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Treasurer Dr. Jim Chalmers delivers the 2026 federal budget on May 12, 2026.
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00:00Speaker, this is the most important and ambitious budget in decades.
00:05Important because the world is throwing a lot at us, and this budget is about helping
00:09Australia deal with those challenges.
00:12And ambitious because we have so much going for us, and this budget is about Australia
00:17seizing those opportunities.
00:21War in the Middle East has been pushing up prices, pushing down growth and punishing Australians.
00:27It has exposed weaknesses in the global economy and intensified longstanding challenges here
00:33at home.
00:35We didn't decide when this war began, and we have no control over when it will properly
00:40end.
00:41But how we respond is up to us, how we help each other through, and how we come out of
00:47this as a stronger, fairer, more productive and more resilient nation.
00:52This budget is ambitious in the face of adversity.
00:57It's a responsible budget, and it's a reforming budget, which builds resilience and bolsters
01:02our economy.
01:04There is more cost of living relief, more Medicare and more aged care, and more housing.
01:10It makes the tax system fairer and stronger for workers, businesses, first homebuyers and
01:17future generations, responding to the pressures of the here and now, while embracing our intergenerational
01:23responsibilities.
01:26The core of this budget is an economic strategy with five main parts.
01:31Getting through the global oil shock and building resilience.
01:34Taking the pressure off people where we can.
01:37Making the economy more productive to lift living standards over time.
01:42Reforming the tax system for workers, businesses and future generations, including a new tax
01:48cut for every working Australian taxpayer.
01:51And making the budget stronger, more sustainable, and helping to take the pressure off inflation
01:57by saving more than we spend.
02:00Speaker, we are dealing with the fifth economic shock in less than 20 years.
02:06The conflict in the Middle East and the closure of the Strait of Hormuz has disrupted the global
02:11economy and the global outlook.
02:14Oil production fell by eight million barrels a day in the first month of the war, almost eight
02:20times more than any of the oil shocks we've seen since the 1970s.
02:24The global oil price started the year around $60 and has now been above $100 for the bulk
02:31of the past two months.
02:33A third of the world's seaborne fertiliser has been stuck, putting pressure on food production,
02:39food security and supermarket prices.
02:41All of this has made the outlook more uncertain.
02:45Treasury's central forecasts assume oil stays around $100 a barrel until the end of next month
02:52and glides to $80 by the end of June next year.
02:55On that assumption, it would still be above its pre-conflict price in 12 months' time.
03:01This means Treasury now expects global growth to slow from 3.5 per cent last year to just
03:073 per cent this year.
03:10Inflation is spiking all around the world and Australia is not immune from these global price
03:15rises.
03:17Australians have been paying a hefty price for this war, at the Bowser and beyond.
03:22We were already dealing with price pressures in our economy, but Treasury's now forecasting
03:27inflation to peak around 5 per cent in the middle of the year because of the conflict.
03:33For the same reasons, it's expecting growth to come in half a percentage point lower next
03:37financial year to be 1.75 per cent overall.
03:41In this budget, Treasury also presents a more severe scenario where the oil price peaks
03:46at $200 a barrel and takes three years to fall back down.
03:51We'd still avoid a recession, but unemployment would spike to pre-pandemic levels and inflation
03:56would peak above 7 per cent.
04:00As Australians, we confront these serious challenges together from a position of strength.
04:06We are much better placed and better prepared than most countries to deal with this global
04:12crisis.
04:14Growth here is still higher than our peers.
04:16Real incomes have been growing strongly.
04:19Unemployment is historically low, and we have one of the strongest budgets in the world.
04:25Before the war, GDP growth was strengthening and broadening.
04:29The outlook for business investment remains robust, with a solid pipeline of data centre and renewable
04:36energy projects.
04:38Employment is still growing, and even if unemployment ticks up as expected, it will still stay around
04:43the mid fours.
04:45Nominal wages growth is expected to remain above 3 per cent, and annual real wage growth will
04:50return from next year, after growing for eight of the last nine quarters.
04:55We know there's more work to do because the immediate costs and consequences of this war
05:00are already serious and they could be severe.
05:05At the same time, our economy is being reshaped by structural shifts across energy, industry,
05:12technology, demography and geopolitics.
05:16We have longstanding challenges when it comes to our productivity performance, our housing market
05:20and our tax system.
05:23This budget is about getting us through the global oil shock and taking pressure off Australians,
05:28while building a stronger economy, a better tax system, a more sustainable budget and lifting
05:34living standards for our people.
05:38Speaker, we are responding to the biggest oil shock in history with a comprehensive $14.8 billion
05:45plan to secure more fuel, strengthen our supply chains, build resilience and take the sting out of prices.
05:54The Strengthening Australia's Fuel Resilience Package will deliver more fuel for drivers and industry,
06:00more fertiliser for farmers and more fuel security for our economy.
06:05Its centrepiece is a $10 billion investment in immediate fuel supplies and a permanent Australian fuel security reserve
06:12to get the fuels and fertiliser that we need.
06:16We are helping businesses and manufacturers bolster supply chains with $1 billion in interest-free loans
06:22through the National Reconstruction Fund and incentives to get more freight moving on trains and ships.
06:29Targeted support for electric vehicles, building more charging stations and heavy vehicle reform
06:34are all investments in our long-term fuel resilience.
06:38We will produce more fuel through our $1.1 billion Cleaner Fuels Program,
06:43backed with reforms to our low-carbon liquid fuels market to support demand.
06:49We are reserving 20% of gas exports for Australian users, so there is more supply at lower prices.
06:56And we are making more progress on our Future Made in Australia agenda, supporting mining and processing
07:01through our critical mineral strategic reserve and investments in domestic smelting and manufacturing.
07:09We understand that this crisis is adding to the cost of living pressures facing Australians,
07:14and that is why we are taking some of the sting out of global price rises by more than halving
07:19the fuel excise,
07:20reducing the heavy vehicle road user charge to zero,
07:24putting petrol companies on notice by doubling the consumer watchdog's maximum penalties
07:29and ramping up enforcement and monitoring.
07:32Giving businesses a bit more leeway at tax time if they are facing fuel supply problems.
07:38And continuing to make it easier and quicker for small businesses to get access to credit if they need it.
07:47Speaker, immediate relief from the fuel crisis is coupled with lasting and responsible cost-of-living measures.
07:54This government cut taxes two years ago. We are cutting them again this year and next year too.
08:00Tonight we are proud to be delivering another round of ongoing tax cuts for Australian workers.
08:07We will put more money into the pockets of 13.3 million workers with a new $250 Working Australians tax
08:15offset.
08:17It will begin from the second half of 2027 and be paid each year after that, ongoing and automatically,
08:23in your tax return, just like the instant deduction that we are rolling out as well.
08:28This offset is targeted to workers and it represents the most meaningful permanent increase to the effective tax-free threshold
08:36since Labor increased it more than a decade ago.
08:40All together, our five different tax cuts will benefit the average worker by up to $2,816 in 2028.
08:50Averaged out over the year, our three tax cuts, our instant deduction and the new offset
08:54are the equivalent of up to $54 back in the average earner's pocket each week.
09:02Now, the $6.4 billion tax offset is the biggest cost-of-living measure in this budget,
09:08but it is not all we are doing to support families under pressure.
09:12As a Labor government, we will always invest in Medicare and cheaper medicines and public health
09:17so Australians get the care that they need and when they need it.
09:21This budget includes another $25 billion for public hospitals.
09:26We are also investing $5.9 billion to list more medicines on the Pharmaceutical Benefits Scheme,
09:33so Australians continue to access life-changing medicines at cheaper prices.
09:38One example is cutting the cost of treatment for cystic fibrosis will save some Australians around $250,000 a year.
09:49Medicare urgent care clinics reduce out-of-pocket costs because more bulk billing means less pressure on household budgets and
09:56emergency departments.
09:57By July, four in five Australians will live within a 20-minute drive of one of the 137 clinics around
10:05the country.
10:06We are permanently funding every one of them, with $1.8 billion over the next four years and about half
10:13a billion dollars every year after that.
10:17Speaker, Australia's long-standing housing shortage is making homes unaffordable.
10:24This challenge hits young workers and families hard and we are addressing it from every responsible angle.
10:30The reforms in this budget will lift our total investment in housing to a record $47 billion.
10:37We are levelling the playing field for first home buyers with 5% deposits and tax reform to help more
10:43young Australians into their own home.
10:46We will invest another $2 billion in the power, roads and drains that we need for new housing developments, which
10:52will help around 65,000 new homes over the next decade.
10:57We are working with the states to cut red tape and planning delays, which could unlock tens of thousands more.
11:02We are extending our ban on foreign investors buying existing homes to take pressure off the market.
11:09And helping to fix the youth housing penalty to secure homes for 4,000 young people at risk of homelessness.
11:18Speaker, these housing reforms go to the very core of our budget strategy, dealing with the very real pressures on
11:24people right now, while taking responsibility for the challenges facing the next generations.
11:31The shocks from around the world are coming at us faster and more frequently.
11:36And that global uncertainty is not a reason to delay reform, it's why we must move with urgency and with
11:42ambition.
11:43The challenges coming at us, the opportunities ahead of us and the better future that Australians deserve will not wait
11:50for a time when all is quiet in the world.
11:53That's why this budget invests in resilience and reform, to grow our economy the right way and lift living standards
11:59over time.
12:00We will do that through three ambitious policy packages.
12:05A productivity and investment package.
12:07A tax reform package.
12:09And a savings package as well.
12:12Because, speaking to lift wages and living standards, we have to lift productivity.
12:16In the market sector, productivity has now grown for five consecutive quarters.
12:20It was 1.5 per cent last year.
12:22But this budget is about going further and moving faster.
12:26This productivity package will help us attract and absorb more investment.
12:30Make it easier and quicker to build.
12:33And it will slash compliance costs.
12:35The reforms we are announcing tonight will cut regulatory costs by $10.2 billion every year.
12:43Our efforts in national competition policy alone could boost GDP by $13 billion a year.
12:49This is the broadest productivity push in a budget since the 1990s.
12:56Speaker, our productivity plan starts with incentivising investment and innovation through the tax system for businesses, start-ups and venture
13:04capital.
13:05We are cutting the unnecessary red tape holding us back, including $780 million every year in the financial sector alone.
13:13We are also making tax time simpler for small businesses, which will save them 376,000 hours a year.
13:22We are getting rid of almost 600 more tariffs to reduce trade barriers, as well as expanding our trusted trader
13:29program and streamlining biosecurity for fertiliser imports.
13:33We are also building a single national market through our national competition policy reforms.
13:38So Australia works as one economy, not eight, with new work to make mandatory standards free for workers and businesses.
13:46And we are making governments simpler to deal with, through a tell us once approach so Australians don't have to
13:52keep submitting the same information and expanding the digital ID.
13:57We will speed up approvals so businesses can move quickly from an investment decision to shovels in the ground.
14:04That is the motivation behind our environmental law reforms, the investor front door and the second round of foreign investment
14:11changes.
14:12We will also simplify building regulations for when these projects begin construction.
14:17And we are doing more on skills recognition and education, so tradies can get their qualifications recognised more easily and
14:25businesses can find the skilled workers that they need.
14:27We are progressing the most significant reforms to the national electricity market since the 1990s as the world moves to
14:35net zero, including changes to help attract more investment in renewable energy and increased competition.
14:41We are also modernising our energy system with a domestic gas reservation and getting more solar and batteries into homes
14:48which could save $7 billion in systems costs by 2050.
14:53We are seizing the vast opportunities from AI with grants to commercialise AI innovations and making government more efficient.
15:00We are investing billions more in science and innovation through the Medical Research Future Fund and in the CSIRO and
15:08the Square Kilometre Array.
15:10And billions in the infrastructure that we need to get people to work and to improve our regions, towns and
15:16cities.
15:17We are also strengthening the performance test so our $4.5 trillion super sector isn't being discouraged from investing productive
15:26capital in areas like energy and housing.
15:30Speaker, the productivity package is ambitious and so are our tax reforms.
15:36This budget includes the most significant tax reform package in more than a quarter of a century.
15:43This is about tax relief and tax reform to make our economy work for more Australians, for more businesses and
15:50future generations.
15:52We are delivering a fairer tax system for workers, first-time buyers and young people.
15:57This will help rebalance a system which is more generous to assets than it is to labour.
16:03And help rebalance a system where house prices have decoupled from incomes.
16:08Since 1999, house prices have risen over 400 per cent, more than twice as fast as average incomes.
16:16Our tax changes will help about 75,000 Australians achieve the dream of home ownership.
16:22We will limit negative gearing for residential property to new builds from July next year.
16:28And we are replacing the 50 per cent capital gains tax discount with inflation-adjusted indexation to restore the taxation
16:36of real gains.
16:38These changes will be prospective and new builds will retain the option to use the 50 per cent discount.
16:44We will also introduce a minimum 30 per cent tax rate on capital gains from July next year.
16:51And on discretionary trust from July the year after.
16:54This is about better aligning the taxes paid on these types of income with the taxes paid on wages.
17:02These changes will level the playing field for workers and first-home buyers and support investment in productive assets including
17:08new housing supply.
17:10And they will fund our new round of tax relief for more than 13 million Australian workers.
17:16So, Speaker, we are building a better tax system for businesses too, with over $3.5 billion in new measures
17:24that lower taxes to encourage investment and innovation.
17:28We will permanently introduce two-year loss carryback for all companies up to $1 billion in turnover, bolstering resilience and
17:36risk-taking.
17:36And we will introduce loss refundability for start-ups to help new businesses invest and grow in their first two
17:44years.
17:45We will also expand tax incentives for venture capital and better target the research and development tax incentive to support
17:52more high-impact innovation.
17:55The third part of our tax reform package is to make the tax system simpler and more sustainable.
18:00Simpler for workers with a $1,000 instant deduction and simpler for small businesses with a permanent instant asset write
18:07-off and more dynamic tax instalments.
18:10And we will put in place more sustainable long-term settings to support the take-up of electric vehicles.
18:18Speaker, our tax reforms will help workers create a fairer housing market and drive more productive investment across our economy.
18:26They build on the significant reforms we have already delivered and they complement our other efforts to increase housing supply
18:32and boost productivity and reduce compliance costs.
18:35The new revenue raised will be returned to workers and businesses over the next four years so that more Australians
18:41can earn more and keep more of what they earn.
18:45Speaker, this means the heavy lifting on budget repair is being done by savings and spending restraint, not tax increases.
18:53This budget delivers the largest savings package on record.
18:58All up, there are $63.8 billion in savings.
19:02Our decisions improve the budget in net terms by $26.1 billion once you take our responsible provisions into account.
19:11A big part of our savings package will restore the NDIS to its original intent and secure its future so
19:17it grows in a sustainable way in line with programs like Medicare.
19:22This difficult but necessary reform will save $37.8 billion over the forward estimates.
19:29On top of savings, there is also a very substantial spending rate.
19:33Real spending growth averages just 1.5 per cent for the eight years to June 2030.
19:38This is the lowest average growth rate in any eight-year period for almost three and a half decades and
19:44less than half the 30-year average.
19:47As a result of all of this, we have returned every single dollar of revenue upgrades to the bottom line
19:53for the second consecutive update.
19:55Payments as a share of the economy are forecast to go down from 26.8 per cent next year to
20:0126.2 per cent by the middle of 2030.
20:04This responsible economic management means that the budget deficit next financial year is $2.8 billion lower at $31.5
20:12billion.
20:13The bottom line is better in every year over the forward estimates and the medium term.
20:18The budget position has improved by $44.9 billion.
20:22This makes it more than a quarter of a trillion dollars better than when we came to office.
20:29Gross debt will be $982 billion at the end of this financial year.
20:33It peaks lower, it peaks earlier and is lower in every year for the next 11 years.
20:39This means, in share of economy terms, gross and net debt remain well below what we inherited in every year
20:47going forward.
20:48Debt is lower and the budget position is stronger in every year of the medium term because of our savings.
20:55The medium term budget position is much stronger and more sustainable as a consequence, creating more room for future tax
21:01relief.
21:03Speaker, we have made progress getting the budget in much better shape at the same time as we have found
21:08room to fund the services and the security that Australians rely on.
21:12This budget includes record investments in health care, defence and economic resilience.
21:17There is $3 billion to deliver more beds, more packages and better aged care for older Australians.
21:23$2 billion for the Thriving Kids program and a $3 billion provision for other foundational supports outside the NDIS.
21:30And $2.2 billion to strengthen Services Australia and ensure that Australians continue to receive safe, secure and reliable services
21:40quickly and easily.
21:42Speaker, we are building an economy which is stronger and fairer and gives more Australians a stake in our success.
21:49We are investing an extra $1.2 billion to close the gap, doubling the number of jobs created as part
21:56of the Remote Jobs and Economic Development Program.
21:58Improving housing quality and expanding our support for grocery stores in remote First Nations communities.
22:06Speaker, the gender pay gap has never been narrower and women's workforce participation hit record highs last year.
22:13We are proud to have backed $21 billion in wage rises for women working in sectors like aged care and
22:19early childhood education, which have been undervalued for too long.
22:23Since 2022, we have also invested more than $4.4 billion to deliver the National Plan to End Violence Against
22:31Women and Children.
22:32And this budget includes hundreds of millions of dollars for frontline services and to make our child support system safer,
22:38so children get the financial support that they need and women are protected from abuse.
22:45Speaker, economic security, economic resilience and national security are now one and the same.
22:51We are investing an additional $53 billion over the next decade in our Defence Force to keep Australians and our
22:58region safe.
22:59And there is almost $800 million for veterans as part of our response to the Royal Commission into Defence and
23:06Veterans Suicide.
23:07We are also taking action to strengthen our national security and our national unity since the devastating anti-Semitic terror
23:14attack at Bondi Beach.
23:16We are adopting every recommendation from the Royal Commission on Anti-Semitism and Social Cohesion's interim report,
23:23and we are fast-tracking tougher gun laws through the National Cabinet.
23:28There is $600 million in this budget for a new counter-terrorism online centre,
23:33grants to support affected communities and money for our law enforcement agencies to crack down on the hate speech,
23:39the violent extremism and the terrorism which has absolutely no place in this country.
23:47So, Speaker, against the backdrop of global uncertainty,
23:51this budget invests in Australia's resilience, its economic sovereignty and its national security.
23:58And at a time when Australians are under pressure,
24:01this budget delivers more help with the cost of living and new tax cuts for workers.
24:07And in an era where people feel like the system no longer works for them,
24:11this budget doesn't just acknowledge that, it acts on it.
24:16By levelling the playing field for first home buyers,
24:19backing the aspiration and innovation of small businesses,
24:22and renewing that fundamental bargain between generations
24:25to help bring the dream of home ownership within reach of more young Australians.
24:32No other budget in the 2000s has set out this much responsible budget repair
24:38and this much economic reform.
24:41These are difficult decisions to ensure a stronger bottom line every year,
24:45to give us greater insurance in uncertain times,
24:49at the same time as we build a more resilient, more productive and competitive economy.
24:55This is a strategy which helps shield people from the harshest consequences of a global oil crisis,
25:02stabilises our economy and our budget at a time of extreme uncertainty and volatility in the world,
25:08and strengthens Australia for the next shock.
25:12Faced with a choice between resilience or reform,
25:15this budget demonstrates that our government and our country are capable of both.
25:22Tonight we choose the hard road of reform, not the path of least resistance,
25:26by responding to the pressures that Australians confront today
25:30and fulfilling our obligations and our responsibilities to the generations to come.
25:35And that, Mr Speaker, is why I commend this bill and this budget to the House.
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