2025-26 Federal Budget at a Glance

Below is a dot-point summary of Treasurer Jim Chalmers’ budget speech, which outlines the main budget measures. Mind the spin!

We’ll have more analysis tomorrow.

1. Framing: “Most important and ambitious Budget in decades”

Chalmers positions the Budget as a response to:

• the Middle East war and the largest oil shock in history
• global inflation, slower growth, and supply chain disruption
• long‑standing domestic challenges in productivity, housing, and tax fairness

The Budget’s strategy has five pillars:

1. Getting through the global oil shock
2. Cost‑of‑living relief
3. Productivity and investment reform
4. Major tax reform
5. Budget repair through savings and restraint

2. Global oil shock: $14.8b fuel resilience package

The government responds to the oil shock with a $14.8b plan, including:

• $10b Australian Fuel Security Reserve
• More fuel and fertiliser supply
• $1b in interest‑free loans for manufacturers
• Incentives for freight to shift to rail and shipping
• EV charging infrastructure
• Cleaner Fuels Program ($1.1b)
• 20% domestic gas reservation
• Support for critical minerals, smelting and manufacturing

3. Cost‑of‑living relief

Key measures:

• Halving the fuel excise
• Reducing heavy vehicle road user charge to zero
• Tougher penalties for petrol companies
• Easier credit access for small business

Tax cuts

• New $250 Working Australians Tax Offset (from 2027)
• Combined with other measures, workers receive up to $2,816 in 2028
• Equivalent to $54 per week for the average earner

Health

• $25b for public hospitals
• $5.9b for new PBS listings
• Permanent funding for 137 Medicare Urgent Care Clinics

4. Housing: $47b total investment

The Budget focuses heavily on housing affordability and supply:

• $2b for enabling infrastructure (power, roads, drains) → 65,000 new homes
• Cutting planning delays with states
• Extending ban on foreign buyers of existing homes
• Support for 4,000 young people at risk of homelessness

5. Major tax reform package (largest in 25+ years)

A. Housing‑related tax changes

• Negative gearing limited to new builds from July next year
• CGT discount replaced with inflation‑indexed model
• New builds can choose either system
• Minimum 30% tax rate on capital gains (from July next year)
• 30% minimum tax on discretionary trusts (from July the year after)

Goal: rebalance system towards workers, improve fairness, and support new housing supply.

B. Business tax reform

• Permanent two‑year loss carry‑back for companies up to $1b turnover
• Loss refundability for start‑ups
• Expanded venture capital incentives
• Targeted R&D reform

C. Simplification

• $1,000 instant deduction for workers
• Permanent instant asset write‑off for small business
• Dynamic PAYG instalments
• Long‑term EV tax settings

6. Productivity & investment agenda

• Cuts $10.2b per year in regulatory costs
• National Competition Policy reforms (GDP +$13b)
• Removal of ~600 tariffs
• Faster approvals (environmental law reform, Investor Front Door)
• Skills recognition improvements
• Major energy market reforms
• AI commercialisation grants
• Billions for science, CSIRO, SKA
• Infrastructure investment across regions and cities
• Strengthening the superannuation performance test

7. Budget repair: record $63.8b savings package

• Net improvement: $26.1b
• NDIS reform saves $37.8b
• Real spending growth capped at 1.5% over eight years
• All revenue upgrades returned to bottom line
• Payments fall from 26.8% to 26.2% of GDP by 2030

Debt

• Gross debt: $982b this year
• Peaks earlier and lower than previously forecast
• Lower in every year for the next 11 years

8. Major spending priorities

• $3b for aged care
• $2b for Thriving Kids
• $3b for foundational supports outside NDIS
• $2.2b for Services Australia
• $1.2b for Closing the Gap
• $53b for defence over the decade
• $600m for counter‑terrorism and social cohesion

9. Closing message

Chalmers frames the Budget as:

• protecting Australians from the oil shock
• delivering cost‑of‑living relief
• reforming tax and housing
• strengthening resilience and national security
• repairing the Budget responsibly

Chalmers concluded by claiming that the government is choosing “the hard road of reform” to meet both current pressures and intergenerational responsibilities.