Treasurer Jim Chalmers handed down his fifth Federal Budget last night, framing it as the most ambitious tax overhaul in 26 years. For Perth households, the headline news is a pair of new personal tax cuts, the biggest rewrite of negative gearing and capital gains tax in a generation, and a $12 billion commitment to expand the Henderson Defence Precinct south of the city.
The new tax measures take effect in 2026–27 and 2027–28. The negative gearing and capital gains tax changes don’t begin until July 1st 2027. Shadow Treasurer Tim Wilson called the Budget “weird” and a package of “broken promises, higher taxes, lower living standards and fewer homes”, pledging to repeal the property reforms if the Coalition wins office. The next 12 months will likely be dominated by Senate negotiations and industry lobbying.
What’s new for workers
Two new personal tax measures are landing on top of the cuts already legislated in previous Budgets.
The first is a $1,000 instant tax deduction, effective from the 2026–27 financial year. Workers can knock $1,000 off their taxable income for work-related expenses without keeping receipts. Treasury estimates 6.2 million Australians, or 42% of taxpayers, will use it, for an average benefit of $205.00.
The second is the new $250.00 Working Australians Tax Offset, a permanent annual tax cut beginning in 2027–28. It effectively lifts the tax-free threshold by nearly $1,800 to $19,985.
For a worker on average earnings of $81,245, Treasury’s modelling estimates a cumulative tax cut of $1,978 in 2026–27 and $2,496 from 2027–28, rising to roughly $2,700 if the new instant deduction is used.
Negative gearing and CGT — the “broken promise”
This is the part Chalmers is calling generational, and the part Tim Wilson has already promised to repeal. From July 1st 2027, negative gearing will be limited to new builds only, and the 50% capital gains tax discount will be replaced with inflation indexation plus a minimum 30% tax on real capital gains.
Every property held at 7:30 pm last night is fully grandfathered, so existing investors are not affected. The changes hit future buyers of established homes, and Treasury says only about 230,000 Australians a year acquire a negatively geared property — roughly 1% of taxpayers. Investors who buy new builds can still negatively gear and can choose between the old 50% discount or the new indexation regime when they sell.
REIWA chief executive Suzanne Brown has flagged concerns that the changes will push some investors out of the WA market at a time when Perth needs more rentals, not fewer. Investors supply more than 86% of WA’s rental properties, and the vacancy rate sat at 2.0% in March; well under the 2.5% to 3.5% range REIWA considers balanced. Treasury’s counter-modelling estimates the rent impact at under $2.00 a week and projects 75,000 additional owner-occupiers over the decade.
There’s a separate, dedicated explainer on the negative gearing and CGT changes coming on So Perth, because it’s such a big subject and hot topic that people think will be the silver bullet to make housing more affordable. Hint: It won’t affect housing affordability in any meaningful way and will likely widen the wealth inequality gap.
Henderson is the biggest WA story
Easy to lose in the noise, but the single biggest dollar figure for Western Australia in this Budget is the $12 billion initial commitment to expand the Henderson Defence Precinct south of Perth. Independent advice puts the eventual decade-long bill closer to $25 billion, and Defence is projecting 10,000 direct jobs over the next 20 years, plus subcontracting work for hundreds of WA small and medium businesses.
Henderson is being built out to handle the construction of naval ships, the sustainment of surface combatants, and docking for AUKUS nuclear-powered submarines from the early 2030s onward. A further $30 million in this Budget covers design work and interim facilities for the non-defence industry being displaced to make room. The flow-on effect through Cockburn, Kwinana, and Rockingham will run for two decades.
Cheaper meds and a permanent urgent care guarantee
The Government is spending $5.9 billion to list new medicines on the PBS, including treatments for cystic fibrosis, chronic kidney disease, and several cancers. The RSV vaccine Arexvy is being added to the National Immunisation Program for eligible older Australians at a cost of $449.3 million.
The 137 Medicare Urgent Care Clinics — Perth has them in Armadale, Joondalup, Midland, Rockingham, Cockburn, and elsewhere — are being made permanent with $1.8 billion in funding plus $580.2 million each year going forward. The Government’s target is that nine in ten GP services will be bulk billed by 2030. As of January, the national rate was 81.4%.
What’s the catch?
The 2026–27 underlying cash deficit is $31.5 billion. The Government claims $63.8 billion in savings, with the largest single chunk — $37.8 billion over four years — coming from NDIS reforms. The fine print on those reforms includes standardised functional capacity assessments, tighter plan reassessment rules, and an explicit return to “the original intent” of the scheme. Early media reporting has flagged that the new eligibility tests could result in significant numbers of existing participants being reassessed under the scheme over time. The detail will dominate the Senate inquiry to follow.
Inflation is forecast to peak at around 5% mid-year, real GDP growth is being downgraded from 2.25% to 1.75%, and Treasury has been frank that the Middle East oil shock is the main reason. The Budget commits $14.8 billion to a longer-term fuel resilience package: a $3.2 billion strategic Fuel Security Reserve, a $7.5 billion Fuel and Fertiliser Security Facility, and a 20% domestic gas reservation from July 2027. The temporary excise cut that has been in place at the bowser since April 1st runs until the end of June.
What happens now, and what’s missing?
Most of these measures still need to pass Parliament. While the Coalition opposes the property reforms, Wilson has signalled support for the $250.00 tax offset, the permanent $20,000 instant asset write-off for small business, and the $2 billion housing infrastructure fund. The property tax fight will likely dominate headlines across Australia for the next few months.
What’s missing is any plan to give the people what they want and adequately tax multinationals and gas exports.
