Australia Macro+: FY27 Budget: Changing Of The Guard

Research evidence excerpt

Australia Macro+: FY27 Budget: Changing Of The Guard

IdeaM

Macro and Market Implications

Change Delivered: In our 2026 Outlook we called out Fiscal Evolution as a key

theme for investors to focus and stay abreast of. The Treasurer's continued

acknowledgement of productivity lags, the necessity of certain structural spend

and growing public angst around intergenerational inequity, in our view, was

setting the stage for a larger reform agenda to be ultimately embraced. Throw in a

global energy shock that exposed meaningful domestic vulnerabilities and change

was coming and the Federal Budget just announced delivered a meaningful version

of such.

Revenue Raising - A Wealth of Options: Under the broad narrative of Tax reform,

the most market sensitive areas of this Budget will likely be linked to the change

proposed for CGT, Negative Gearing and broad wealth distribution. Whilst partially

grandfathered in terms of implementation, the impacts in our view will be

meaningful. There are now two classes of property investor with very different

cash flow impacts and post tax return profiles. This should raise debate on

transactional velocity and future credit demand within the sector and also given

the still attractive post tax benefits of Superannuation - a looming asset allocation

decision. This should also link to the advice sector with meaningful restructuring of

vehicles ahead of transition cliffs.

NDIS - Seeking Containment: Much focus on this budget was whether the broad

spending and deficit profile would be contained sufficiently in order to avoid

undue influence to already hawkish monetary policy settings. On aggregate

forecasts this would seem to have been achieved. The wrinkle however is that the