital systems.
$47.6 million over four years to progress bilateral agreements with states and territories to more efficient processing of environmental approvals.

First Nations

The Government will provide $793.7 million over five years from 2025–26 (and $176.1 million ongoing) to achieve better outcomes for First Nations people under the National Agreement on Closing the Gap. Funding includes:

$299 million over five years from 2025–26 (and $161.7 million per year ongoing) to create an additional 3,000 jobs under the Remote Jobs and Economic Development program.
$144.1 million to continue to meet urgent infrastructure needs of the Aboriginal Community Controlled Health Services sector.
$53 million to complete the construction of dialysis units and associated workforce accommodation under the Better Renal Services for First Nations Peoples Budget measure and to provide operational funding to support delivery of renal dialysis services at these sites.
$44.4 million to extend funding for the ten existing Birthing on Country services which provide First Nations led maternal care.
$42.8 million to establish permanent, statutory arrangements for the National Commission for Aboriginal and Torres Strait Islander Children and Young People to support better outcomes for the safety and wellbeing of First Nations children and young people.
$32.7 million to expand the Store Efficiency and Resilience Package to support an additional 75 remote stores to improve storage and operational capacity.
$30 million over three years to continue support for the Australian Indigenous Education Foundation to provide secondary school scholarships.
$23.8 million over two years to extend the Indigenous Boarding Provider grants program for rural and remote First Nations students for the 2027 school year
$18.9 million over four years to help 13YARN manage increased demand.

Ending Gender‑Based Violence

$4.4 billion in initiatives to deliver the National Plan to tackle gender-based violence. The Government will provide $308.6 million over five years from 2025–26 to further support women and children leaving violent relationships and strengthen the frontline family, domestic and sexual violence workforce.

Energy Sovereignty

The Government will provide up to $11.9 billion over five years from 2025–26 to support Australian households, businesses and industry through the National Fuel Security Plan, including:

The establishment of a Fuel and Fertiliser Security Facility to increase additional supply and storage of fuel and fertiliser by providing up $7.5 billion in financial support including loans, equity, guarantees, insurance and price support.
The establishment of a $3.2 billion Australian Fuel Security Reserve to increase long term fuel supply and storage in combination with an increase Australia’s fuel reserves to 50 days.
The National Reconstruction Fund Corporation to deliver the $1 billion Economic Resilience Program from 2025–26 to support freight, fuel, fertiliser and other critical supply chains.
$55 million to deliver the Transport Resilience and Capacity Kickstart pilot program to incentivise increased freight volumes by rail and maritime transport.
$54.7 million over five years from 2025–26 to support ongoing management of Australia’s fuel security framework.
$40.5 million to accelerate the electrification of Australia Post’s delivery fleet.
$10 million over two years from 2026–27 for the Australian Energy Regulator to expand electricity market monitoring and reporting activities.
$10 millionto support feasibility studies into new or expanded fuel refining capabilities, to be co-funded with state and territory jurisdictions.

Government Response to the Antisemitic Bondi Terrorist Attack

The Government will provide $604.2 million over five years from 2025–26 (and $8.1 million per year ongoing) in response to the antisemitic Bondi terrorist attack.

$218.9 million over four years from 2025–26 as an immediate response to support the victims of the attack, their families, and the broader community.
$207.4 million over five years from 2025–26 (and $8.1 million per year ongoing) to respond to the recommendations of the Special Envoy’s Plan to Combat Antisemitism.
$131.1 million over four years from 2025–26 for the Attorney General’s Department to establish the Royal Commission on Antisemitism and Social Cohesion.

Addressing Online Gambling Harms

$112.7 million over five years from 2025–26 (and $18.1 million per year ongoing) to address online gambling harms through improved consumer protections, expanded support services and targeted public awareness and education campaigns.

Prime Minister and Cabinet

$23 million over four years to support Prime Minister and Cabinet to deliver on Government priorities, including international engagement such as AUKUS.
$182.6 million over four years to close loopholes enabling weaponisation, financial abuse, and non-compliance in the child support scheme.
$171.7 million over five years from 2025–26 to establish a single national Children and Family Support program.

Treasury

$198.1 million over two years from 2026–27 to boost productivity through streamlining regulatory systems and secure access to data.
$38.9 million over four years to increase Australia’s economic security and resilience to strategic shocks and threats.
$100 million over four years to promote fair competition and protect consumers.
$17.8 million over four years to strengthen governance requirements, supervision and enforcement in relation to managed investment schemes.

Attorney-General

$50.4 million in 2026–27 to continue the work of the Office of the Special Investigator to investigate and support the prosecution of war crimes alleged to have been committed by the Australian Defence Force in Afghanistan.
$37.3 million over two years to the Office of the Director of Public Prosecutions to strengthen its capacity to undertake criminal prosecutions on behalf of the Commonwealth.
$28.0 million over four years for the Australian Federal Police, Office of the Commonwealth Ombudsman, the Department of Home Affairs, the Australian Criminal Intelligence Commission and AGD to continue to support access to data for law enforcement and national security purposes under the AUS/US Data Access Agreement.
$14.3 million over four years to continue the Commonwealth Fraud Prevention Centre.
$10.8 million over four years in additional resourcing for the Australian Law Reform Commission.
$12.1 million to continue initiatives to prevent, disrupt and combat child sexual abuse, and maintain support services for victims and survivors of child sexual abuse.

Economy & Cost of Living

Tax

Individuals

A new $250 Working Australians Tax Offset from the 2027–28 income tax year. This is in addition to the tax cuts for every Australian taxpayer that will come into effect on 1 July 2026 and 1 July 2027.
The Government will introduce an instant tax deduction of up to $1,000 from the 2026–27 income tax year to make the tax system simpler.
From 1 April 2029, a permanent 25% discount on fringe benefits tax (FBT) will be available for all electric cars valued up to and including the fuel‑efficient luxury car tax threshold, implemented through a 15 per cent rate in the FBT statutory formula.
The Government will increase the Medicare levy low‑income thresholds for singles, families, and seniors and pensioners by 2.9% from 1 July 2025.
From 1 July 2027, the 50% Capital Gains Tax discount will be replaced by cost base indexation for assets held for more than 12 months, with a 30% minimum tax on net capital gains.
$86.3 million over four years from 1 July 2026 to deliver Phase 2 of the Counter Fraud Strategy to modernise the prevention and detection of fraud in the tax and super systems.
The Government will extend the temporary ban on foreign purchases of established residential dwellings by two years and three months until 30 June 2029.
Temporary reduction in the fuel excise and excise‑equivalent customs duty rates applying to most fuel products and the road user charge for heavy vehicles, for 3 months from 1 April 2026.

Small Business

$58.2 million over five years from 2025-26 to support the implementation of loss refundability for small businesses and start-ups.
$2.8 million in funding over three years to the ATO to support the implementation of reforms to the Research and Development Tax Incentive (R&DTI) to simplify and better target Government support for business R&D.
The Government will expand the venture capital tax incentives to better facilitate venture capital investment and support early stage and growth businesses. $3.6 million to support growth of the programs.
The Government will introduce a 30% minimum tax on discretionary trusts to improve the fairness of the tax system and help fund new tax cuts for workers.
The Government will permanently extend the $20,000 instant asset write‑off for small businesses with turnover up to $10 million.
$10.9 million to the ATO to expand the dynamic pay (PAYG) as you go instalment calculations.

Social Services

$182.6 millionover four years to prevent the weaponisation of the Child-Support Scheme
$202.7 million over five years from 2025-26 to maintain existing Income Management arrangements and reinvest funding for support services for participants while the Government determines future Income Management arrangements.
$171.7 millionover five years from 2025–26 to establish a single national Children and Family Support program.

Health, Disability and Ageing

Ageing

$565.1 million over four years to provide better care for older Australians.
$606.5 million over four years to respond to the Residential Aged Care Accommodation Pricing Review to stimulate an increase in bed supply and to protect equity of access for supported residents.
$348.4 million over four years to introduce capital subsidies for residential aged care providers.
$224.3 million over four years for dementia care supports, including the expansion of the Hospital to Aged Care Dementia Support program.
$1.1 billion to be held in the Contingency Reserve for future spending to increase the Accommodation Supplement and introduce an additional payment for high supported resident ratios.

Health

$39.2 million over five years support the activities of health agencies and continued access to health data and information.
$447.9 million over five years from 2025–26 to reduce health risks through preparedness and prevention measures.
$590.7 million over five years from 2025–26 (and $60.9 million per year ongoing) to improve access to medicines, vaccines and health technologies for Australians.
$1.4 billion over four years to improve affordability and access to home care supports.
$283.2 million over four years from 2025–26 to continue to strengthen Australia’s mental health and suicide prevention system.
$220.3 billion over five years to the states and territories for public hospital services and the implementation of the 2026–2031 Addendum to the National Health Reform Agreement (NHRA).
$488.2 million over five years from 2025–26 to improve health outcomes through preventive health, equitable access and early intervention
$5.9 billion over five years from 2025–26 for new and amended listings on the Pharmaceutical Benefits Scheme (PBS) and Repatriation Pharmaceutical Benefits Scheme.

National Disability Insurance Scheme

$1.7 billion over five years from 2025–26 to support people with disability and to improve the quality of supports delivered through the National Disability Insurance Scheme (NDIS).
$3 billion over five years to establish Foundational Supports outside the NDIS, to be matched by states and territories as agreed by National Cabinet. This is on top of the Commonwealth’s $2 billion contribution towards establishing the $4 billion Thriving Kids program.
The Government has also provisioned $200 million over three years from to establish an Inclusive Communities Fund.

Medicare

$2.1 billion over five years to increase access to bulk billing.
$745.1 million over four years to strengthen the integrity and functionality of critical Medicare systems and infrastructure.

Families & Children

$2.0 billion over five years to deliver national services for the Thriving Kids program.
- $1.4 billion over five years to states and territories to deliver Thriving Kids services.
- $139.7 million over five years to facilitate Thriving Kids services for children in early childhood education and care settings
- $126.1 million to support the early identification of children with developmental delay or neurodevelopmental difference.
- $120.9 million to provide national and local information and advice to parents and families on child development, including through a national phone line, and a national autism information and advice helpline.
- $99.5 million to empower parents, carers and kin with the skills to support children with developmental concerns or autism through Mental Health in Primary Schools and the Positive Partnerships Program, and through a National Digital Child Health Record in My Health Record.

Industry, Energy & Environment

Fuel Supply

$14.8 billion Strengthening Australia’s Fuel Resilience Package.
$30.6 million over four years to develop and implement the Domestic Gas Reservation Mechanism.
Delivering the $1.1 billion Cleaner Fuels Program to provide production support to the domestic low carbon liquid fuels industry.
$1 billion Round 2 of the Hydrogen Headstart program.

Industry, Science and Resources

$173.3 million to support growth of Australia’s critical minerals industry.
$100 million to build a new, upgraded Scitech Discovery Centre in Perth, conditional on co‑investment by the Western Australian Government.
$222.6 million to continue providing support and stabilisation to the Whyalla Steelworks during administration.

Renewable Energy

$143.2 million to maximise the benefits of the energy transition.

$97.2 million to continue implementing the National Consumer Energy Resources Roadmap.
$14.6 million to maintain proportionate battery system inspections under the Cheaper Home Batteries program.

Electric Vehicles

$15.4 million to expand the scope of the Dealership and Repairer Initiative for Vehicle Electrification Nationally program and extend the program by an additional year to better meet industry needs.
From 1 April 2029, a permanent 25 per cent discount on fringe benefits tax (FBT) for all electric cars valued up to and including the fuel‑efficient luxury car tax threshold.

Environment

The Government will provide funding to implement significant reforms to the EPBC Act, including the establishment of a National Environmental Protection Agency form 1 July 2026.

$105.9 million over four years to modernise environmental information, data and digital systems, including with artificial intelligence to improve user experience and enable simpler, faster environmental approvals.
$36.9 million over two years for the DCCEEW and the Clean Energy Regulator to continue administering the Nature Repair Market.
$28 million over two years from DCCEEW and DAFF to work with impacted states to develop landscape‑scale approval pathways to allow existing forestry operations under Regional Forest Agreements.
$13.2 million over two years for DCCEEW to establish the Restoration Contributions Holder to deliver environmental offsets on behalf of proponents.
$17 million to continue delivery of the Government’s circular economy policy, program and legislative functions.
$24.7 million over three years from 2025–26 to deliver a national pilot for recycling solar panels and establish up to 100 pilot collection sites nationwide
$11.5 million to improve management of Australia’s expanding marine parks, support the health and biodiversity of Australia’s oceans and strengthen Australia’s international ocean leadership.
$91.8 million over two years to continue activities to protect and restore the Great Barrier Reef
$110.8 million over two years to continue activities to protect native species and Australia’s biodiversity.
$23.3 million to strengthen the Government’s climate capability and support emissions reduction activities.
$21.1 million over four years from to continue water reform activities.

Agriculture, Fisheries and Forestry

$77.1 million over four years for the Department to sustain agricultural export and trade functions.
$45.1 million over four years to continue Australia’s international engagement in agricultural forums and trade standard setting functions
$23.8 million over four years to continue to support access to critical global agricultural markets

Employment and Workplace Relations

The Government will provide $316.1 million over five years from 2025–26 to continue supporting Australians into employment and improve participant experience. Funding includes:

$285.6 million over five years from 2025–26 for improvements to the employment services system and to support future reform
$26.5 million over three years from 2026–27 to increase resourcing for the National Customer Service Line
$36.7 million over four years to extend support for skills and training priorities.
$11.2 million over two years to progress the Government’s workplace relations agenda

Infrastructure

$3.8 billion over four years in additional funding for Suburban Rail Loop East in Victoria
$1.8 billion over six years in equity for the Australian Rail Track Corporation to invest in its interstate rail network
$1.7 billion over nine years for new Infrastructure Investment Program projects,
$659.6 million over three years from 2025–26 for the High-Speed Rail Authority to undertake development works for the Newcastle to Sydney high speed rail project
$500 million over ten years to continue the Active Transport Fund
$230.8 million over ten years to continue supplementary local road funding for South Australia.
$4.1 billion over three years for a temporary fuel and other materials disruption slippage adjustment for the Infrastructure Investment Program
$1.7 billion over six years from 2025–26 to address unavoidable cost pressures for 28 existing Infrastructure Investment Program projects.

Transport

$731.1 million over four years to support aviation priorities
- $600.0 million in as an equity investment in Airservices Australia
- $66.5 million over four years to support the Civil Aviation Safety Authority
- $38.1 million over four years to enhance protections for aviation consumers, including to establish the Aviation Consumer Protection Authority and an independent Aircraft Noise Ombudsperson, and deliver new aviation‑specific disability standards
- $14.3 million over four years to the Department of Home Affairs for cargo monitoring and regulatory fit‑out requirements at Western Sydney International Airport
$91.7 million over four years to support transport priorities
- $47.1 million over three years from 2026–27 to continue developing a Maritime Single Window and establish a digital portal for international maritime regulatory reporting
- $22.6 million for the Australian Maritime Safety Authority to support its continued delivery of the National System for Domestic Commercial Vessel Safety

Regional Development

$841.7 million over four years to support economic growth and development across urban and regional Australia.
- $781.6 million over four years for further rounds of the Thriving Suburbs program and the Growing Regions program
- $30.1 million over three years for round ten of the Stronger Communities Programme

Technology & Communications

Communications

$15.0 million over three years to expand Auslan video relay services, enabling access to services for deaf Auslan users.
$21.4 million to support news and media sustainability
- $15.0 million in to support the financial sustainability of the Australian Associated Press.

Education

$54.8 million 27 to help early childhood education and care services increase their capacity to support the inclusion of children with additional needs, through tailored support and funding to services
$40.4 million to strengthen compliance arrangements for students with disability loadings.
$26.1 millionto support measures which will contribute to improving educational outcomes in Australian schools.
- $18.2 million to support the Online National Assessment Platform and continue national testing of the National Assessment Program – Literacy and Numeracy.

Housing and Property

The Government will limit negative gearing to new builds from 1 July 2027, to focus tax support on new supply. Existing arrangements will remain unchanged for all properties held before 12 May.
$2.1 billion over five years from 2025–26 to support increased housing supply and research.
- $2 billion Local Infrastructure Fund to help local governments and state utilities build essential infrastructure to support new housing.
$59.4 million over four years to provide states and territories with funding for community housing providers to supplement rental income for social housing for over 4,000 eligible young people at risk of homelessness.
$100 million released from the Housing Australia Future Fund to improve the quality of housing for First Nations Australians in remote communities.

Defence, Foreign and Home Affairs

Defence

$6.8 billion over four years to support the delivery of the 2026 National Defence Strategy and Integrated Investment Program
$30 million in 2025–26 to support the design and commencement of early works for interim facilities at the Henderson Defence Precinct in Western Australia
$173.7 million over five years from 2025–26 to continue supporting veterans and their families
$600 million over four years to expand defence infrastructure investments in the Pacific and South‑East Asia.
$16.6 million over two years to undertake an Independent Inquiry into Military Sexual Violence in the Australian Defence Force
$863.8 million over four years for the Nuclear‑Powered Submarine program.
$311.9 million over four years to implement the Government’s response to the Final Report of the Royal Commission into Defence and Veteran Suicide
$106.4 million over six years to continue support for a growing defence industry sector and the strategic policy sector through grants

Foreign Affairs and Trade

$25.3 million over four years for the next phase of the India‑Australia Comprehensive Strategic Partnership
$187.8 million over four years to enhance Australia’s engagement with and support to the Pacific
$550 million over ten years to support high‑quality, climate‑resilient infrastructure in the Pacific and Timor‑Leste
$33.2 million over four years to contribute to implementation of the Australia‑Indonesia Treaty on Common Security (the Jakarta Treaty 2026
$72.2 million over five years from 2025–26 to deliver consular services and sustain Australia’s diplomatic network
$110.2 million over five years from 2025–26 to boost Australia’s tourism, trade and investment opportunities
- $38.6 million over four years from 2026–27 (and $7.1 million per year ongoing) to implement the Australia‑European Union Free Trade Agreement
- $10.8 million over four years to support implementation of the Singapore‑Australia Green Economy Agreement

Home Affairs

$89.3 million over four years to sustain and enhance cyber security initiatives.
$20.3 million over four years to combat the illicit tobacco market.
$117.8 million to continue implementing reforms to strengthen Australia’s Anti-Money Laundering and Counter-Terrorism Financing Act 2006.
$70.0 million to continue to protect the Australian community from the threats posed by convicted high risk terrorist offenders.
$66.9 million over four years to streamline and sustain AusCheck’s background checking services.
$167.4 million to strengthen the integrity of Australia’s migration system.
- $74.2 million over four years from 2026–27 to the Federal Court of Australia and the Federal Circuit and Family Court of Australia (FCFCOA) to address misuse of the protection visa system by increasing the efficiency of the merits and judicial review processes, and to establish a pre‑filing pilot for a duty lawyer legal assistance service in the Sydney and Melbourne FCFCOA registries
- $27.0 million to continue information and education activities to improve migrant workers’ awareness of workplace safeguards, protections and compliance measures related to migration law
$88.6 million to support Australia’s border security
$1.7 billion over two years for frontline staff to help manage claims and maintain service standards and to continue emergency response capability
$160.4 million over four years from 2025–26 for the Services Australia Cyber Security Uplift program

Further Information

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