Hi Vicky,

The 2026-27 Federal Budget was the most significant in years, and my team and I have been going through the details.

I believe this budget has some genuine wins, but it falls short of all our community deserves.

I hear about cost of living every day in Wentworth. Young people can’t get ahead. Community groups are stretched to breaking point. Businesses are struggling under red tape and rising costs. This budget needed to speak to all of that. It does in part, but there is still a lot to do.

Tax reform takes courage and I commend the government for making it a central part of this budget. I've been arguing for years, that we need to rebalance the system away from wages so that all Australians can earn and get ahead, and so that our tax base remains sustainable with an ageing population. The Government has started by making changes to negative gearing, CGT and trusts and some very modest reductions in income taxes.

If the purpose of reform is to build prosperity, we need to ensure we don’t deter investment away from our most innovative and productive companies. That means there are some really important details that must now be carefully worked through to address unintended consequences. I intend to continue playing a constructive role working with the community and Government to ensure that an appropriate balance between fairness and prosperity is achieved.

My other concern is that the Government’s tax package will raise $77 billion of extra tax revenue over the next 10 years, but the Government has not committed to returning that revenue to Australians through income tax cuts. That is not good enough. I'm calling on the government to legislate that any revenue raised is returned to Australians as income tax cuts or bracket creep indexing at every tax bracket.

In my Personal Tax White Paper, the central focus was on reducing the taxes on income for Australians so that hard work is rewarded. It was revenue neutral. While I understand the transition takes time, that should only determine when, not whether income taxes are reduced.

Most economists agree with me that this budget needed to make meaningful efforts to rein in spending to reduce pressures on inflation. The changes to the NDIS reforms are a necessary part of that, but they’re overdue. I know that for many Australians the NDIS is a life-changing program and often the only port in the storm. People are understandably worried about what change means for them and their loved ones, and the Government owes it to these people to properly support them and reassure them through this transition.

There were other options for saving the government didn’t take including more money for Melbourne’s Suburban Rail Loop and that’s disappointing.

But the Government has made some good calls on lifting Australia’s productivity. There are some genuine measures for small and young companies to lift investment, such as the instant asset write-off, expanded tax incentives for venture capital, and loss carry backs and refundability provisions that will unlock cashflow for businesses when they need it most – when they’re young.

There is also a laundry list of good productivity measures, like national occupational licensing and skills recognition for migrants. But we’ve seen announcements before. What counts is delivery. The government is claiming $10.2 billion in efficiency gains each year, much of which comes from measures already undertaken like reforming our environmental approval laws. In reality serious productivity-enhancing measures are a hard grind, and I won’t be letting the Government chalk up the win until I see runs on the board.

Something else I am glad to see is the $604.2 million investment in community safety, security and recovery for our Jewish and local Bondi community after the December 14th attack. This is something I've pushed hard on and I am pleased to see the government take this seriously.

Like many of you, I am disappointed (but ultimately not surprised) there was no gas tax. The community has been pushing for this for years. The evidence is clear. The Senate inquiry is done. There is simply no good excuse for Australians missing out on a fair share of the profits from our natural resources.

Below I've summarised some of the major changes in this budget and what I think was missing. There is a lot to get through, and what matters most to me is that our community is part of this conversation.

Tonight I'm hosting a Zoom webinar to unpack the changes, answer your questions and hear your feedback. I'd love to see you there. Please RSVP by clicking below.

BIG PICTURE NUMBERS

• Deficit: $28.2 billion this year, $31.5 billion next year. The budget is in deficit and staying there, with the Government prioritising spending on cost of living and national security over returning to surplus.
• Inflation forecast to hit 5% by end of June. This could reach 7.25% if the Iran war worsens and oil hits $200 a barrel, a reminder of how exposed Australia remains to global energy shocks.
• Real wages falling 1.75% this year. Wages are forecast to grow 1% in 2026-27, but for now Australians are still going backwards in real terms.
• Economic growth slowing from 2.25% to 1.75% next year. The economy is cooling, which makes the cost of living measures in this budget more important than ever.

TAX

• Workers will receive an income tax offset. From mid-2028, wage earners will receive an annual $250 Working Australians Tax Offset, a modest recognition that wages have been taxed too heavily.
• Negative gearing is being restricted to new builds. From July 2027, negative gearing will be restricted to new residential builds only. Properties held before the budget announcement (7:30pm AEST 12 May 2026) are fully exempt, meaning existing investors are unaffected. Read the government's factsheet here.
• The 50% capital gains tax discount is being replaced by indexation. From July 2027, it will be replaced by cost base indexation, meaning you only pay tax on the real gain above inflation, and a 30% minimum tax rate on real capital gains. New builds are exempt to encourage construction. The changes only apply to gains accruing after 1 July 2027. Gains before that date are calculated under the existing rules. Read the government's factsheet here.
• $1,000 instant tax deduction for work-related expenses. Workers will be able to claim up to $1,000 in work-related expenses without needing to keep receipts, simplifying tax returns for millions of Australians.
• Minimum tax on discretionary trusts. From July 1st 2028, a minimum 30% tax rate will apply to discretionary trusts, closing a loophole that has allowed income splitting to reduce their tax bills. There are certain exemptions for things like primary production.

HOUSING

• Extension of the ban on foreign investors buying existing homes. The Government has extended the existing ban on foreign investors purchasing existing residential properties to 2029. This is a measure aimed at easing pressure on housing supply for Australian buyers.
• $2 billion to unlock land for new housing. A new fund will help councils build the roads, water, power and sewerage infrastructure needed to open land for new housing development, addressing one of the key bottlenecks in housing supply.

HEALTH AND AGED CARE

• Cheaper medicines. The PBS co-payment will be reduced to $25, down from the current rate, with the concessional rate frozen at $7.70 until 2030, making medicines more affordable for millions of Australians.
• $3 billion in funding for aged care. This includes an additional 5,000 beds and expanded Support at Home packages, good news for older Australians and their families who have been waiting too long for support.
• Urgent care clinics made permanent. $1.8 billion will fund 137 bulk-billed urgent care walk-in centres across the country, no appointment needed, helping to take pressure off emergency departments.
• More than $500 million released for the Medical Research Future Fund. Much needed funding as our population ages and demand for new treatments grows.
• Private health insurance subsidies for over-65s cut. This will add approximately $240 a year to premiums for older Australians.

CLIMATE AND ENVIRONMENT

• $500 million to extend the Active Transport Fund. Safe, connected walking and cycling networks deliver many benefits: reducing emissions, congestion and noise; improve public health and increase transport choice. I’ve been engaging directly with the Minister on this and I'm really pleased to see it.
• Cheaper Home Battery Program maintained and funding to implement the National Consumer Energy Resources Roadmap. This helps households take control of their energy needs. Australians are now installing almost one in ten batteries globally, helping to lower wholesale power prices, reduce price spikes and reduce reliance on gas generation.
• $11.5 million to improve marine park management. Supports the health and biodiversity of our oceans and the implementation of the High Seas Treaty.
• Establishment of the National Environmental Protection Agency. Australia’s first, independent environmental regulator to commence from 1 July to enforce environmental laws and strengthen protection.
• No reforms to gas tax. Despite widespread community support and crossbench pressure, the Government has not made any reforms to gas taxation - either for the long-term or the short-term. This is a missed opportunity, and I will keep pushing for change to ensure Australian’s get a fair return.
• No reform to the Fuel Tax Credit Scheme. This diesel rebate to off-road users costs $10.7 billion in 2026-27 and creates a stronger incentive to use fossil fuels than the Safeguard Mechanism does to eliminate them.
• No funding for the National Adaptation Plan. Disaster recovery has already cost $2.9 billion this financial year, underscoring the imperative to build resilience and adaptive capacity.

SUPPORT FOR THE COMMUNITY

• $604.2 million to support the Jewish and local Bondi community. This is something I've been pushing really hard for since the December 14th attack because I know how important it is to our community. I'm glad to see this significant investment in community safety, security and recovery.
• Continued investment in ending gender-based violence, but no new initiatives. Ongoing funding for prevention, early intervention and support services for those affected by family and domestic violence through the National Plan to End Violence against Women.
• Mental health support. Commitment for continuity of funding for the National Mental Health and Suicide Prevention Agreement, which was due to expire June of this year.
• $182.6 million to strengthen the Child Support Scheme. New reforms to ensure children receive the financial support they are entitled to, and that the system is fairer for all families.

NDIS

• Significant reforms to eligibility criteria. Eligibility is being tightened to focus on permanent and severe disabilities. Those with autism and lower support needs are likely to be most affected.
• $2 billion Thriving Kids program. A new program to support autistic children outside the NDIS, the Government's answer to those leaving the scheme, though many advocates will want to see the detail before drawing conclusions.
• $3 billion for foundational supports outside the NDIS. For those who are no longer eligible under the new rules, the Government is investing in a broader support system outside the scheme.

PRODUCTIVITY AND INNOVATION

• R&D Tax Incentive reforms. From July 2028, businesses that invest in genuine experimental research and development will receive a tax incentive to help offset the cost. The reforms better target support toward young, fast-growing firms that are taking real risks on new ideas. A positive step, though I'll be watching the final design closely.
• Small business, venture capital and cashflow. The budget includes measures to improve cashflow for startups 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.
• Reforms to improve labour mobility through national occupational licensing and better skill recognition for migrants. This will unlock more people working at their skill level.

NATIONAL SECURITY

• Gas companies required to reserve 20% of exports for domestic use. Designed to improve domestic supply and moderate prices, a step in the right direction, but not a substitute for proper gas tax reform.
• $14.8 billion on fuel security. This includes a publicly owned stockpile of 1 billion litres of jet fuel and diesel, and $1 billion to support local biofuel production, a significant investment in Australia's energy resilience.
• $53 billion extra on defence over ten years. This includes drones, counter-drone technology and nuclear submarines under AUKUS, reflecting the serious and deteriorating global security environment.

If you have feedback or questions about any of these changes, please get in touch with my office. You can email me on [email protected].

Thanks for your support,

Allegra Spender MP