Community Newsletter

12 May 2026

Budget tackles big reform but misses the moment on climate resilience and fairness

 

Zali's Budget take

The federal budget has sought to balance cost-of-living relief with spending restraint and structural reform, as Australians continue to grapple with rising living costs and global instability. On the defining challenge of our time, however, this budget is a failure.

The Albanese government has fallen badly short on one of the key themes of its budget: resilience. Its continued failure to invest meaningfully in climate adaptation and disaster preparedness will leave Australia dangerously exposed and far worse off in the long term.

The government continues to take a narrow and outdated view of national security, pouring billions into defence while leaving climate resilience severely underfunded. It is troubling that just $117 million has been allocated to climate adaptation and disaster resilience, compared with $863.8 million over four years for the nuclear-powered submarine program.

This budget exposes a clear and deliberate choice by the Albanese government: protect multinational fossil fuel interests or secure a fair return for Australians. It chose the former. The refusal to remove fossil fuel subsidies or introduce a 25% gas export tax is a major failure of leadership and a lost opportunity to deliver fairness in the national interest.

The government will spend just $3.4 million over four years on measures aimed at putting downward pressure on property insurance premiums. This tokenistic funding is inadequate in the face of escalating climate risk and rising insurance costs. The government is failing to invest meaningfully in climate adaptation and resilience, while doing little to ensure people can actually keep their homes insurable.

I welcome an overhaul of property tax concessions, which may assist more Australians into the housing market. I also welcome targeted cost-of-living and tax relief measures that will provide some short-term relief to struggling households.

However, the government’s claim of strong budget management is undermined by poorly targeted measures such as halving the fuel excise for all motorists, and a universal $250 tax cut, which risk adding to inflationary pressures at a time when restraint is needed.

I have fought hard to secure several important measures in this budget, including almost $183 million to address financial abuse and non-compliance in the Child Support Scheme, and more than $500 million in disbursements for medical research. I also strongly welcome the permanent instant asset write-off for small businesses investing in new equipment.

The productivity measures in this budget are a step forward in reducing red tape and encouraging investment, and I support stronger incentives for research and development to keep Australia competitive. However, more ambition is needed to ensure Australia’s 2.6 million small businesses can not only survive, but thrive.

It is also deeply concerning that there is no increase to JobSeeker or other welfare payments. At a time of persistent cost-of-living pressure, this is a significant omission.

Finally, the budget contains little meaningful funding for anti-racism initiatives, at a time when such investment is urgently needed to address rising social division fuelled by One Nation.

PROGRESS

• Capital gains and negative gearing reform
• Instant asset write off (IAWO) for small business made permanent

FALLS SHORT

• Income offset not targeted
• Overall budget remains in deficit
• No gas export tax
• Instant asset write-off threshold for small business too low

Commentary

Overall budget position
Australia’s budget is in deficit to the tune of $31.5 billion in 2026-27, and is not projected to return to balance until 2034–35.

Inadequate resource taxes
Revenue from the Petroleum Resource Rent Tax (PRRT) has been revised up by $1.6 billion across the forward estimates, after repeated downward revisions in previous budgets. However, it remains negligible compared to the estimated $16 billion a year that could be raised through a 25% gas export tax and by scrapping fuel tax credits. The ongoing failure to properly tax gas exports is a major missed opportunity to ensure Australians receive a fair return from a national resource.

Capital gains and negative gearing
Changes to capital gains tax and negative gearing concessions are a good step. These reforms, long advocated by me and others, represent a move toward greater fairness – particularly for younger Australians trying to enter the housing market. I am pleased the government has also ensured the family home remains exempt from these changes.

However, tax reform alone will not resolve the housing shortage. The government remains significantly off-track to meet its target of 1.2 million new homes. I support the $2 billion Local Infrastructure Fund to support enabling infrastructure such as water, power, sewerage and roads.

Taxation of discretionary trusts
A minimum 30 per cent tax will apply to most discretionary trusts from 1 July 2028, with three years of rollover relief from 1 July 2027 for restructuring. This reflects a gradual shift toward taxing wealth structures rather than only earned income, which is a broadly sensible direction in principle.

With demographic pressures intensifying - fewer workers supporting more retirees over time - structural tax reform is increasingly necessary to maintain fiscal sustainability.

Electric vehicle incentives
While there were concerns the government would remove EV incentives entirely, it is good to see support for electric vehicles under $75,000 will continue for a further three years. Ongoing support is important as fuel costs remain elevated. That said, beyond $40 million for additional charging infrastructure, there is limited investment in decarbonising transport at scale.

Instant asset write-off made permanent
Making the instant asset write-off permanent provides certainty for small businesses, allowing them to plan and invest with confidence. However, the $20,000 threshold remains too low to support meaningful investment in productivity-enhancing equipment and vehicles. There is also a strong case to better align the policy with investments in energy-efficient and modern equipment.

$250 tax offset and instant deductions
All workers will receive a permanent $250 annual tax offset and be able to claim up to $1,000 in simplified deductions without receipts. While these measures will provide short-term relief, they do not address underlying cost-of-living pressures. There are also valid concerns that broad-based cash measures may add to inflationary pressure, as noted by the Reserve Bank. Importantly, Australians on JobSeeker and other income support payments do not benefit from these measures and remain among those most affected by ongoing cost-of-living pressures.

PROGRESS

• Skilled migration focus
• National Reconstruction Fund to get moving

FALLS SHORT

• No long-term fuel transition strategy
• Inadequate climate resilience funding
• Almost nothing for insurance affordability

Commentary

Migration
The government will invest $85.2 million to accelerate skills assessments for migrant workers and reform the points test to better prioritise higher-skilled migrants. I welcome efforts to speed up recognition of overseas qualifications, so Australia can make better use of the skills migrants already bring to the economy.

Local businesses have also raised with me the high cost of sponsoring skilled workers, which needs to be addressed. It is equally important that migration pathways remain fair, transparent, nationally consistent, and accessible for all migrants.

Defence and national security
The government will invest an additional $14 billion in defence over the next four years and $53 billion over the decade. In an increasingly unstable geopolitical environment, sustained investment in defence capability is necessary. However, this spending must deliver clear outcomes and represent genuine value for money.

At the same time, the budget again misses a critical opportunity to invest in climate resilience and adaptation. Climate change is widely recognised by security experts as one of Australia’s most significant long-term national security risks. Without stronger action, Australians will continue to bear rising economic and social costs from worsening climate impacts.

Unspecified funding has also been allocated for the divestment of Defence estate assets, including HMAS Penguin at Balmoral. I will continue to oppose any partial divestment unless a full cost-benefit analysis is undertaken and community interests are properly protected.

Insurance affordability
The government will spend just $3.4 million over four years on measures aimed at reducing property insurance premiums. This token investment falls far short of what is needed, leaving Australians increasingly exposed to climate-related risk and rising insurance costs. In the absence of meaningful investment in climate adaptation and resilience, the government is also doing little to ensure Australians can maintain access to affordable insurance and keep their homes protected.

$10 billion fuel security plan
The $10 billion fuel security plan reflects the need to strengthen national fuel resilience. However, it risks entrenching long-term reliance on imported fossil fuels unless paired with a clear transition strategy. A credible approach would also invest in electrification, energy storage, public transport and renewable energy to reduce exposure to global oil shocks. Also, public support should not flow to polluting industries such as mining. Priority should be given to sectors that genuinely require liquid fuels, alongside accelerating electrification of heavy freight where viable alternatives already exist.

National Reconstruction Fund
The government will allocate $6.15 billion through the National Reconstruction Fund to support manufacturing and industry capability, including a $1 billion Economic Resilience Program and a $5 billion Net Zero Fund to support clean energy manufacturing and efficiency. The fund has been slow to deploy capital since its establishment in 2023, with its risk aversion limiting private investment. I hope this additional funding will improve delivery speed and unlock greater investment in clean energy and industrial transformation.

PROGRESS

• Home Batteries program continues
• Support for clean exports
• EPA funded
• Ocean spending

FALLS SHORT

• Biodiversity and environment spending

Commentary

Household electrification
True domestic energy security is achieved by accelerating home electrification and rooftop solar. I welcome $7.2 billion over four years to continue the Cheaper Home Batteries program. The government will also spend $143.2 million over five years from 2025–26 to maximise consumer and community benefits of the energy transition.

Greener exports
$1.22 billion is allocated to speeding up the transition of Australia's exports from carbon-intensive to low-emissions. This includes a focus on metals production.

Environmental Protection Agency
I am pleased to see a $250 million commitment to establishing the National Environmental Protection Agency. A strong independent watchdog is essential to restoring trust in environmental laws, improving accountability and delivering more credible project approvals. Unfortunately, there is little else for the environment or arresting biodiversity loss.

Biodiversity
Just $110.8 million will be spent over two years to protect native species and Australia’s biodiversity. This is well short of what’s needed to halt Australia’s extinction crisis. Biodiversity experts say nature investment must be scaled up significantly to properly protect threatened species and restore degraded ecosystems.

Solar sustainability
It is great to see $24.7 million over three years for a national pilot program to recycle solar panels. It includes up to 100 pilot collection sites across Australia to reduce waste and reuse valuable components.

Oceans
Oceans are central to daily life in much of Warringah. I am pleased to see $11.5 million allocated to Australia’s marine parks and supporting the health of Australia’s oceans. Measures include combatting illegal activities and continuing Sea Country partnerships with traditional owners.

PROGRESS

• Cheaper medicine
• Affordable urgent care
• Medical research funding
• Home care packages increase

FALLS SHORT

• Hospital funding not enough
• Thriving Kids and NDIS uncertainty

Commentary

Urgent Care Clinics
Medicare Urgent Care Clinics will be made permanent with a $1.8 billion commitment over five years. I support initiatives that improve access to affordable healthcare, particularly where they reduce pressure on hospital emergency departments and expand after-hours care. However, urgent care clinics must complement – not substitute for – proper investment in general practice, preventive care, and addressing ongoing health workforce shortages.

NDIS
I support efforts to reform the NDIS to ensure long-term financial sustainability, but changes must be fair, evidence-based, and carefully implemented. Any reforms must protect participants while also supporting the many providers - often women-led businesses - who deliver essential allied health services. I remain concerned about delays to the Thriving Kids initiative and the slow progress of state and territory implementation. Children and families should not be left waiting for support due to intergovernmental delays.

Hospital funding
The government will provide an additional $25 billion for public hospitals over five years to ease pressure on the health system. While this funding is positive, modelling by the Australian Medical Association indicates it is still insufficient to address declining hospital performance, including emergency department wait times, elective surgery backlogs and ambulance ramping. With an ageing population, rising medical costs and increasing demand, Australia needs deeper structural reform of hospital funding alongside increased investment.

Medical Research Future Fund (MRFF)
The Budget includes $508.5 million increase in disbursements from the Medical Research Future Fund. The MRFF was designed to provide ongoing investment in medical research and innovation, yet it has accumulated nearly $25 billion in unspent funds while quality research projects remain unfunded.

I have joined calls for higher annual disbursements to ensure Australian researchers can drive the next generation of medical breakthroughs.

Aged care
The $3 billion aged care package is well overdue. It includes funding for 5,000 additional aged care beds per year, expanded Support at Home packages, free personal care services such as showering and dressing, and over $200 million for dementia support. These reforms must be supported by long-term workforce planning, improved regional access, and sustainable funding arrangements. I also have concerns about relying on reductions in private health insurance rebates to fund the package, which may increase pressure on public hospitals and affordability for seniors.

PROGRESS

• Youth homelessness funding
• Child Support Scheme safer and fairer

FALLS SHORT

• No Digital Duty of Care
• National Anti-Racism Framework not fully funded

Commentary

Youth homelessness
The government will invest $60 million to support around 4,300 young people into community housing. This funding focuses on early intervention and specialised support for 19–24-year-olds, who experience some of the highest rates of homelessness. There remains a broader and unresolved need for sustained investment in secure, long-term, affordable, and social housing.

Social cohesion
I support increased investment in social cohesion initiatives following the Bondi terror attack. However, I am disappointed that the Australian Human Rights Commission’s National Anti-Racism Framework has not been fully funded. The framework offers a comprehensive, practical roadmap for addressing racism across education, health, workplaces, media, and the justice system.

At a time of growing division, discrimination, and rising hatred, the government should properly fund long-term work that strengthens inclusion and cohesion.

Online safety and Digital Duty of Care
The Budget includes some related digital safety initiatives, including online safety education, measures to reduce online gambling harm, and funding to counter online extremism. However, it does not include dedicated funding to advance a broader digital duty of care for technology platforms.

This is a significant gap. As AI-generated content, addictive platform design, misinformation, and other online harms become more pervasive, Australia needs stronger obligations on digital platforms to prevent foreseeable harm – rather than responding only after damage has already occurred.

Domestic violence
Domestic and family violence is a national emergency. Women and children escaping violence need safety, secure housing, and long-term support. The Budget provides $308.6 million over five years to continue action on gender-based violence, including targeted measures for Aboriginal and Torres Strait Islander women and children. Key measures include $218.3 million for the first actions under the new First Nations plan to end family, domestic and sexual violence, $61.2 million for the next phase of the 500 frontline worker initiative, ongoing funding for the Family Violence and Cross Examination of Parties Scheme, and support for victim-survivors experiencing technology-facilitated abuse.

This funding is necessary, but the scale of the crisis demands a more ambitious long-term response. The government must shift from short-term program extensions to secure, ongoing funding for frontline services, crisis accommodation, legal assistance, and early intervention and prevention measures.

Financial abuse in child support payments
The Budget provides $182.6 million over four years to make the Child Support Scheme safer and fairer, particularly for parents experiencing financial abuse after separation. This is a step in the right direction and reflects a policy change I have advocated for over many years. The funding will help improve payment compliance, reduce opportunities for child support to be used as a tool of control, and make it easier for parents to get the support their children are owed. This is a welcome measure because child support should provide stability for children, not become another way for perpetrators to continue abuse.

PROGRESS

• Increased and better targeted R&D Tax Incentive
• More funding for CSIRO

FALLS SHORT

• University research
• Barely anything for AI safety

Commentary

Research and Development Tax Incentive
I welcome the Government’s reforms to the R&D tax incentive from 1 July 2028, which will better target support toward genuine experimental R&D and young, fast-growing firms. The reforms are expected to save $650 million over five years while increasing R&D investment by young firms by around $400 million annually. This is a positive shift toward supporting innovative, high-risk, high-productivity businesses. However, the final design will require close scrutiny to ensure it works as intended.

Small business, venture capital and cash flow
The Budget includes measures to improve cash flow for start-ups and small businesses, including loss carry-back, a refundable loss offset for early-stage firms and expanded venture capital concessions. These are practical reforms that acknowledge long-standing pressures on small business and innovation.

Science and national research capability
There are important investments in Australia’s science system, including additional funding for the CSIRO, the National Measurement Institute, the Square Kilometre Array project, the Australian Space Agency, and the establishment of a National Resilience and Science Council. The council could play a useful coordinating role if it effectively aligns priorities across government, industry, and research bodies.

Universities and commercialisation
The Budget is weaker on universities. While it supports research and science institutions, part of the R&D package is funded by redirecting uncommitted funds from the Australia’s Economic Accelerator program, which was designed to help commercialise university research. Australia needs to properly fund both discovery and commercialisation. Weakening one part of the innovation pipeline to fund another risks undermining productivity gains.

Higher education governance and student safeguards
There are modest education measures, including cost recovery for the National Student Ombudsman and expanded powers for TEQSA. These are sensible in principle and support stronger oversight and clearer complaint pathways for students. However, they do not address deeper structural pressures facing the higher education sector.

Artificial intelligence
The Budget takes initial steps on artificial intelligence, including up to $70 million for an AI Accelerator to support research and commercialisation, and the rollout of AI.gov.au to support responsible adoption. AI is also being used to improve government processes, including approvals and regulatory systems.

However, these measures are modest relative to the scale of change ahead. Australia needs a far more ambitious national AI strategy that drives innovation, protects workers and creators, and ensures infrastructure constraints – particularly in energy and water – are properly managed as demand grows.

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