Australian Federal Budget 2026-27: Marsh analysis
Treasurer Jim Chalmers delivered the Budget for the coming year, balancing cost-of-living pressures with measures aimed at strengthening Australia’s economic footing in a more complex and shifting global environment.
Against a backdrop of slowing growth, persistent inflation and global uncertainty, the 2026-27 Federal Budget is framed around resilience and reform.
Key highlights:
- Budget position steady despite global uncertainty: While deficits are forecast to continue, the FY2026-27 deficit is now projected to be $2.8 billion lower at $31.5 billion, with the Budget position improving in every year across the forward estimates and by $44.9 billion overall.
- Tax reforms reshape the investment landscape: Changes to Capital Gains Tax (CGT) concessions and negative gearing are designed to improve intergenerational equity, support home ownership and help fund new tax cuts for workers.
- Productivity reform becomes a major economic focus: Measures including tariff abolition, compliance reduction, faster approvals and AI investment aim to improve business efficiency and support long-term economic growth.
- Fuel security and sovereign capability take centre stage: More than $10 billion committed to fuel resilience, critical minerals, domestic manufacturing and supply chain continuity as Australia responds to heightened geopolitical and energy security risks.
- Loss carry-back reforms strengthen business resilience: The reintroduction of loss carry-back provisions - alongside the permanent $20,000 instant asset write-off - is designed to improve cash flow, support investment and help businesses absorb economic shocks.
- Productivity and digital transformation drive the reform agenda: Targeted investment in AI adoption, Digital ID, deregulation and workforce capability signals a shift toward a more technology-enabled, outcomes-focused operating environment for Australian organisations.
- Enhanced Defence capability, preparedness and resilience. Additional funding of $6.8 billion over four years from 2026–27 (and $35.6 billion over ten years from 2026–27) to increase Australia’s self‑reliance over the longer term, grow Australia’s sovereign defence industrial base, and improve national civil preparedness and national resilience.
- CGT and negative gearing reforms may increase the strategic value of super: Changes to capital gains tax and property investment settings are likely to reshape how individuals structure assets between super and non-super environments, particularly for growth and property investments.
- Implementation and compliance now take priority over new reform: With Payday Super, higher contribution caps and expanded regulatory oversight moving into operational phases, funds, employers and members face a more complex and compliance-driven superannuation landscape.
- Member outcomes: In this environment, a clear understanding of both policy direction and individual circumstances will be critical to maximising retirement outcomes.
- The workforce agenda shifts from labour supply to productivity: The Budget prioritises AI adoption, digital capability and workforce redesign, signalling a stronger focus on productivity, automation and workforce adaptability.
- Workforce governance and transparency expectations continue to rise: New gender equality reporting obligations, expanding pay transparency expectations and greater scrutiny of workforce policies will require stronger governance, reporting and compliance capability from employers.
- Workforce wellbeing focus continues with supported by mental health investments: Increased investment in mental health services and heightened regulatory oversight reinforce the growing importance of workforce wellbeing and organisational resilience.
Prepared by Mercer (Australia) Pty Ltd ABN 32 005 315 917 (Mercer Australia). References to ‘Mercer’ shall be construed to include Mercer Australia and/or its associated companies.
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