Latest / Money News / Full: Jim Chalmers' 2026 Budget Speech

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Full: Jim Chalmers' 2026 Budget Speech · Money News

0:00
S1: For the purposes of the appropriation Bill number one, 2026
0:04
S1: to 2027. I call the treasurer.
0:11
S2: Speaker, I present the appropriation bill number 12627 and the
0:15
S2: explanatory memorandum.
0:18
S1: Call the clerk.
0:22
S3: First reading a Bill for an act to appropriate money
0:25
S3: out of the Consolidated Revenue Fund for the ordinary annual
0:29
S3: services of the government and for related purposes.
0:33
S1: I'll give the call to the treasurer.
0:37
S2: I acknowledge the honorable people here and the Yaga and
0:39
S2: the Yugambeh people back home in Logan, and I move
0:42
S2: that this bill be now read a second time. Speaker,
0:46
S2: this is the most important and ambitious budget in decades.
0:51
S2: Important because the world is throwing a lot at us,
0:54
S2: and this budget is about helping Australia deal with those challenges.
0:58
S2: And ambitious because we have so much going for us
1:02
S2: and this budget is about Australia seizing those opportunities. War
1:07
S2: in the Middle East has been pushing up prices, pushing
1:10
S2: down growth and punishing Australians. It has exposed weaknesses in
1:15
S2: the global economy and intensified long standing challenges here at home.
1:21
S2: We didn't decide when this war began, and we have
1:24
S2: no control over when it will properly end. But how
1:28
S2: we respond is up to us. How we help each
1:30
S2: other through, and how we come out of this a stronger, fairer,
1:35
S2: more productive and more resilient nation. This budget is ambitious
1:41
S2: in the face of adversity. It's a responsible budget, and
1:44
S2: it's a reforming budget which builds resilience and bolsters our economy.
1:50
S2: There is more cost of living relief, more Medicare and
1:53
S2: more aged care and more housing. It makes the tax
1:57
S2: system fairer and stronger for workers, businesses. First home buyers
2:03
S2: and future generations responding to the pressures of the here
2:06
S2: and now while embracing our intergenerational responsibilities. The core of
2:12
S2: this budget is an economic strategy, with five main parts
2:17
S2: getting through the global oil shock and building resilience, taking
2:21
S2: the pressure off people where we can, making the economy
2:24
S2: more productive to lift living standards over time, reforming the
2:29
S2: tax system for workers, businesses and future generations, including a
2:33
S2: new tax cut for every working Australian taxpayer and making
2:38
S2: the budget stronger, more sustainable and helping to take the
2:42
S2: pressure off inflation by saving more than we spend. Speaker,
2:47
S2: we are dealing with a fifth economic shock in less
2:50
S2: than 20 years. The conflict in the Middle East and
2:54
S2: the closure of the Strait of Hormuz has disrupted the
2:56
S2: global economy and the global outlook. Oil production fell by
3:01
S2: 8 million barrels a day in the first month of
3:04
S2: the war, almost eight times more than any of the
3:07
S2: oil shocks we've seen since the 1970s. The global oil
3:12
S2: price started the year around $60 and has now been
3:15
S2: above $100 for the bulk of the past two months.
3:19
S2: A third of the world's seaborne fertiliser has been stuck,
3:23
S2: putting pressure on food production, food security and supermarket prices.
3:28
S2: All of this has made the outlook more uncertain. Treasury's
3:32
S2: central forecast assume oil stays around $100 a barrel until
3:37
S2: the end of next month, and glides to $80 by
3:39
S2: the end of June next year. On that assumption, it
3:43
S2: would still be above its pre-conflict price in 12 months time.
3:48
S2: This means Treasury now expects global growth to slow from 3.5%
3:52
S2: last year to just 3% this year. Inflation is spiking
3:57
S2: all around the world and Australia is not immune from
4:00
S2: these global price rises. Australians have been paying a hefty
4:04
S2: price for this war at the bowser and beyond. We
4:08
S2: were already dealing with price pressures in our economy. But
4:12
S2: Treasury's now forecasting inflation to peak at around 5% in
4:15
S2: the middle of the year because of the conflict. For
4:19
S2: the same reasons, it's expecting growth to come in half
4:21
S2: a percentage point lower next financial year to be 1.75% overall.
4:27
S2: In this budget, Treasury also presents a more severe scenario
4:31
S2: where the oil price peaks at $200 a barrel and
4:34
S2: takes three years to fall back down. We'd still avoid
4:38
S2: a recession, but unemployment would spike to pre-pandemic levels and
4:42
S2: inflation would peak above 7%. As Australians, we confront these
4:48
S2: serious challenges together from a position of strength. We are
4:53
S2: much better placed and better prepared than most countries to
4:56
S2: deal with this global crisis. Growth here is still higher
5:01
S2: than our peers. Real incomes have been growing strongly. Unemployment
5:06
S2: is historically low, and we have one of the strongest
5:09
S2: budgets in the world. Before the war, GDP growth was
5:13
S2: strengthening and broadening. The outlook for business investment remains robust,
5:19
S2: with a solid pipeline of data center and renewable energy projects,
5:24
S2: employment is still growing. And even if unemployment ticks up
5:27
S2: as expected, it will still stay around the mid four's
5:31
S2: nominal wages growth is expected to remain above 3%, and
5:35
S2: annual real wage growth will return from next year after
5:38
S2: growing for eight of the last nine quarters. Now we
5:42
S2: know there's more work to do, because the immediate costs
5:44
S2: and consequences of this war are already serious, and they
5:49
S2: could be severe. At the same time, our economy is
5:53
S2: being reshaped by structural shifts across energy industry, technology, demography
6:00
S2: and geopolitics. And we have long standing challenges when it
6:04
S2: comes to our productivity performance, our housing market and our
6:07
S2: tax system. This budget is about getting us through the
6:11
S2: global oil shock and taking pressure off Australians while building
6:15
S2: a stronger economy, a better tax system, a more sustainable budget,
6:20
S2: and lifting living standards for our people. Speaker, we are
6:25
S2: responding to the biggest oil shock in history, with a
6:29
S2: comprehensive $14.8 billion plan to secure more fuel. Strengthen our
6:35
S2: supply chains, build resilience, and take the sting out of prices. Yes,
6:41
S2: the Strengthening Australia's Fuel Resilience package will deliver more fuel
6:44
S2: for drivers and industry, more fertiliser for farmers and more
6:48
S2: fuel security for our economy. Its centrepiece is a $10
6:52
S2: billion investment in immediate fuel supplies and a permanent Australian
6:57
S2: Fuel Security reserve to get the fuels and fertiliser that
7:01
S2: we need here. We're helping businesses and manufacturers bolster supply
7:05
S2: chains with $1 billion in interest free loans through the
7:08
S2: National Reconstruction Fund and incentives to get more freight moving
7:12
S2: on trains and ships. Targeted support for electric vehicles. Building
7:18
S2: more charging stations and heavy vehicle reform are all investments
7:21
S2: in our long term fuel resilience. We'll produce more fuel
7:26
S2: through our $1.1 billion cleaner fuels program, backed with reforms
7:30
S2: to our low carbon liquid fuels market to support demand.
7:35
S2: We're reserving 20% of gas exports for Australian users, so
7:39
S2: there's more supply at lower prices. And we're making more
7:43
S2: progress on our future Made in Australia agenda supporting mining
7:47
S2: and processing through our Critical minerals strategic reserve and investments
7:51
S2: in domestic smelting and manufacturing. Speaker, we understand that this
7:56
S2: crisis is adding to the cost of living pressures facing Australians,
8:01
S2: and that's why we are taking some of the sting
8:03
S2: out of global price rises by more than halving the
8:05
S2: fuel excise, reducing the heavy vehicle road user charge to zero,
8:10
S2: putting petrol companies on notice by doubling the consumer watchdog's
8:14
S2: maximum penalties and ramping up enforcement and monitoring, giving businesses
8:19
S2: a bit more leeway at tax time if they're facing
8:23
S2: fuel supply problems and continuing to make it easier and
8:26
S2: quicker for small businesses to get access to credit if
8:30
S2: they need it. Speaker, immediate relief from the fuel crisis
8:35
S2: is coupled with lasting and responsible cost of living measures.
8:40
S2: This government cut taxes two years ago. We're cutting them
8:43
S2: again this year and next year too. Tonight, we're proud
8:47
S2: to be delivering another round of ongoing tax cuts for
8:51
S2: Australian workers. We will put more money into the pockets
8:55
S2: of 13.3 million workers, with a new $250 working Australians
9:01
S2: tax offset. It will begin from the second half of
9:04
S2: 2027 and be paid each year after that ongoing and
9:08
S2: automatically in your tax return. Just like the instant deduction
9:12
S2: that we are rolling out as well. This offset is
9:15
S2: targeted to workers and it represents the most meaningful permanent
9:19
S2: increase to the effective tax free threshold since labor increased
9:24
S2: it more than a decade ago. Here, altogether, our five
9:28
S2: different tax cuts will benefit the average worker by up
9:31
S2: to $2,816 in 2028. Averaged out over the year. Our
9:37
S2: three tax cuts, our instant deduction and the new offset
9:41
S2: are the equivalent of up to $54 back in the
9:44
S2: average earners pocket each week. Now the $6.4 billion tax
9:50
S2: offset is the biggest cost of living measure in this budget.
9:54
S2: But it's not all we're doing to support families under pressure.
9:58
S2: As a Labour government, we will always invest in Medicare
10:01
S2: and cheaper medicines and public health so Australians get the
10:05
S2: care that they need and when they need it. This
10:08
S2: budget includes another $25 billion for public hospitals. We're also
10:13
S2: investing $5.9 billion to list more medicines on the Pharmaceutical
10:18
S2: benefits Scheme, so Australians continue to access life changing medicines
10:22
S2: at cheaper prices. One example is cutting the cost of
10:26
S2: treatment for cystic fibrosis will save some Australians around $250,000
10:33
S2: a year. Medicare urgent care clinics reduce out of pocket
10:37
S2: costs because more bulk billing means less pressure on household
10:41
S2: budgets and emergency departments. By July, 4 in 5 Australians
10:46
S2: will live within a 20 minute drive of one of
10:49
S2: the 137 clinics around the country. We're permanently funding every
10:55
S2: one of them, with $1.8 billion over the next four
10:58
S2: years and about half $1 billion every year after that. Hear, hear. Speaker,
11:04
S2: Australia's long standing housing shortage is making homes unaffordable. This
11:10
S2: challenge hits young workers and families hard, and we're addressing
11:13
S2: it from every possible angle. The reforms in this budget
11:17
S2: will lift our total investment in housing to a record
11:21
S2: $47 billion. We're levelling the playing field for first home buyers,
11:26
S2: with 5% deposits, and tax reform to help more young
11:29
S2: Australians into their own home. We'll invest another $2 billion
11:34
S2: in the power roads and drains that we need for
11:36
S2: new housing developments, which will help around 65,000 new homes
11:41
S2: over the next decade. We're working with the states to
11:44
S2: cut red tape and planning delays, which could unlock tens
11:47
S2: of thousands more. We're extending our ban on foreign investors
11:51
S2: buying existing homes to take pressure off the market and
11:55
S2: helping to fix the youth housing penalty. Secure to secure
11:59
S2: homes for 4000 young people at risk of homelessness. Yeah. Speaker,
12:05
S2: these housing reforms go to the very core of our
12:08
S2: budget strategy, dealing with the very real pressures on people
12:11
S2: right now while taking responsibility for the challenges facing the
12:15
S2: next generations. The shocks from around the world are coming
12:19
S2: at us faster and more frequently, and that global uncertainty
12:23
S2: is not a reason to delay reform. It's why we
12:26
S2: must move with urgency and with ambition. The challenge is
12:30
S2: coming at us, the opportunities ahead of us, and the
12:33
S2: better future that Australians deserve, will not wait for a
12:36
S2: time when all is quiet in the world. That's why
12:40
S2: this budget invests in resilience and reform, to grow our
12:43
S2: economy the right way and lift living standards over time,
12:47
S2: we'll do that through three ambitious policy packages a productivity
12:52
S2: and investment package, a tax reform package and a savings
12:56
S2: package as well. Because, speaker, to lift wages and living standards,
13:00
S2: we have to lift productivity in the market sector. Productivity
13:04
S2: has now grown for five consecutive quarters, was 1.5% last year.
13:08
S2: But this budget is about going further and moving faster.
13:12
S2: This productivity package will help us attract and absorb more investment,
13:17
S2: make it easier and quicker to build, and it will
13:19
S2: slash compliance costs. The reforms we are announcing tonight will
13:23
S2: cut regulatory costs by $10.2 billion every year. Our efforts
13:30
S2: in national competition policy alone could boost GDP by $13
13:34
S2: billion a year. This is the broadest productivity push in
13:38
S2: a budget since the 1990s. Speaker, our productivity plan starts
13:44
S2: with incentivising investment and innovation through the tax system for businesses,
13:49
S2: startups and venture capital. We're cutting the unnecessary red tape
13:54
S2: holding us back, including $780 million every year in the
13:58
S2: financial sector alone. We're also making tax time simpler for
14:02
S2: small businesses, which will save them 376,000 hours a year.
14:09
S2: We're getting rid of almost 600 more tariffs to reduce
14:11
S2: trade barriers, as well as expanding our trusted trader program
14:16
S2: and streamlining biosecurity for fertilizer imports. We're also building a
14:21
S2: single national market through our national competition policy reforms. So
14:25
S2: Australia works as one economy, not eight. With new work
14:28
S2: to make mandatory standards free for workers and businesses. And
14:33
S2: we're making government simpler to deal with through a tell
14:35
S2: us once approach. So Australians don't have to keep submitting
14:39
S2: the same information. And expanding the digital ID. We will
14:43
S2: speed up approvals so businesses can move quickly from an
14:47
S2: investment decision to shovels in the ground. That's the motivation
14:51
S2: behind our environmental law reforms. The investor front door and
14:55
S2: the second round of foreign investment changes. We'll also simplify
14:59
S2: building regulations for when these projects begin construction. And we're
15:04
S2: doing more on skills recognition and education. So tradies can
15:07
S2: get their qualifications recognised more easily. And businesses can find
15:12
S2: the skilled workers that they need. We're progressing the most
15:15
S2: significant reforms to the national electricity market since the 1990s,
15:20
S2: as the world moves to net zero, including changes to
15:23
S2: help attract more investment in renewable energy and increase competition.
15:28
S2: We're also modernising our energy system with a domestic gas
15:30
S2: reservation and getting more solar and batteries into homes, which
15:34
S2: could save $7 billion in systems costs by 2050. We're
15:40
S2: seizing the vast opportunities from AI with grants to commercialize
15:43
S2: AI innovations and making government more efficient. We're investing billions
15:48
S2: more in science and innovation through the Medical Research Future
15:52
S2: Fund and in the CSIRO and the Square Kilometre Array,
15:56
S2: and billions in the infrastructure that we need to get
15:59
S2: people to work and to improve our regions, towns and cities.
16:03
S2: We're also strengthening the performance test. So our $4.5 trillion
16:08
S2: super sector isn't being discouraged from investing productive capital in
16:13
S2: areas like energy and housing. Speaker, the productivity package is
16:19
S2: ambitious and so are our tax reforms. This budget includes
16:24
S2: the most significant tax reform package in more than a
16:27
S2: quarter of a century. This is about tax relief and
16:31
S2: tax reform to make our economy work for more Australians,
16:35
S2: for more businesses and future generations. We're delivering a fairer
16:39
S2: tax system for workers, first time buyers and young people.
16:44
S2: This will help rebalance the system, which is more generous
16:46
S2: to assets than it is to labour and help rebalance
16:50
S2: a system where house prices have decoupled from incomes. Since 1999,
16:55
S2: house prices have risen over 400%, more than twice as
17:00
S2: fast as average incomes. Our tax changes will help about
17:04
S2: 75,000 Australians achieve the dream of home ownership. We'll limit
17:09
S2: negative gearing for residential property to new builds from July
17:13
S2: next year, and we're replacing the 50% capital gains tax discount,
17:18
S2: with inflation adjusted indexation to restore the taxation of real gains.
17:24
S2: These changes will be prospective, and new builds will retain
17:27
S2: the option to use the 50% discount. We'll also introduce
17:33
S2: a minimum 30% tax rate on capital gains from July
17:36
S2: next year, and on discretionary trusts from July the year after.
17:41
S2: This is about better aligning the taxes paid on these
17:44
S2: types of income with the taxes paid on wages. These
17:48
S2: changes will level the playing field for workers and first
17:51
S2: home buyers, and support investment in productive assets, including new
17:55
S2: housing supply, and they will fund our new round of
17:58
S2: tax relief for more than 13 million Australian workers. So, speaker,
18:03
S2: we're building a better tax system for businesses, too. With
18:07
S2: over $3.5 billion in new measures that lower taxes to
18:11
S2: encourage investment and innovation, we'll permanently introduce two year loss
18:16
S2: carryback for all companies up to $1 billion in turnover,
18:20
S2: bolstering resilience and risk taking. And we'll introduce loss refundability
18:25
S2: for start ups to help new businesses invest and grow
18:29
S2: in their first two years. We'll also expand tax incentives
18:33
S2: for venture capital, and better target the research and development
18:36
S2: tax incentive to support more high impact innovation. The third
18:41
S2: part of our tax reform package is to make the
18:43
S2: tax system simpler and more sustainable, simpler for workers with
18:48
S2: a $1,000 instant deduction and simpler for small businesses with
18:52
S2: a permanent instant asset write off and more dynamic tax installments.
18:56
S2: And we'll put in place more sustainable long term settings
18:59
S2: to support the take up of electric vehicles. Speaker, our
19:05
S2: tax reforms will help workers create a fairer housing market
19:09
S2: and drive more productive investment across our economy. They build
19:13
S2: on the significant reforms we've already delivered, and they complement
19:16
S2: our other efforts to increase housing supply and boost productivity
19:19
S2: and reduce compliance costs. The new revenue raised will be
19:23
S2: returned to workers and businesses over the next four years,
19:26
S2: so that more Australians can earn more and keep more
19:29
S2: of what they earn here. So, speaker, this means the
19:33
S2: heavy lifting on budget repair is being done by savings
19:37
S2: and spending restraint, not tax increases. This budget delivers the
19:41
S2: largest savings package on record. All up, there are $63.8
19:46
S2: billion in savings. Our decisions improve the budget in net
19:50
S2: terms by $26.1 billion. Once you take our responsible provisions
19:56
S2: into account. A big part of our savings package will
19:59
S2: restore the NDIS to its original intent and secure its
20:03
S2: future so it grows in a sustainable way, in line
20:06
S2: with programs like Medicare. This difficult but necessary reform will
20:10
S2: save $37.8 billion over the forward estimates. On top of savings,
20:16
S2: there's also very substantial spending restraint. Real spending growth averages
20:20
S2: just 1.5% for the eight years to June 2030. This
20:24
S2: is the lowest average growth rate in any eight year
20:28
S2: period for almost three and a half decades, and less
20:30
S2: than half the 30 year average as a result of
20:34
S2: all of this. We've returned every single dollar of revenue
20:37
S2: upgrades to the bottom line for the second consecutive update.
20:41
S2: Payments as a share of the economy are forecast to
20:43
S2: go down from 26.8% next year to 26.2% by the
20:48
S2: middle of 2030. Now, this responsible economic management means that
20:53
S2: the budget deficit next financial year is $2.8 billion lower
20:57
S2: at $31.5 billion. The bottom line is better in every
21:01
S2: year over the forward estimates and the medium term, the
21:05
S2: budget position has improved by $44.9 billion, and this makes
21:09
S2: it more than a quarter of $1 trillion better than
21:12
S2: when we came to office. Gross debt will be $982
21:17
S2: billion at the end of this financial year, and it
21:20
S2: peaks lower. It peaks earlier and is lower in every
21:24
S2: year for the next 11 years. And this means in
21:26
S2: share of economy terms, gross and net debt remain well
21:30
S2: below what we inherited in every year going forward. Debt
21:35
S2: is lower in. The budget. position is stronger in every
21:37
S2: year of the medium term. Because of our savings, the
21:41
S2: medium term budget position is much stronger and more sustainable
21:44
S2: as a consequence, creating more room for future tax relief. Speaker,
21:50
S2: we've made progress getting the budget in much better shape.
21:52
S2: At the same time as we've found room to fund
21:54
S2: the services and the security that Australians rely on. This
21:58
S2: budget includes record investments in health care, defence and economic resilience.
22:03
S2: There's $3 billion to deliver more beds, more packages and
22:06
S2: better aged care for older Australians, $2 billion for the
22:10
S2: thriving kids program and a $3 billion provision for other
22:14
S2: foundational supports outside the NDIS and $2.2 billion to strengthen
22:19
S2: Services Australia and ensure that Australians continue to receive safe,
22:24
S2: secure and reliable services quickly and easily. Speaker, we're building
22:30
S2: an economy which is stronger and fairer and gives more
22:33
S2: Australians a stake in our success, we're investing in extra
22:37
S2: $1.2 billion to close the gap, doubling the number of
22:40
S2: jobs created as part of the Remote Jobs and Economic
22:44
S2: Development Program, improving housing quality and expanding our support for
22:47
S2: grocery stores in remote First Nations communities. Speaker, the gender
22:53
S2: pay gap has never been narrower, and women's workforce participation
22:57
S2: hit record highs last year. We're proud to have backed
23:00
S2: $21 billion in wage rises for women working in sectors
23:04
S2: like aged care and early childhood education, which have been
23:08
S2: undervalued for too long. Since 2022, we've also invested more
23:12
S2: than $4.4 billion to deliver the National Plan to End
23:16
S2: Violence against Women and Children, and this budget includes hundreds
23:19
S2: of millions of dollars for frontline services and to make
23:23
S2: our child support system safer so children get this financial
23:26
S2: support that they need, and women are protected from abuse. Yes, speaker,
23:32
S2: economic security, economic resilience and national security are now one
23:37
S2: and the same. We're investing an additional $53 billion over
23:40
S2: the next decade in our defense force to keep Australians
23:43
S2: and our region safe. And there's almost $800 million for
23:48
S2: veterans as part of our response to the Royal Commission
23:50
S2: into Defence and Veteran suicide. We're also taking action to
23:55
S2: strengthen our national security and our national unity. Since the
23:58
S2: devastating anti-Semitic terror attack at Bondi Beach, we're adopting every
24:04
S2: recommendation from the Royal Commission on anti-Semitism and Social Cohesions
24:08
S2: interim report. And we're fast tracking tougher gun laws through
24:12
S2: the national cabinet. There is $600 million in this budget
24:16
S2: for a new counter-terrorism online centre. Grants to support affected communities,
24:21
S2: and money for our law enforcement agencies to crack down
24:24
S2: on hate speech, the violent extremism and the terrorism, which
24:28
S2: has absolutely no place in this country. We're. So, speaker,
24:34
S2: against a backdrop of global uncertainty, this budget invests in
24:39
S2: Australia's resilience, its economic sovereignty, and its national security. And
24:45
S2: at a time when Australians are under pressure, this budget
24:48
S2: delivers more help with the cost of living and new
24:51
S2: tax cuts for workers. And in an era where people
24:55
S2: feel like the system no longer works for them. This
24:58
S2: budget doesn't just acknowledge that it acts on it. By
25:02
S2: levelling the playing field for first home buyers, backing the
25:05
S2: aspiration and innovation of small businesses, and renewing that fundamental
25:10
S2: bargain between generations to help bring the dream of home
25:14
S2: ownership within reach of more young Australians. Hear, hear. No
25:19
S2: other budget in the 2000 has set out this much
25:22
S2: responsible budget repair and this much economic reform. These are
25:28
S2: difficult decisions to ensure a stronger bottom line every year
25:32
S2: to give us greater assurance in uncertain times. At the
25:35
S2: same time, as we build a more resilient, more productive
25:39
S2: and competitive economy. This is a strategy which helps shield
25:43
S2: people from the harshest consequences of a global oil crisis,
25:48
S2: stabilizes our economy and our budget at a time of
25:51
S2: extreme uncertainty and volatility in the world, and strengthens Australia
25:56
S2: for the next shock. Faced with a choice between resilience
26:01
S2: or reform, this budget demonstrates that our government and our
26:04
S2: country are capable of both. Tonight we choose the hard
26:09
S2: road of reform, not the path of least resistance. By
26:13
S2: responding to the pressures that Australians confront today and fulfilling
26:17
S2: our obligations and our responsibilities to the generations to come.
26:22
S2: And that, Mr. Speaker, is why I commend this bill
26:24
S2: and this budget to the House.
26:29
S4: Treasurer Jim Chalmers live from Canberra in.