Sweeping changes to negative gearing and capital gains tax are at the heart of the federal government’s ambitious 2026-27 budget that is aimed shoring up wealth for younger Australians.

The long called for move comes as Millennials and Gen-Z-ers outnumber baby boomers on electoral rolls for the first time.

Investors will pay about $100 billion over a decade to support tens of thousands of first home buyers enter the property market.

A tax offset of $250 will be paid to 13 million wage earners each year from 2027 and companies will also see tax relief.

The budget is a recognition that Australia’s tax system has favoured passive earners over working wage earners, the government says.

The budget comes as global economic uncertainty continues because of the conflict in the Middle East prompting the government to spend $15 billion on fuel and other resilience measures. It also comes at  a time of rising interest rates and inflation.

Migration and multiculturalism

The budget has confirmed the permanent migration program will remain capped at 185,000 places moving forward, with over 70 per cent of places reserved for skilled migrants.

The government will prioritise applications from onshore migrants — rather than those from overseas — across both the skilled and family streams.

The remaining 55,110 offshore places will mostly be allocated to high‑skilled migrants that “help address Australia’s long‑term skill needs”, budget papers say.

On top of selecting those whom it considers stronger applicants; the government will also accelerate skills assessment tests to recognise existing qualifications.

But the estimated number of migrants remaining in Australia this year has been revised  upwards to 295,000, up by 35,000 on previous estimates.

The budget also establishes an Office for Multicultural Affairs but funding for the Multicultural Affairs and Citizenship portfolio has been cut $160 million.

The government has expanded Australia’s skilled migrant program with an investment of $85.2 million to fast-track migrants into trades and almost $8 million to extend the Economic Pathways to Refugee Integration program aimed at increasing refugee employment outcomes.

The budget also sees the creation of a Skills Migration Commissioner who will oversee faster and more flexible skills recognition.

The government has also prioritised the processing of onshore visa applications to resolve the status of migrants and asylum seekers seeking permanency in Australia.

The budget also confirms that the number of humanitarian visas provided by Australia will remain at the current level of 20,000 but it’s not clear if some of those will go to people already onshore.

The budget includes $604.2 million to address hate speech, violent extremism and terrorism, $21.7 million in disaster recovery support for the Bondi community, and $42.9 million in mental health support for the Jewish community and broader Bondi community.

The budget outlines plans to overhaul the Adult Migrant English Program, with Treasurer Jim Chalmers describing the current system as overdue for reform.

From 2029, a redesigned English-language program will offer more flexible tuition and student support services aimed at improving employment outcomes, workplace communication and social cohesion. The updated program will target migrants considered most in need of English-language assistance.

Health

The budget includes a $25 billion investment in public hospitals, the expansion of bulk billing, $1 billion towards subsidising personal care for older Australians, and long overdue investments in women’s health, including $10.8 million for the Health in My Language program to provide community-led health literacy education to refugee and migrant women.

Health Minister Mark Butler has already announced $15 billion will be cut from the NDIS over the next four years to clamp down on the ballooning costs of the scheme.

Initial modelling shows the changes will reduce the number of people on the NDIS from 760,000 to 600,000 by the end of the decade.

The government will spend $1.8bn over five years from 2025-26 – and an ongoing $580.2m a year – to fund Medicare urgent care clinics, giving Australians access to bulk-billed care for conditions which are urgent but not life-threatening.

The government will spend $5.9billion over five years from 2025-26 on new and amended listings on the Pharmaceutical Benefits Scheme and the Repatriation Pharmaceutical Benefits Scheme. New additions include drugs for treating prostate cancer, arthritis, multiple sclerosis, bladder cancer, and other conditions.

Health Minister Mark Butler has already announced $15 billion will be cut from the NDIS over the next four years to clamp down on the ballooning costs of the scheme.

Initial modelling shows the changes will reduce the number of people on the NDIS from 760,000 to 600,000 by the end of the decade.

Housing

The budget includes $2 billion for local housing infrastructure to support up to 65,000 new homes .

The temporary ban on foreign purchases of established residential dwellings will be extended until June 2029, meaning Australians will be able to buy homes that might otherwise have been bought by foreigners.

Gender violence

The budget includes the introduction of new, and the maintenance of, existing initiatives that are intended to support gender violence campaigns systems and provide resources for women and girls.

A key feature of this year’s women’s budget is the Government’s commitment to alter arrangements and systems that can currently be weaponised to perpetuate violence against women. These systems include family law and housing.

Education

The budget includes $54.8 million to help childcare centres care for children with additional needs as well $17.6 million for a national identity verification system for people working in childcare.

Social security

The budget includes $60 million over four years to place 430o homeless youth into housing,

Indigenous

The budget includes $1.2 billion commitment to the ‘closing the gap’ initiative and a doubling the number of remote jobs for indigenous people as well as Economic Development program jobs.

There is also a commitment to improving housing quality and support for grocery stores in remote areas.

Tax

Property investors and family trusts will pay more tax under provisions in the federal budget.

The budget includes reforms to negative gearing and capital gains tax (CGT) arrangements. These reforms will limit the benefits of negative gearing to new residential properties, re-introduce capital gains tax cost base indexation, and introduce a 30 per cent minimum tax on capital gains.

 From 1 July 2027, the Government will limit negative gearing for residential property investments to new builds; and replace the 50 per cent CGT discount for individuals, trusts and partnerships with cost base indexation and a 30 per cent minimum tax rate on capital gains.

Response to the global oil shock

The budget lays out how one billion extra litres of petrol and diesel secured so far for March to June. S $7.5 billion Fuel and Fertiliser Security Facility has been created to secure more fuel from international partners.

The budget includes $3.2 billion Australian Fuel Security Reserve to build long-term fuel resilience and $1 billion in interest-free loans to help manufacturing and logistics businesses.

The government has already announced a reserve of 20 per cent of gas exports for Australians.

Defence

In the face of “intensifying” global risks, the budget lays out a staggered plan to increase defence spending to 3 per cent of gross domestic product (GDP) by 2033, when measured using NATO’s methodology.

It will spend an additional $53 billion over the next decade to contribute to that goal.

The $53 billion increase in spending takes into account some projects that have already been announced, including $12 billion towards the upgrade to the Henderson shipyards in Western Australia.

The numbers

Assisted by major upgrades to tax revenues from higher commodity prices and inflation, the budget shows improvements to the bottom line of $44.9 billion over five years compared with the December fiscal update.

But Australia’s finances remain in the red, with an estimated deficit of $28.3 billion in 2025-26, growing to $34.4 billion in 2028-29.

The structural savings such as the NDIS reforms will allow the budget to project a return to  surplus in a decade’s time, the government says.

Gross debt is projected to surpass $1 trillion, reaching $1,051 billion by June 30, 2027.