What will be in tonight's federal budget? Here are the major measures we know about so far

Jim Chalmers wants his budget to address the inter-generational unfairness in Australia's tax system. (ABC News: Callum Flinn) Link copiedShareShare articleTreasurer Jim Chalmers is unveiling his fifth budget tonight, and housing for younger Australians will be a centrepiece. But the war in the Middle East, which created a global energy crisis and major wave of inflation, has forced last-minute adjustments to be made. Interest rates and inflation are rising, and the Reserve Bank has warned of a dramatic slowdown in growth in Australia, leaving economists to wonder how the government will juggle competing priorities. "This is one of the most hotly anticipated and potentially interesting budgets in at least a decade," Westpac chief economist Luci Ellis said on the weekend. Here are some of the budget's major policies that have already been flagged ahead of the treasurer's budget speech tonight. Housing policy has been central to Australia's debate about inter-generational unfairness for years. The 2025 federal election marked a seismic shift in Australian politics in that regard. It was the first federal election that millennial and gen Z voters outnumbered baby boomers in every state and territory around the country. For once, the budget won't be a dull one. Jim Chalmers's tax reforms will create a stir and some question whether they will close the generation gap, but the treasurer is projecting a relaxed figure. So now, the Albanese government seems willing to tackle some of the sacred cows in Australia's tax arrangements for housing, knowing that the demographics are on its side. Those sacred cows include negative gearing and the capital gains tax (CGT) discount. The government will reform the rules to ensure the tax system encourages investment that increases the supply of new housing, rather than incentivising investors to pour money into pre-existing dwellings at the expense of younger aspiring home-owners. How the government plans to "grandfather" the tax arrangements for current property investors, and how long it will take to transition to the new system, will be confirmed tonight. It has announced $2 billion for councils and state utility companies to deliver infrastructure (roads, pipelines, wires) that will help support the construction of 65,000 new homes over a decade. There may also be changes announced to the way discretionary trusts are taxed. The budget will include an Australian Fuel Security and Resilience package. More than $10 billion will be spent improving Australia's fuel security as the government tries to shield Australia from the long-term consequences of the war in Iran. Currently, refiners and importers are required to store between 20 and 32 days of emergency supplies, depending on the type of fuel they hold. Under the proposal, which will require government and private-sector funding, Australia's mandatory petrol stockpiles will increase to about 37 days, while diesel and jet fuel will be about 50 days. In the face of "intensifying" global risks, the government plans 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. Australia's defence spending will climb by $53 billion over the next decade amid "intensifying" global risks. 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 facility will be used to dock and maintain nuclear-powered submarines under AUKUS and construct Mogami-class frigates in the future. It also includes $2 billion to $5 billion on new investments in drone technology. The bulk of the additional spending is due towards the end of the coming decade, with $8.7 billion in 2033-34 and $9.8 billion in 2034-35. The budget will include a "productivity package" that the government hopes will help to reverse Australia's historically low productivity performance. It says it will cut the cost for businesses of complying with government regulations by $10 billion a year. Treasurer Jim Chalmers says Australia's productivity problem will take a long time to fix, but a $10 billion annual saving on business compliance costs is a start. It will make permanent the $20,000 instant asset write-off for small businesses when they purchase new equipment or other assets. Fees of up to $1,600 to access mandatory Australian standards for construction will be scrapped, electronic record keeping with financial regulators will be made easier, and climate-related financial disclosures will be simplified. And the government plans to shake up Australia's migration system by changing the points test, which is used to select skilled migrants, and committing to speed up the process for migrants seeking to have their overseas qualifications recognised. Martin

What will be in tonight's federal budget? Here are the major measures we know about so far

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