The Budget 2026 live updates: Jim Chalmers announces negative gearing, capital gains changes, $250 tax relief

WHAT HE SAID: We’re dealing with a fifth economic shock in less than 20 years.

WHAT HE ACTUALLY MEANT: The other four were Wayne Swan.

We are much better placed and better prepared than most countries. Growth here is still higher than our peers.

As long as those peers are all in sub-Saharan Africa.

Even if unemployment ticks up as expected it will stay around the mid 4s.

Like my approval rating.

The Strengthening Australia’s Fuel Resilience package will deliver more fertiliser for farmers.

By bagging all the shit I am talking.

Its centrepiece is a $10 billion investment in immediate fuel supplies and a permanent Australian Fuel Security Reserve.

I hope people don’t realise this policy is the plot from Mad Max.

And we’re making more progress on our Future Made in Australia agenda

Just need to find the allen key…

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While the government will be keen to push the line that an additional 75,000 home owners will result from Tuesday night’s announced changes, it’s the unintended consequences we need to think about.

Let’s start with the capital gains tax changes.

As recently as late last week, property experts were warning that the turning point in Perth’s booming residential property market may have already been reached.

Respected property analyst Gavin Hegney and others had detected a shift in some fundamental indicators over the past 6 weeks or so.

Days on the market are starting to increase as are the number of listings of properties for sale. Sure these might be incremental shifts for now, but heading in the wrong direction nonetheless.

Mortgage brokers are reporting that some investors with multiple properties are selling down to reduce debt, cashing in on the double digit returns enjoyed over the past three years.

We’ve seen three interest rate increases already. Combined with expectations that we would see at least one and possibly two more hikes before year’s end, some investors are already both stretched and spooked.

Let’s also not forget that capital gains tax liabilities can be reduced by the negative gearing losses generated by the same properties during the year.

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Australia is set to add another 1.4 million people over the next four years with immigration forecasts revised upwards in the Treasury Budget papers.

The national population is forecast to grow from 28 million, come the end of June this year, to 29.4 million by the 2029-30 financial year.

The immigration slowdown promised by Labor is taking longer than expected with 295,000 now expected to have arrived in Australia in 2025-26 — on a permanent and long-term basis.

That’s up from the 260,000 forecast a little more than a year ago, on a net basis with departures factored in.

More migrants are also forecast for 2026-27 with 245,000 now expected, up from 225,000 projected in Labor’s pre-election Budget of March 2025.

Net overseas migration was forecast to grow by 225,000 in 2028-29 and 2029-30, roughly where it was in the 2010s and lower than last year’s levels above 300,000.

Fertility was tipped to increase slightly from a record low of 1.44 now to 1.49 by 2029-30.

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Investors will be slugged billions in additional tax while working Australians will receive modest relief under a Budget Treasurer Jim Chalmers is hailing as the “most ambitious” in decades to address “intergenerational anxieties”.

Volatility from the Iran war is forecast to push inflation to 5 per cent but also deliver $33 billion in revenue upgrades over the next two years as commodity prices soar, particularly LNG exports.

The Albanese Government has confirmed it will break a string of election promises by increasing taxes on capital gains, trusts and negative gearing which are expected to generate over $8 billion over two years.

As many as 150 individual savings measures are included in the Budget including massive cuts to the NDIS, with the Treasurer saying the bottom line will improve by $26 billion over the next four years, once spending is factored in.

Among those decisions is a new $250 Working Australians Tax Offset that will go to 13.3 million workers in the second half of 2027, to be paid through tax returns each year on an ongoing basis.

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Shadow Treasurer Tim Wilson has launched the Coalition’s first response to the 2026 Budget, labelling it a failure on living standards, housing and tax relief.

Describing the Budget off-camera as “weird”, Mr Wilson told the ABC it amounted to “broken promises, higher taxes, lower living standards and fewer homes”.

“The opposition set three basic tests — to restore living standards, improve Australia’s security and honesty, and they’ve failed all three,” he said.

He argued the biggest issue facing the country was housing supply.

“The biggest problem is the lack of houses being built across the country.”

Pressed on whether Labor was right to “pull all levers in a crisis of that magnitude”, Wilson maintained the government’s approach was not working, pointing to weak outcomes on wages and housing delivery.

“Based on real wages and the number of houses built, Labor is failing to raise living standards.”

However, Mr Wilson indicated the Coalition would support at least one measure in the package, a $250 cost-of-living offset for workers.

“We 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.”

Mr Wilson also signalled the Coalition would oppose broader Budget measures, as the political fight over housing and inflation intensifies following the Treasurer’s fifth Budget.

Treasurer Jim Chalmers says house prices will continue to rise under Labor’s tax changes, but at a slower pace than they otherwise would have.

“In the Treasury modelling… prices will continue to grow at about 2 per cent slower on a median house. That’s about $19,000,” he told the ABC.

He said the goal was not to drive down prices, but to improve access for buyers.

“We’re not targeting a particular price… what we’re trying to do is to make sure that there are more affordable options for people to buy, particularly people who are buying their first home.”

Dr Chalmers said the reforms were also aimed at reshaping incentives in the housing market.

“We’re trying to make sure that these tax arrangements… encourage people to build new houses and new units.”

He said the broader aim was to fix long-standing distortions in the system.

“What we’re trying to do in this tax reform package is to deal with this issue… and better align the way that we tax people who work in relation to how we tax people who make their income in other legitimate ways — we’re trying to rebalance the tax system.”

Feeling prosperous? Dream of becoming rich? Adverse towards higher taxes? This is not your Budget.

The Labor Government’s 2026-27 spending and taxing plan is what used to be known as “soak the rich” policy. Today it is called helping “fulfilling our obligations and responsibilities to the generations to come”.

Two tax increases will hit the wealthy and those who aspire to create wealth. The hikes will be balanced by a tax cut only meaningful for the lowest paid.

In an example of devilishly clever political timing, the $250-a-year “Working Australians Tax Offset” will start in the second half of 2027, just before an election is due in early 2028. The cut, which will operate in perpetuity, is worth $6.4 billion over the first two years.

The pain from the Budget’s big tax hikes won’t kick in until after the election. Higher capital gains tax on investments and the end of negative gearing on non-newly built houses and apartments will start generating revenue for the Government in the 2029 financial year.

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Treasurer Jim Chalmers says the controversial decision to change negative gearing and capital gains tax settings was made only recently, as pressure mounted on housing affordability.

“This decision was taken in recent weeks… relatively late in the budget process,” he told the ABC.

He said the move was driven by growing concern that supply-side policies alone would not fix the housing crisis.

“We became increasingly of the view that the focus on supply… was not enough to deal with some of these intergenerational issues.”

Dr Chalmers acknowledged the political risk but said the government was focused on the policy outcome.

“Obviously, we know that that invites an element of political risk. Obviously, these changes have been contentious for some time. And so you asked me before, would I acknowledge that we’ve come to this different view — we have — but we’ve come to this different view for very good reasons”

He said the changes were aimed at “encouraging another 75,000 Australians into the housing market over the next decade” and “rebalancing the playing field when it comes to housing and tax.”

Treasurer Jim Chalmers has acknowledged the government has shifted its position on negative gearing and capital gains tax, but stopped short of calling it a broken promise.

“Yes, I acknowledge that the government’s come to a different view about some really important policy areas,” he told the ABC in a post Budget interview.

He said the election commitments were shaped by a focus on housing supply, but argued that approach alone was no longer enough.

“The comments and commitments we made at the election reflected the government’s almost singular focus on housing supply… but the challenge begins there, it doesn’t end there.”

“We also need to take these decisive steps, these contentious steps, to rebalance the tax system… because the interaction of the housing market and the tax system is locking too many Australians, particularly young Australians, out.”

Federal Government spending growth will continue vastly outpacing economic activity during an era of weak productivity, sparking fears of even more interest rate rises as cash handouts add to price pressures.

The spending is expected to intensify until the next election due in 2028, with Labor splurging rather banking the multi-billion-dollar company tax revenue boost from higher LNG prices during the Iran war.

Commonwealth payments are expected to hit $829.6 billion in 2026-27, marking a 5.3 per cent increase from the previous financial year with only deficits forecast until 2030.

This is higher than the 4.6 per cent increase in inflation, which is projected to climb to a three-year high of 5 per cent by June.

The increase in Federal Government spending is almost double Australia’s 2.6 per cent economic growth rate last year and the mid-point of the Reserve Bank’s 2-3 per cent inflation target.

Productivity was flat during the December quarter, potentially making any increase in government spending above 2 per cent inflationary, amid predictions the RBA cash rate could rise two more times in 2026 to a new 18-year high of 4.85 per cent.

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