Australia: Federal Budget 2026-27 Released

The Australian Federal Treasurer, the Hon Jim Chalmers MP, has released the 2026-27 Australian Federal Budget overnight.

Noting the uncertainty which is being posed by the conflict in the middle east the Treasurer has cast the budget as one of resilience and reform.

While headline reforms have concentrated on building Australia’s resilience in the face of middle east tensions and also redirecting housing investment towards new developments the Budget also includes important reforms to improve compliance and safety, improve productivity in construction and help address skills shortages.

Building resilience in response to the conflict in the Middle East

To address concerns over fuel and other shortages over $14.7 billion will be invested to support the Strengthening Australia's Fuel Resilience Package which will assist with a range of measures including:

• Securing more than a billion extra litres of fuel
• Expanding the Minimum Stockholding Obligation with an additional 10 days' supply for diesel, jet fuel and petrol
• Establishment of a $3.2 billion government controlled Australian Fuel Security Reserve
• Strengthening the Fuel Security Services Payment to protect and expand on existing refinery capabilities in Australia
• Underwriting additional cargoes
• Adjusting fuel standards, enabling more Australian produced fuel.
   

Changes to capital gains tax and negative gearing

The other significant headline reform outlined in the Budget is the introduction of changes to negative gearing and capital gains tax which will see the Government replace the 50 per cent Capital Gains Tax (CGT) discount with a discount based on inflation and introduce a minimum 30 per cent tax on gains from 1 July 2027.

The CGT reforms, which are designed to channel investment into new build housing rather than existing stock, will apply to gains arising after 1 July 2027 and only to existing properties. Investors in new builds will be able to choose the 50 per cent CGT discount or the new arrangements.

The Government has also announced its intention to limit negative gearing to new builds from 1 July 2027 to again focus tax support on new supply. The new arrangements however will not be applied retrospectively.

Improving productivity in construction including through skills reforms

Turning now to skills related reforms the Government has confirmed its intention to further improve labour mobility through the introduction of national occupational licensing and modernising the National Construction Code.

RICS welcomes this announcement as it is in line with calls it has made as part of RICS’s recently released Addressing Skills Shortages in Australia Report.

 The Government has also earmarked $70 million for 'AI Accelerator' grants to boost AI development and will be working to accelerate the use of AI in government including to make the National Construction Code easier to use.

 The Government has also confirmed that it will invest $85.2 million to accelerate skills assessments for migrant trade workers and to accelerate occupational licensing. The permanent migration points test will also be reformed with the aim of selecting higher skills and younger migrants.

Streamlining of Australia's immigration processes is also an issue identified by RICS has needing reform to address chronic skills shortages.

Still on skills and immigration university students with relevant TAFE qualifications will also be able to claim past learning to expedite degrees under the National Credit Recognition Framework.

Australian standards to be made available for free

The Government also appears to have taken on board strong and widespread feedback from the sector that all standards that are referenced in Australian legislation (including the National Construction Code) should be made available free of charge to improve safety and quality in construction.

Steps are also being taken to remove historical legislative barriers to modern methods of construction.

Improving building and development approval timeframes

The Government also confirmed that it is prioritising building and development approvals by:

• Accelerating environmental, low risk foreign investment, resources and telecommunications approval to make it easier to launch new projects following recent changes to the Environmental Protection and Biodiversity Act
• Strengthening the Investor Front Door to help nationally significant projects.
   

Funding infrastructure that supports housing supply

Importantly a further $2.1 billion over five years from 2025-26 has been allocated to support increased housing supply and research. This includes $2.0 billion over four years for the Housing Support Program – Local Infrastructure Fund to provide funding to states and territories to support local governments and state utility providers to expedite the delivery of housing enabling infrastructure.

Other Measures

To counter concerns about future economic shocks and research best policy responses $38.9 million has been allocated to Treasury, the Australian Securities and Investments Commission and the Australian Prudential Regulatory Authority.

The Government will also re-introduce loss carry back to support business risk and resilience with small businesses being able to use a loss incurred in 2026-27 to get a refund against tax paid in the prior two income years.

Instant asset write-off of $20,000 for small businesses will be permanently extended from 1 July 2026 helping with cash flow and a new instant tax deduction of $1,000 will apply to work related expenses.

The Government will also be working to remove 497 tariffs from 1 July 2026 and simplifying trade including through the recently ratified Australia-EU Free Trade Agreement and Australian Trusted Trader program.

For more information:

Mel Rohan
External Affairs (Australia)
mrohan@rics.org