Federal Budget 2026–27: What It Means for the Infrastructure Sector

Tahnia Miller
May 27
4 min read

While much of the attention has focused on tax changes and cost-of-living relief, there are several measures that have a direct impact on Australia’s infrastructure, transport and energy sectors.

The 2026-27 Budget highlights that productivity, supply chain resilience and long-term investment remain national priorities.

Fuel Security and Freight

One of the biggest headline items is the Government’s $14.8 billion fuel security package. The plan includes $10 billion for immediate fuel supplies and a permanent Australian Fuel Security Reserve, alongside $1.1 billion for cleaner fuels and support for EV infrastructure.

The Budget also includes incentives to move more freight onto rail and sea networks, reinforcing the long-term role of rail in reducing congestion, emissions and fuel dependency.

Housing and Infrastructure Delivery

Housing affordability remains a major focus, with the Government attempting to improve access for first home buyers while increasing housing supply.

The Budget includes $2 billion for roads, power and drainage infrastructure to help unlock new housing developments, alongside support for around 65,000 new homes over the next decade and a broader $47 billion housing investment pipeline. Compared to the scale of Australia’s housing shortage, funding is relatively modest, prompting the question of whether it’s really enough in the face of a growing population.

The housing measures also align closely with the Government’s broader tax reforms, including changes to negative gearing and capital gains tax settings aimed at shifting investment toward new housing supply rather than existing properties.

Skills, Training and Workforce Development

Another major focus is workforce capability, with the Government positioning skills and training as a national economic priority.

The Government will provide $2.9 billion for state skills and workforce development services, including $2.6 billion through the National Skills Agreement and a further $294 million in targeted partnership funding, but with skills shortages increasing, we wonder if it’s enough to support the industry.

The Budget also continues Fee-Free TAFE, with funding for at least 100,000 free TAFE and VET places annually from 2027.

For infrastructure and construction employers, one of the more relevant initiatives is the Advanced Entry Trades Training Program, which aims to help experienced but unqualified workers in housing and civil construction gain nationally recognised qualifications faster through recognition of prior learning and gap training.

Clean energy workforce development is also a major priority, with funding directed toward training facilities for wind, solar, hydrogen, battery storage and electrical trades.

The National Training Centre in New Energy Skills is expected to upskill more than 2,000 tradespeople annually, while Mobile TAFE and the TAFE Technology Fund aim to improve training access in regional and remote communities.

There are also significant changes to apprenticeship incentives from 1 January 2027. The Key Apprenticeship Program Employer Incentive will reduce from up to $5,000 to $4,000 per apprentice, while employers with 200 or more employees will no longer be eligible for the payment, except for Group Training Organisations.

The same eligibility changes will apply to the Priority Hiring Incentive, although the payment will remain at up to $2,500.

While the Government is clearly prioritising direct support for apprentices and training pathways, some industry groups question whether reducing employer incentives for larger businesses risks slowing long-term workforce development. Major contractors, infrastructure companies and large employers often deliver apprenticeships at scale, and any reduction in support could potentially impact apprenticeship intake numbers over time.

At the same time, the Government is maintaining strong direct support for apprentices themselves. Eligible apprentices working in housing construction and clean energy pathways can still access up to $10,000 over the life of their apprenticeship, alongside interest-free support loans of up to $25,983 and Living Away From Home Allowance payments of up to $120 per week in the first year.

Productivity and Faster Approvals

Productivity was another major focus. Treasurer Jim Chalmers described the package as the broadest productivity reform agenda since the 1990s, with measures aimed at reducing regulation, streamlining approvals and cutting red tape.

Measures include reducing regulatory costs by $10.2 billion annually, financial sector red tape reductions worth $780 million per year and reforms expected to boost GDP by $13 billion through updated National Competition Policy settings.

For infrastructure and engineering businesses, faster approvals and simplified processes could help accelerate project delivery timelines, particularly in sectors like renewables and major transport projects where lengthy approvals often create delays.

Tax Incentives for Business

The Budget also includes more than $3.5 billion in business tax measures, including permanent instant asset write-offs for small businesses, expanded venture capital incentives and improved R&D tax targeting.

Other measures include a permanent two-year loss carry-back for companies with turnover up to $1 billion, support for start-up loss refundability and a new $1,000 instant deduction for workers.

These initiatives may provide a boost for contractors, start-ups and technology-driven businesses operating in the infrastructure and energy space.

AI, Innovation and Technology

Technology and innovation also featured prominently, with further investment in AI commercialisation, science and digital government services.

Funding commitments include ongoing investment in the CSIRO, the Square Kilometre Array and measures designed to improve skills recognition and workforce mobility.

While still developing, AI is increasingly becoming part of infrastructure planning, asset management and project delivery, particularly across transport and utilities.

Defence Spending and Industry Flow-On Effects

Defence spending was another standout, with an additional $53 billion committed over the next decade, alongside almost $800 million in support for veterans.

Historically, major defence investment has had a flow-on effect across engineering, construction and manufacturing supply chains, particularly in Queensland, South Australia and Western Australia.

The veteran support measures as an important inclusion in the Budget. The long-term wellbeing, transition and support of Defence personnel should remain a national priority, and continued investment in veteran services is something we strongly support.