Treasurer Jim Chalmers has handed down his fifth budget with a major focus on reform and resilience, as well as intergenerational “fairness”.

Jim Chalmers, in his budget speech, says it’s a budget “ambitious in the face of adversity”.

“The core of this budget is an economic strategy, with five main parts getting through the global oil shock and building resilience,” he said.

Chalmers has also forecasted a deficit of $31.5 billion for the 2026-27 financial year. Debt will grow to $982 million, which the treasurer says will decrease each year until 2037.

“The budget deficit next financial year is $2.8 billion lower at $31.5 billion,” he said

Economic growth has been forecasted to fall to 1.75 per cent in the next year.

The Treasurer says the world is facing the fifth economic shock in 20 years, citing the Iran War and closures of the Strait of Hormuz for causing significant economic strain, with Australia not immune to inflationary pressures.

“Australians have been paying a hefty price for this war at the bowser and beyond,” he said.

“We didn’t decide when this war began and have no control over when it will end, but how we respond is up to us,” he added.

He’s also revealed the treasury has estimated the worst-case scenario would see inflation peak to seven per cent by the end of the year. Unemployment could also rise to more than five per cent.

Chalmers has also pledged what he calls a $45 billion improvement to the nation’s finances, as well as a tax offset of $250 for every worker.

The Capital Gains tax discount is set to be replaced with cost-based indexation and a minimum tax rate of 30 per cent, with negative gearing set to be limited to new builds.

As previously announced, there have been significant changes to the NDIS, as the government attempts to cut down on rorting and spending. with $15 billion set to be cut over the next four years. This will see a saving of $37.8 billion in savings.

From July 2028, there will be a 30 per cent tax rate on discretionary trusts.

Federal Treasurer Jim Chalmers has defended the broken promises in what he admits is a ‘contentious’ budget.

“I know that this is contentious. I know that this is not the same policy that we have had in the past, but it’s an important change nonetheless,” he told James Willis on Money News.

He also says there will be a “modest” impact on rents.

Independent economist Saul Eslake says there were no surprises in this budget, but he’s also revealed he supports the major changes to the negative gearing and CGT taxes.

Listen to more highlights from Money News

Image: Hilary Wardhaugh/Getty Images