Commentary on the Federal Budget 2026-27 by Professor Alan Duncan

Professor Alan Duncan, Director of the Bankwest Curtin Economics Centre, shares his initial thoughts on the Federal Budget 2026-27, handed down on Tuesday, 12 May 2026.

My broad take is that this Budget seeks to reposition Labor as a government willing to pursue politically difficult structural reform – particularly around housing and tax – rather than leaning mainly on temporary cost-of-living relief. In many respects, that’s economically mature and overdue.

The permanency of the $250 Working Australians Tax Offset is a surprise, but modest in scale relative to the pressures households face.

And it’s worth remembering that bracket creep remains a far larger revenue engine. In effect, the Budget hands back a small share of the revenue generated by non-indexed tax thresholds while leaving the underlying mechanism firmly intact.

The move on housing tax reform is politically bold, but more measured than many expected.

Retaining negative gearing for new builds and phasing CGT changes is more nuanced than a blunt reduction in the current discount rate.

The Budget is clearly trying to improve affordability and ease rental pressures over the medium term by lifting supply and taking some heat out of investor demand. But that offers limited comfort to renters under acute financial strain right now, many of whom will see little immediate relief.

Investor incentives may soften at the margin, though broader market conditions and price expectations will still dominate behaviour.

Professor Alan Duncan
Director
Bankwest Curtin Economics Centre