Every Federal Budget is about more than dollars and cents. It is a statement of national priorities. It reflects the choices governments make about how resources are shared, whose needs receive attention and what kind of society Australia hopes to become.

For the St Vincent de Paul Society, the measure of every Budget begins with the dignity of the human person. Catholic Social Teaching reminds us that economic policy exists to serve the common good, especially those who experience disadvantage. The Society’s advocacy is similarly grounded in the experiences of the people we meet every day through emergency relief, housing services, financial assistance and local community support. These encounters reveal both the immediate pressures facing Australians and the structural barriers that keep many people trapped in hardship.

Viewed through this lens, the 2026 Federal Budget presents an interesting shift in direction. Earlier budgets under an Albanese Government concentrated on easing immediate cost-of-living pressures through measures such as energy bill relief, cheaper medicines and increases to rent assistance. The 2026 Budget places greater emphasis on structural reform, particularly through changes to Australia’s taxation system. While many of the financial impacts will emerge gradually, these reforms have the potential to reshape housing affordability, intergenerational equity and the distribution of wealth over the coming decades.

Structural reform begins with tax

Taxation rarely dominates public discussion of Federal Budgets. Yet tax policy shapes many of Australia’s most significant social outcomes. It determines how governments raise revenue, how economic incentives operate and how opportunities are distributed across society.

The Society has consistently argued that Australia’s tax system should be progressive, equitable and capable of funding the public services that strengthen communities. Importantly, it should be underpinned by a central tenet of Catholic Social Teaching, the common good, which encompasses the well-being of all members of society and emphasises that individual rights must be balanced with the needs of the community.

In its Towards a Fairer Australia policy platform, the Society called for reforms to negative gearing, the capital gains tax discount and discretionary trusts as part of a broader strategy to improve housing affordability and strengthen the integrity of the tax system. The 2026 Budget delivers substantial progress in each of these areas.

These reforms matter because Australia’s housing affordability challenge extends beyond the simple question of how many homes are built. Increasing housing supply remains essential, particularly social and affordable housing, and governments at every level have an important role in supporting new construction. At the same time, demand-side settings also shape housing outcomes. Tax concessions influence investment decisions, house prices and the ability of first home buyers to compete in the market.

The Parliamentary Budget Office has estimated that tax concessions associated with negative gearing and the capital gains tax discount cost the Commonwealth around $15.4 billion in 2025–26. Treasury data also shows that around 82 per cent of the benefits from the capital gains tax discount flow to the highest-income 10 per cent of taxpayers. These figures illustrate why tax reform has become an increasingly important component of housing policy as well as fiscal policy.

Recent analysis submitted to the Senate Select Committee on Intergenerational Housing Inequity also challenges several common assumptions about Australia’s housing crisis. While increasing housing supply remains vital, the evidence suggests supply alone cannot explain the deterioration in affordability. Over the past decade Australia’s dwelling stock increased by 19 per cent while the population grew by 16 per cent. Across the 20 years from 2001 to 2021, dwelling numbers increased by 39 per cent compared with population growth of 33 per cent. However, during this same period tax settings continued to encourage investment in existing housing, contributing to stronger investor demand and intensifying competition for first home buyers. House prices, which had broadly tracked household incomes before 2000, subsequently accelerated much more rapidly than incomes. Whether one accepts every conclusion of the analysis or not, it reinforces an important point: housing affordability requires attention to both supply and the incentives created by public policy.

The Budget’s reforms therefore represent more than technical tax adjustments. They seek to redirect investment towards new housing, moderate speculative demand for existing dwellings, and improve opportunities for future generations to enter the housing market. From the Society’s perspective, these changes reflect an important principle: housing should first and foremost provide security, stability and belonging.

The Society also welcomes recent amendments to the tax reform bill currently before Parliament which provide clarity to investors, concessions for small businesses and incentives for innovation.

Following the distribution of the Budget

One of the most interesting analyses of the Budget comes from Associate Professor Ben Phillips and the ANU Centre for Social Policy Research. Using microsimulation modelling, Phillips examined how the Budget affects households across different income groups, wealth levels and age cohorts.

The modelling suggests that the Budget’s immediate financial impacts are relatively modest for most Australians. The largest reductions in disposable income fall on highwealth households, while younger households receive the greatest average gains. Looking solely at the 2026 Budget therefore tells only part of the story.

When the cumulative effect of all Albanese Government budgets from 2022 to 2026 is considered, a clearer pattern emerges. Low- and middle-income households generally experience positive outcomes, while households reliant on JobSeeker receive the largest estimated gains—around $2,800 per year compared with the 2022 policy settings. These improvements largely reflect earlier increases to working-age payments, Commonwealth Rent Assistance and childcare support. Overall, the modelling concludes that the Government’s policy direction has gradually shifted disposable income towards lower-income households while maintaining only modest fiscal costs.

And while we have seen improvements for low- and middle-income households, the Economic Inclusion Advisory Committee has consistently recommended that working age payments be increased to 90% of the Age Pension, as a priority, to maintain a decent standard of living while people look for work.

This perspective is important because it reminds us that structural reform often unfolds over several budgets rather than a single financial year. Judging any Budget in isolation provides only a partial understanding of its long-term impact.

Progress alongside continuing challenges

The Society welcomed several additional measures announced in the Budget. Continued investment in Medicare, public hospitals and the Pharmaceutical Benefits Scheme strengthens universal access to healthcare. Funding for youth housing initiatives and reforms to employment services recognise the importance of stable housing and meaningful work in breaking cycles of disadvantage. Improvements to child support arrangements also strengthen financial security for many families.

At the same time, the Society’s frontline experience reminds us that many Australians continue to face severe financial pressure.

The Budget does not include an increase to the base rate of JobSeeker or Youth Allowance, additional Commonwealth Rent Assistance, new funding for homelessness services or an increase to the Remote Area Allowance. These remain central advocacy priorities for the Society because income adequacy shapes every aspect of daily life. The ability to pay rent, purchase nutritious food, maintain stable employment and participate in community life depends fundamentally upon having enough income to live a decent life.

This distinction highlights an important feature of the 2026 Budget. Structural reforms improve the fairness of Australia’s economic institutions over the long term. Income support determines whether people experiencing hardship can meet today’s essential needs. Building a fairer Australia ultimately requires progress in both areas.

Australia’s humanitarian responsibility

The Budget also illustrates the continuing tension between humanitarian protection and border management.

The Society welcomes continued funding for the Economic Pathways to Refugee Integration program, which has supported refugees to secure sustainable employment, alongside increased investment in multicultural programs and overseas humanitarian assistance. These measures strengthen social inclusion and recognise the contribution refugees make to Australian society.

However, the broader funding profile presents a more complex picture. Australia’s Humanitarian Program remains at 20,000 places despite record levels of global displacement. Spending on Refugee, Humanitarian, Settlement and Migrant Services is projected to decline over the forward estimates, while total expenditure on offshore processing since 2012 will reach approximately $13.35 billion. These figures invite continued reflection on how Australia balances border management with its humanitarian responsibilities and long-standing commitment to refugee protection.

Looking beyond one Budget

Blessed Frédéric Ozanam encouraged Members of the Society to study “the injustices which brought about such poverty, with the aim of a long-term improvement”. That insight remains just as relevant today.

The 2026 Federal Budget demonstrates that structural reform can play an important role in building a fairer Australia. Tax policy, housing affordability and intergenerational equity all shape the opportunities available to future generations. The Budget also reminds us that structural reform and social protection are complementary rather than competing priorities. Fair taxation creates the capacity to invest in stronger public services, while adequate income support ensures that people experiencing hardship share in Australia’s prosperity today.

The Society’s advocacy has always extended beyond responding to immediate need. It seeks to address the policies and systems that create disadvantage in the first place. The 2026 Budget represents meaningful progress in several of those structural areas. It also provides a timely reminder that the work of building a fairer Australia continues well beyond any single Budget night. 

Visit vinnies.link/advocacy-tjca to read ‘Towards a Just and Compassionate Australia’ which brings together the Society’s national policy papers on the key social and economic challenges facing Australia today.