Productivity

Delivering on our productivity agenda

This Budget advances the reform directions set by the Treasurer’s Economic Reform Roundtable, delivering a significant package of practical reforms that will meaningfully boost productivity growth. Together, they will make it easier to build, easier to do business and easier to invest and innovate.

Incentivising investment and innovation

This Budget delivers landmark tax reforms that will encourage investment and innovation, including:

• loss refundability
• a permanent $20,000 instant asset write‑off, and
• expanded tax incentives for venture capital.

Reforms to the Research and Development (R&D) Tax Incentive will unlock $400 million per year in additional R&D by young firms.

The annual superannuation performance test helps protect members from persistent underperformance. The Government will strengthen the test to help reduce unintended barriers to investment that supports member outcomes.

A stronger Investor Council will support the Investor Front Door to prioritise investment proposals and identify opportunities for coordinated public financing; with up to $125 billion being deployed by the Government’s specialist investment vehicles.

Reducing red tape

The Government is reducing financial sector compliance costs by $780 million a year by progressing 14 legislative reforms, including increasing company reporting thresholds. Financial regulators are also taking 13 actions to streamline their data collections to reduce compliance costs.

We will regularly introduce regulatory reform bills to improve and modernise regulation, building on the 60 measures legislated in 2025.

Removing barriers to trade

• The Government is abolishing another 497 nuisance tariffs from 1 July 2026, bringing the total abolished to around 1,000 and saving businesses $157 million a year in compliance costs.
• The Government will also consult on abolishing additional tariffs to further cut costs for Australian businesses.
• We are simplifying trade through the landmark Australia‑EU Free Trade Agreement, expanding the Australian Trusted Trader program and streamlining biosecurity border processes.

Building a Single National Market

• The Government will work with states on reforms to payroll tax administration, in addition to further improving labour mobility through national occupational licensing.
• This will allow health practitioners to work to their full scope of practice, and enable a national approach to screening care workers.

Making it easier to engage with Government

The Government is implementing a ‘tell‑us‑once’ approach and investing $654.3 million to expand the use of Digital ID to safely verify identity, reduce data storage and improve access to government services online.

A further $62 million is being invested into the Consumer Data Right, including finding new ways for customers to use their own data to save money and get better services.

Accelerating approvals

The Government is:

• accelerating environmental, low‑risk foreign investment, resources and telecommunications approvals to make it easier to launch new projects
• delivering stronger environmental outcomes through more than $500 million to implement approval reforms that deploy AI, cut duplication with states and fund more bioregional plans and strategic assessments
• strengthening the Investor Front Door to help nationally significant projects.

Building more homes

The Government is funding last‑mile infrastructure to unlock up to 65,000 homes in states and territories that drive productivity in the housing sector, including by:

• speeding up approvals
• making more land ready for new homes, and
• modernising the National Construction Code.

The Government is also taking action to simplify building regulations and make it easier to build by providing free access to all standards referenced in Australian legislation. This will save small businesses and tradies up to $1,600 per year. The Government is also removing barriers to using modern methods of housing construction.

Modernising energy markets

The Government is working with states and territories to pursue the most significant reforms to our energy market since the 1990s. These upgrades will make our system more productive and competitive and for the first time allow household solar and battery systems to directly participate in the market.

We are introducing a domestic gas reservation from 1 July 2027 to ensure Australian gas stays on our shores. This requires LNG producers to reserve 20 per cent of their export volumes for Australian users to reduce pressure on prices.

Better recognising skills

• The Government is investing $85.2 million to accelerate skills assessments for migrant trades workers and to accelerate occupational licensing, making it faster for them to enter the workforce.
• The Government is also reforming the permanent migration points test to select better educated, higher‑skilled and younger migrants.
• University students with relevant TAFE qualifications will benefit from quicker degrees through a National Credit Recognition Framework.

Unlocking the data and AI opportunity

The Government is providing up to $70 million for ‘AI Accelerator’ grants to boost AI development. It is also advancing use of AI in government, including to accelerate environmental and medicine approvals and make the National Construction Code easier to use.

Investing in science and innovation

The Government is investing $1.5 billion in our research and scientific institutions including:

• CSIRO
• the National Measurement Institute, and
• the Square Kilometre Array.

To maximise value from its innovation investment, the Government is establishing the National Resilience and Science Council to coordinate and align public innovation investments.

The Government has also provisioned $508.5 million to increase disbursements for medical research from the Medical Research Future Fund.

Reducing the regulatory burden

The Government’s productivity reforms will reduce regulatory burden by $10.2 billion each year, boost long‑run GDP by around $13 billion a year, and progress 13 of the 17 reform areas identified by the Productivity Commission’s five pillar inquiries.