Jim Chalmers delivers 2026 federal budget in parliament
The treasurer, Jim Chalmers, has stood to deliver the budget in the House of Representatives.
He says this is the most “important and ambitious budget in decades”.
double quotation markImportant, because the world is throwing a lot of challenges at us … and ambitious, because we have so much going for us.
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Updated at 10.34 BST
Key events
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Chalmers defends budget spending, says Labor has found ‘historic’ savings
Jim Chalmers says that the government is not making the Reserve Bank’s job harder and adding to public demand with the level of spending in the budget.
The treasurer has shuffled down the press gallery corridor to speak with Sky News next.
Host, Keiran Gilbert says that the government has tipped $18.3bn more into the budget since Myefo – but Chalmers refutes that that is fuelling inflation.
double quotation markIf you look at the Treasury advice that we present in the Budget papers, they make it really clear we’re taking the pressure off inflation.
We’re finding an historic amount of savings. We’re getting the budget bottom line in better nick in every year, including this year, we’re getting spending as a share of the economy down from close to 27 at the start of the forward estimates to close to 26 by the end of the forward.
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Wilson criticises Labor’s fifth budget, opposition won’t back negative gearing or CGT changes
The shadow treasurer, Tim Wilson says that the opposition set “three basic tests” – to restore living standards, improve Australia’s security and honest, and claims the government failed all three.
Wilson says the biggest problem is the lack of houses being built across the country, with 35,000 less homes being built over the decade.
He’s sitting in the hot seat on 730 with Sarah Ferguson after the treasurer, he says the opposition won’t support the capital gains tax, discretionary trusts or negative gearing changes.
But Ferguson picks him up on the $250 working Australians offset and asks if the opposition will support that. You might remember that the opposition found itself in hot water last year went it promised to rewind a small tax cut that the government promised in the last budget.
Wilson says:
double quotation markWe do support this measure because ultimately Australians need to be able to be protected from the consequences of Jim Chalmers’ inflation agenda. Every time the government puts forward a measure like that, it’s outstripped by inflation.
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Updated at 11.42 BST
Government loses $1.3bn in revenue from tobacco excise
The tobacco black market is well and truly dominant, with the government suffering due to a loss in tax payments.
The budget says that due to an explosive black market (that obviously skirts the tobacco excise) it’s down $1.3bn over the financial year – even just compared with the December Myefo – dropping from $5.45bn to $4.13bn.
The budget also says the impact of the loss of tobacco excise will hit $8bn over the next five years.
It’s a problem the government has been warned of – and while there’s $14m in the budget to help the states “disrupt the illicit tobacco and e-cigarette markets”, they haven’t taken any more significant measures to curb the loss.
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Lisa Cox
Climate Council says budget continues ‘gravy train’ for fossil fuel
The Climate Council says the budget gives the fossil fuel industry “a massive free kick” while leaving Australians exposed to global energy spikes and climate harm.
They say the budget maintains $19bn in annual subsidies and forgone tax revenue with gas export taxes remaining unchanged.
Chief executive Amanda McKenzie says:
double quotation markThis budget maintains the $19bn gravy train for big fossil fuel corporations. That is $19bn in the wrong direction, keeping us tied to foreign oil, rather than supporting the expansion of renewable energy solutions that Australians want to deliver a safer, cleaner, more secure energy future.
People all over the country are clamouring for a broad scale shift to cleaner, more secure solutions like rooftop solar and electric vehicles, which give us control over our own energy. Unfortunately, this budget leaves too many Australians wanting.
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Updated at 11.40 BST
Sarah Basford Canales
ACTU says tax changes ‘rebalance the scales’
The Australian Council of Trade Unions say the changes to negative gearing and capital gains tax “rebalance the scales in favour of young people and workers”.
Investment properties bought after 7.30pm on budget night 2026 will no longer be able to be negatively geared from 1 July 2027 with a few exceptions: new builds and some government housing programs open to investors.
From 1 July 2027, the 50% CGT discount will be replaced by a system known as cost-base indexation, covering assets held for more than 12 months.
The peak union body welcomed the winding back of both Howard-era policies that “privileged investors and professional landlords”.
The ACTU’s president, Michele O’Neil, said:
double quotation markThis is a budget that finally tackles a system that’s been taxing work harder than taxing wealth.
This budget marks a shift that gives workers a fairer shot at housing stability through tax changes that will start to rebalance the rules.
It’s important to put housing back within reach for working people who have been locked out of affordable housing near where they live and work.
The reforms will help working families that have been pushed further away from their communities and whose rents and house prices are increasing faster than wages.
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Updated at 11.35 BST
‘Heavy lifting on budget repair’ from spending restraint, Chalmers says
Chalmers and Gallagher have pulled together more than $60bn in savings in this budget – the majority of that from significant cuts to the NDIS.
The treasurer tells 730 that contribution is far more than the revenue raised from tax reforms.
double quotation markBy the end of that 10 year period, the contribution of savings is three times the contribution of our tax reform. So once again, the heavy lifting on budget repair is being done by spending restraint and savings in the budget in important areas like the NDIS.
We couldn’t sit by and let NDIS costs blow out to the extent that they were.
You can read more about the changes to the NDIS here:
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Why did it take a war in the Middle East to make these significant tax changes?
Host, Sarah Ferguson puts that valid question to Chalmers – because we’ve known that the balance has been skewed against younger Australians for a while now (and there have been plenty of advocates and experts making the case for change).
On that, Chalmers says the decision was made in recent weeks.
double quotation markIt’s another year of too many people getting locked out of the market.
We became increasingly of the view that some of these other challenges which go beyond supply, they go to the composition of the market. They go to the fact that tax policy settings have had, I think, a negative impact on the housing market.
There’s also the question of integrity – and the fact that the government did a 180 on its previous promises not to touch the incentives. Chalmers says he doesn’t think people will be “focused” more on the positive impact of the policy decision.
double quotation markI think people will be most focused on the positive change that we’re making in the tax system and in the housing market. It has obviously involved a level of political risk because we’ve come to a different view
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Updated at 11.17 BST
Labor came to a ‘different view’ after promising not to touch negative gearing
Jim Chalmers says that the government’s focus on supply is the beginning of the challenge and not the end, while justifying Labor’s decision to break its promise to not touch negative gearing or capital gains tax.
It is a sticky issue for the government who were at pains to previously rule out changes to those tax incentives that have overwhelmingly benefited wealthy Australians.
Speaking to the ABC’s 730 program, Chalmers says that in the space of a couple of year the government has admittedly come to a “different view about some really important policy areas.”
double quotation markThe comments and commitments we made at the election reflected the government’s almost singular focus on housing supply. We’re maintaining that focus on supply, but the challenge begins there. It doesn’t end there with supply. We also need to take these decisive steps, these contentious steps to rebalance the tax system.
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Updated at 11.11 BST
Having completed his speech, Jim Chalmers is running up to the press gallery where he’ll face a grilling by journalists.
He and finance minister already visited each of the press gallery offices and did a quick press conference during the lock up – and he’ll be back for even more.
We’ll bring you those interviews as they happen.
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Updated at 11.08 BST
You can read the whole budget outlook from my colleague and our economics editor, Patrick Commins, here:
And if you want a breakdown of what the changes are to negative gearing, capital gains tax and discretionary trusts – and what their impacts will be – our excellent political editor, Tom McIlroy has you covered:
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After all that, there’s no gas tax
Despite all the public outcry and outrage over the government’s beer excise claiming more revenue than the petroleum resource rent tax, the government decided not to put a tax on gas exports.
In fact, the PRRT is actually estimated to claim less this year than forecast in the mid-year economic and fiscal outlook released in December.
In the financial year 2025-26, the government will get $1.4bn of revenue from the PRRT, $100m less than forecast in the Myefo.
In the coming financial year, 2026-27, that increases to a take of $1.9bn, a $400m improvement from Myefo, but still just a tad more than what was forecast in last year’s budget (and it’s in the context of a global fuel crisis).
And while we keep making comparisons to the beer tax, that excise is anticipated to raise $3.56bn in the 2026-27 financial year.
The PRRT revenue over the years following gets smaller – so you can expect the political pressure on the government to get more revenue from the gas companies to continue.
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Updated at 11.17 BST
Tom McIlroy
Teal MP welcomes negative gearing and CGT changes
Independent MPs Sophie Scamps has welcomed key measures in Tuesday night’s budget, including moves to make the capital gains tax discount and negative gearing rules less generous.
“For too many young Australians, the dream of owning a home has become a pipe dream,” she said.
This long-overdue housing tax reform is a critical step toward tackling intergenerational inequality and giving the next generation a fair shot at housing and greater hope for the future.”
But Scamps, the Mackellar MP, said Australians had been dudded on the government’s refusal to increase tax on gas exports.
double quotation markAustralians around the country tonight will be rightly angry that multinational gas companies will continue to make extraordinary profits from our resources while families here are struggling with cost-of-living pressures.
Yet again, big multinational corporations have been put ahead of everyday Aussies.
Other countries make sure their people get a fair return from their natural resources, and Australia must too. This must change.
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Updated at 11.06 BST
What is Treasury’s worst-case scenario?
Things are looking pretty dire under Treasury’s economic worst-case scenario modelling, which would see inflation peak above 7% by the end of this year. Unemployment would also spike to more than 5%.
You might remember Jim Chalmers saying the Treasury had to modify its forecasts because the economic situation was a lot worse than originally anticipated. They’ve given us a bit of a flavour of that forecast here.
The scenario says the economy would shrink for one quarter, which means Australia would be edging towards recession – but don’t spill your drink quite yet, it takes two quarters of negative growth (ie, the economy shrinking) for a recession to be declared.
The price of oil has been sitting around US$100 a barrel, but in that scenario, it would hit US$200 a barrel – which would have a drastic impact on the price of fuel and other essential goods like fertilisers.
Chalmers says:
double quotation markTreasury also presents a more severe scenario where the oil price peaks at $200 and takes three years to fall back down. We would still avoid a recession, but unemployment would spike to pre-pandemic levels and inflation would peak above 7 per cent. As Australians, we confront these serious challenges together from a position of strength.
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Chalmers says budget has $63.8bn in savings
While there will be more revenue coming in from changes to negative gearing and capital gains tax, Jim Chalmers says the budget has also found $63.8bn in savings.
The lion’s share of that is from major cuts announced last month to the national disability insurance scheme, which will save the budget $36.2bn over the forward estimates. This is also a big political risk for the government, with 160,000 people to be kicked off the scheme from 2028 and concerns that some won’t get the support they need.
Chalmers says the government has also exercised spending restraint in this budget to help stabilise the country against current and future shocks.
Ending the address, he says this budget fulfils the government’s obligations and responsibilities for the generations to come.
double quotation markFaced with a choice between resilience or reform, this budget demonstrates our government and our country are capable of both.
Tonight, we choose the hard road of reform, not the path of least resistance.
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ACOSS welcomes tax reform, but criticises lack of help for Australians on income support
The Australian council of social services says the government deserves credit for addressing inequities in the tax system.
But it says the government has made the wrong decision by leaving out people receiving income support from the $250 tax offset.
Its chief executive, Cassandra Goldie, says she is also deeply concerned about the impact of the “deep cuts” coming for the NDIS, and that people with disabilities must be at the centre of reforms.
double quotation markThis is a reforming budget that addresses inequities in the tax system, helps reduce home prices, boosts productivity and kicks off a transformation of our failing employment services system.
The government has made the wrong decision to prioritise another income tax cut to people who are in paid work, right up the income scale, costing the budget $3bn in the first year. The WATO (working Australians tax offset) does not help the more than 4 million people on the lowest incomes in the country who are bearing the brunt of higher unemployment and living costs.
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