Budget 2026: Labor’s ambitious and politically risky changes, explained by Matilda Boseley

Added: 2026-05-12

[00:00:00]This year's federal budget is all about winning over young people. Unless of course that young person happens [music] to be an aspiring property investor or I guess one of the 160,000 people being booted off the NDIS. Well, the treasurer is claiming this >> is the most important and ambitious budget in decades. And while that might feel like a slight exaggeration given we already knew pretty much everything that was announced, there are definitely some major overhauls. See, despite Anthony Albanese repeatedly saying that labor wouldn't make changes to negative gearing or the capital gains tax discount during the 2025 election campaign >> I tell people we wouldn't make changes, the proof's in the pudding Andrew.

[00:00:37]>> It's finally happening. The witch is dead. Well, the witch is injured.

[00:00:42][music] So, we have full videos explaining these policies in depth, but the main thing you need to know for now is that they overwhelmingly benefit wealthy property investors >> [music] >> and have helped propel Australia's house prices into the stratosphere over the last 27 years. Since 1999, [music] it's been the case that when you sell an asset, for example, an investment property, you get a 50% discount on the tax you would normally pay on the profit, aka the capital gains.

[00:01:11]Generally, this is a much more generous deal for the investors than the old inflation [music] indexation method. Now, we're going back to the '90s. That being said, the new indexation system will only apply to the value your asset has accrued after the 1st of July 2027.

[00:01:29]Oh, and to try and increase housing supply, new builds can still get the full 50% discount. When it comes to negative [music] gearing, which is a quirk of our taxation system that allows property investors to well, pay less, there's even more caveats. Yes, starting July 2027, you can only negative gear a residential investment property if it's newly built or meets a few other of these exceptions. Importantly, this will be grandfathered in, meaning nothing changes for the properties people already own. This all seriously limits the already quite modest impact these policy changes could have had on housing prices. So, it's more about slowly bringing them in line with wage growth than drastically changing young people's chances of buying their [music] first home right now. Still, the government at least reckons it will help an extra 75,000 [music] people within the decade.

[00:02:24]Other big headline lines include the previously announced massive cuts to the NDIS, the massive boosts to defense spending, and oh, a smooth $250 off all working Australians' tax bills in the '27-'28 financial year. But, how about the bottom line? Now, you might remember that last year's budget painted a fairly rosy picture for Australia. However, it's important to note that these good news numbers do rely on like no massive international trade wars breaking out or anything like that. Oops. Now, according to Treasurer Jim Chalmers, the closure of the Strait of Hormuz means inflation [music] will be higher and growth slower than expected. But, we aren't [music] totally screwed. We are much better placed and better prepared than most countries to deal with this global crisis.

[00:03:10]Ultimately, this is a deficit budget, but a pretty small one. The government will spend $31.5 [music] billion more than they make in the next financial year, which is slightly less than last [music] year. So, at the end of the day, was this budget at all surprising?

[00:03:26]Not really, but it will be impactful.

[00:03:29]Just probably not in [music] the short term. Oh, and no more tariff on wine glasses or margarine. Um, so that's a plus.