Federal Budget 2026: Labor’s “most important and ambitious” budget yet… How will you be affected?

Parliament of Australia in Canberra. Credit: Sammi Sastradipradja

Jim Chalmers revealed his fifth budget as Treasurer last Tuesday, with tax reform and housing affordability for young people at the core of Labor’s plan.

The war in Iran has greatly disrupted the global economy, sending shocks through oil supply chains. 

Global fuel shortages significantly impacted our economy, and cost of living is predicted to worsen.

There is a lot to digest in this Budget. This is how you will be affected.

Fuel and cost of living relief

In response to what Chalmers described as “the biggest oil shock in history”, the government will roll out a $14.8 billion fuel resilience package. 

At its centre is a $10 billion investment in immediate fuel supplies and a permanent Australian Fuel Security Reserve.

More immediately, the government will more than halve the fuel excise and eliminate the heavy vehicle road user charge, alleviating the stress of rising prices at the pump. 

Petrol companies have also been put on notice, with the consumer watchdog's maximum penalties being doubled and enforcement ramped up.

To boost domestic gas supply and put downward pressure on prices, the government will reserve a fifth of gas exports for Australian consumers.

Tax reform

Chalmers framed this budget as a “big reform budget” that will make the tax system more equitable and fairer on the average Australian worker.

New tax cuts for every taxpayer will also be introduced, resulting in 13.3 million workers receiving a $250 tax offset beginning from the second half of 2027.

Altogether, Labor predicts these “five different tax cuts”—including an instant $1000 deduction at tax time and two previous rounds of tax cuts—will benefit the average worker by up to $2,816 in 2028.

NDIS

Labor aims to reduce the annual growth of the National Disability Insurance Scheme from 10 per cent to 5-6 per cent in the long term.

This means 160,000 NDIS participants will be transferred to state-run support programs by 2030.

The cuts are expected to save $37.8 billion in this year’s budget. 

Labor has allocated $2 billion to establish the Thriving Kids program, aimed at supporting children with autism and neurodevelopmental conditions.

Healthcare

Hospitals will receive a $25 billion boost in funding under a new five-year deal between the Federal Government and states.

$1.8 billion will be dedicated over five years to ensure walk-in Urgent Care Clinics remain up and running.

An additional $5.9 billion will be invested in the Pharmaceutical Benefits Scheme to make medicines cheaper.

Housing

Labor is lifting their housing investment to an all-time high of $47 billion. 

In conjunction with the 5 per cent deposit rule and tax reform, this measure is aimed at easing the pressure of the housing market on young people and families.

Another $2 billion will be directed towards investment in power, roads and drains, paving the way for the construction of 650,000 homes.

Chalmers also announced an extension on the ban on foreign investors, in hopes of further easing pressure within the housing market.

The Coalition’s response

The government is facing criticism over reneging on a promise for property tax breaks. The Coalition is promising to fight these changes, according to the ABC.

“We have changed our position, I’m upfront about that,” Prime Minister Anthony Albanese told Sunrise.

The opposition also vowed to fight Labor’s attempts to restrict negative gearing and amend the capital gains tax discount.

Shadow Treasurer Tim Wilson believed that these reforms would have the opposite effects that Labor hopes for.

"What the government has done is turned around and said we're going to protect the existing arrangements for those who've accumulated wealth, but we are going to kneecap young Australians in their chance to get ahead," Wilson told RN Breakfast.

Resilience and reform

Labor said the budget deficit for the next financial year will be $31.5 billion—$2.8 billion lower than previously forecast—with the budget position improving every year over the forward estimates and medium term.

Real spending growth will average just 1.5 per cent over the eight years to June 2030, the lowest average growth rate in any eight-year period for almost three and a half decades.

Chalmers framed the budget as a choice between “resilience and reform”, and argued that the government is capable of delivering both.