2026-27 Federal Budget Wrap

A number of important announcements align closely with ATSE's recommendations to parliamentary inquiries over recent years. Across ATSE's priority areas and key portfolios, the article below outlines some of the more significant announcements to note.

Alignment with ATSE recommendations

• The R&D Tax Incentive will undergo significant reform as recommended by ATSE’s submission to the Strategic Examination of Research and Development, including:
  • Increasing the offset for core expenditure through a 4.5 percentage point increase in core offset rates.
  • Reducing the intensity threshold from 2% to 1.5%.
  • Removing eligibility of supporting R&D expenditure.
  • Turnover threshold for the refundable offset raised from $20 to $50 million.
  • Lifting the maximum threshold for R&DTI expenditure to $200 million from $150 million.
  • Raising the minimum expenditure threshold from $20,000 to $50,000 and allowing firms below that threshold to claim if they have worked with a Research Service Provider or CRC.
• Funding will be increased for CSIRO ($387.4 million over 4 years) and for the National Measurement Institute ($273 million over four years), aligned with ATSE’s submission to the inquiry into funding and resourcing for the CSIRO.
• Unspecified funding has been allocated for Australia’s association to Horizon Europe in line with ATSE’s submission to the Strategic Examination of Research and Development.
• $97.2 million over five years from 2025–26 will be provided to continue implementing the National Consumer Energy Resources Roadmap aligned with ATSE’s Power to the People explainer and ATSE’s submission to the Electricity and Energy Sector Plan.
• An additional $2.5 billion will be invested in higher education over the next 10 years, through the implementation of new Managed Growth Funding and Needs-based Funding systems, ensuring more students can access, participate and succeed in higher education. This aligns with ATSE’s submission to the Australian Universities Accord.
• The Government is investing $173.3 million to support the critical mineral industry in alignment with ATSE’s submission to the Inquiry into WA decarbonisation.
• $15.9 million will be invested over four years to uplift the Australian Energy Regulator’s capacity. This is aligned with ATSE’s submission to the 2026 AEMO Integrated System Plan.
• $15.4 million over four years will be reallocated to expand the scope of the Dealership and Repairer Initiative for Vehicle Electrification Nationally program and extend the program by an additional year to better meet industry needs – Aligned with ATSE’s submission to the National EV strategy.
• Additional funding of $17 million will be provided in 2026–27 to continue delivery of the Government’s circular economy policy, program and legislative functions, and $24 million for solar panel recycling aligned with ATSE’s Waste Free Future report.
• $5.5 million in 2026-27 to support critical elements of the Australian Carbon Credit Unit Scheme. These include key measures recommended by the Chubb Review, aligned to ATSE’s submission to the ACCU scheme review.
• $1.9 million in 2026–27 for the National Freight Data Hub to continue to capture, standardise and provide accessible freight data, in alignment with ATSE’s Decarbonising Diesel Industries report.

Industry, Science and Resources

• The Government will establish a National Resilience and Science Council to advise on Research, Development and Innovation objectives, priorities and performance and improve coordination of government R&D and industry initiatives.
• Additional unspecified funding has been allocated for the Square Kilometre Array.
• $100 million will be spent on Scitech (WA) and $2.8 million for the Questacon Travelling Exhibits (ACT).
• The Government will establish a critical minerals reserve.
• $166.2 million over 5 years will be cut from uncommitted grant funding in DISR.
• $105 million will be cut from the Industry Growth Program over the next 5 years.
• The Government will establish an east coast gas reservation policy.
• $21.7 million over two years will be allocated to support the Australian Space Agency.

Education

• $5.9 million was allocated to further support for STEM schools programs including $1.8 million to AAS STEM school programs, $1.5 million to The Smith Family’s Let’s Count program, $1.2 million to CSIRO STEM professionals in schools, $0.7 million to Curious Minds, $0.7 million to Little Scientists program.
• There will be no additional funding for Elevate in 2026-27, resulting in the number for scholarships available for 2027 falling considerably.
• No new research projects will be funded through Australia’s Economic Accelerator (AEA) beyond the 2025-26 financial year.
• $113 million was allocated for a range of programs to support First Nations students’ education and help students thrive academically and culturally.
• Government will provide $5.6 million over two years to undertake exploratory work with states and territories on options to establish a new Teaching and Learning Commission. The proposal aims to consolidate and streamline the responsibilities of four existing agencies – Australian Curriculum, Assessment and Reporting Authority; Australian Institute for Teaching and School Leadership; Australian Education Research Organisation and Education Services Australia – into a single Commission.
• The Government will introduce a levy on all higher education providers registered with the Tertiary Education Quality and Standards Agency to fund the National Student Ombudsman.
• The Government will provide $9.4 million over four years (and $1.9 million per year after that) to allow the Tertiary Education Quality and Standards Agency (TEQSA) to have stronger public interest enforcement and monitoring powers.

Climate Change, Energy, the Environment and Water

• The Government will establish a National Environmental Protection Agency.
• $1.3 billion over ten years will be cut from 2026–27 to 2038-39 as part of the Future Made in Australia – Making Australia a Renewable Energy Superpower program, by reducing uncommitted funding under the Battery Breakthrough Initiative and Solar Sunshot programs, and reducing funding available for Round 2 of Hydrogen Headstart to $1 billion.
• $105.9 million will be provided over four years for DCCEEW and NEPA to modernise environmental information, data and digital systems (including through AI) intended to speed up environmental approvals.
• $47.6 million over 4 years will be spent enabling states to do environmental assessments and approvals on the Commonwealth’s behalf.
• $26.4 million is allocated over four years for DCCEEW and NEPA to develop new bioregional plans and strategic assessments with states to fast‑track environmental approvals in priority areas (housing, critical minerals and renewable energy).
• $6.9 million has been allocated in 2026-27 to extend the Murray Darling Basin Aboriginal Water Entitlements Program and support the Closing the Gap Inland Waters Target.

Agriculture, Fisheries and Forestry

• $104.6 million over five years has been pulled from uncommitted funding in grant programs, including pest disease preparedness and response, emissions reduction in the agriculture and land sectors, and other programs.

Health and Aged Care

• $13.6 million will be provided over five years from 2026–27 to monitor health system performance and improve data sharing with the states and territories.
• Government will provide $210.6 million over eight years from 2025–26 to fast track the delivery of new national digital health infrastructure
• $40.1 million will be invested to establish a Motor Neurone Disease Clinical Network to accelerate clinical trials.
• $15.8 million will be spent to continue the National One Stop Shop for clinical trial and human research approvals.

Foreign Affairs and Trade

• The Government will provide $25.3 million over four years from 2026–27 for the next phase of the India Australia Comprehensive Strategic Partnership, including $14.4 million over four years for the Maitri Grants program and Fellowships program, and $1.5 million over four years to support business engagement with India.
• The Government will also provide $550 million over ten years to support high quality, climate resilient infrastructure in the Pacific and Timor Leste through the Australian Infrastructure Financing Facility for the Pacific.
• $10.8 million over four years will be invested to support implementation of the Singapore Australia Green Economy Agreement.

Home Affairs

• $19.8 million will be spent over four years from 2026–27 for enhanced scrutiny of onshore and offshore student visa applications.
• $85.2 million over four years from 2026–27 to the Department of Employment and Workplace Relations for better recognition of migrant skills through faster, more flexible skills assessments.

Infrastructure, Transport, Regional Development, Communications and the Arts

• $3.6 million over two years has been allocated to continue the Real World Testing program to conduct on-road emissions and fuel consumption testing of light vehicles sold in Australia.

Budget in Reply

The Budget in Reply, delivered by the Leader of the Opposition, the Hon Angus Taylor MP, focused on taxation, energy and migration policies. While the speech primarily concentrated on social issues and taxation, there are important implications of his speech for Australia’s clean energy transition.

The plan to extend the lives of existing power plants runs contrary to established climate science and the proposed abolition of the Safeguard Mechanism would also undo significant progress on emissions reduction, with covered emissions falling by 2.4% in 2024-25 for covered sites. ATSE believes that accelerating the decarbonisation of Australia’s energy systems will enable a globally competitive net-zero economy.

ATSE continues to support the continued approach to lift the ban on nuclear power but not at the expense of building our renewable energy capacity now. A technology neutral approach that doesn’t not ban potential sources of low emission technology and allows market forces to determine the best energy solution should be adopted.

ATSE also supports the proposed support to produce biofuels locally, which can not only boost our liquid fuel stores, but can also help to reduce the emissions intensity of vehicles reliant on liquid fuels.

While research and innovation were absent from the Opposition Leader’s speech, ATSE calls for a bipartisan approach to reforming the science and research sector. This includes the changes to the R&D Tax Incentive announced in the Budget and changes to scientific advice (through the new Resilience and Science Council).