Budget 26: what to expect

ANZ Research expects the 2026 Australian budget to show an underlying cash deficit that is little changed from the mid-year economic and fiscal outlook: a deficit of $A37 billion in 2025-26 and $A36 billion in 2026-27.

Deficits averaging 1 per cent of gross domestic product (GDP) are likely over the forward estimates for 2027-28 to 2029-30.

Three themes — spanning the short, medium and long terms — are likely to underpin the budget.

In the short term, ANZ Research expects additional temporary cost-of-living relief for households and businesses to be announced, including a possible extension of the fuel excise reduction.

In the medium term, given Australia’s reliance on imported refined petroleum products, ANZ Research expects a focus on energy security, including via the ‘Future Made in Australia’ package. An increase in defence spending has already been announced. 

In the long term, changes to the taxation of investment properties will strengthen the fiscal position over the next decade and provide a path for revenues as a share of GDP to rise.

The broad stance of fiscal policy will remain more supportive of growth than in the half decade prior to the pandemic. After a deterioration in the fiscal position over recent years, ANZ Research anticipates little change in the key budget aggregates over coming years (which means little change in the fiscal impulse).

The budget is being constructed in a highly uncertain geopolitical and energy environment. ANZ Research assumes energy supplies will remain reasonably secure with no fuel rationing. If that proves wrong, a much larger fiscal response is expected; one designed to offset the clear downside risks to economic activity – initially focused on the most affected households and businesses.

The budget will be delivered on May 12.

Adam Boyton is Head of Australian Economics at ANZ Research

This is an edited excerpt of the ANZ Research report “Australia’s Budget 2026-27 preview”, published April 20, 2026