Every year, advocates, lobbyists and journalists descend on Canberra for the federal budget. It is both a major policy moment for any government and a theatrical event; an opportunity for Australia’s government to articulate its vision for our nation.

ACF was at the budget lock up and in Parliament this week. Our focus? Understanding not only the national narrative the Albanese government is trying to tell with this budget, but what it means for a safe climate and thriving nature.

The budget narrative was understandably dominated by the liquid fossil fuel crisis (think diesel and petrol) created by the Iran War. Major new subsidies for petrol and diesel provide temporary relief at the bowser but do so by redirecting public funds into the pockets of coal, gas and oil giants. This is an enduring transfer of wealth to fossil fuel corporates, at the expense of ordinary Australians.

While the budget contained commendable reforms for Australia’s broader tax system, we were alarmed by how little our federal government intends to invest in protecting nature and climate. Here’s our full budget wrap below.

What’s in the budget for climate action?

Since the Albanese government was elected in 2022, it has invested significantly in climate action and modestly in nature protection. However, new climate and nature protection funding hit new lows in the 2026-2027 budget.

Some of the highlights include embedding the successful Cheaper Home Batteries Program into the forward estimates, providing certainty that Australian households can continue to access rebates for home batteries until at least 2030. This represents a $7.2bn investment in household renewables. The federal government has also committed $500m for the Active Transport Fund, to work with States and Territories to accelerate the rollout of bike lanes and other active transport infrastructure.

ACF also cautiously welcomes the Albanese government’s commitment to “introduce a market measure” to drive demand for low carbon liquid fuels like renewable diesel, sustainable aviation fuel and in niche cases, biogas. If we are to avoid another fuel crunch, we must accelerate the electrification of transport, and where electric options are unavailable, transition to low carbon liquid fuels.

What’s in it for nature protection?

There’s a strong emphasis on implementation of national nature law reforms, a high priority for ACF, but the story here is complex.

Based on the budget papers and announcements by the PM in the lead up to budget night, you’d be forgiven for thinking implementing reforms to the EPBC Act is all about fast tracking approvals. Important reforms like the new National Environmental Protection Agency, due to commence operations on 1 July, are pushed aside by the emphasis on streamlining and fast tracking approvals.

As we pointed out in our media response to the budget, the investment in Australia’s new environmental watchdog is overshadowed by $153.5m to fast-track approvals and streamline state and territory assessments and approvals. This is far cry from the nature protection the government promised, and is much needed to reverse the decline of Australia's natural environment.

But there are some good funding announcements that align with our campaign demands.

National Environment Protection Agency (NEPA) funding ($250m over two years) includes increased capacity to make sure NEPA can start work on turning around the longstanding failure to enforce the law – an important part of addressing Australia’s agricultural deforestation problem. We understand there’s scope for some of the funds for implementation to be used to support farmers to comply with the laws – which is much needed.

There’s also some good news with the continuation of funding ($110.8m) for the Protecting Native Species program for another two years. But increased, longer term funding is needed across the board if the government is serious about halting and reversing nature decline and its promise of zero new extinctions.

A bigger public handout to coal, oil and gas giants at the expense of nature and climate protection funding

However, counterbalancing modest new investment in climate and nature are significant cuts to nature and climate programs, including:

A headline cut of $2.2bn from programs administered by the Climate Change, Environment, Energy and Water Department; and
Changes to the electric vehicle fringe benefits tax exemption which reduces total government support for electric vehicles by $1.7bn to 2030.

While nature and climate protection was cut, public handouts to big coal, oil and gas are set to increase significantly under this budget.

At least $13.6bn of the Albanese government’s Strengthening Australia’s Fuel Resilience Package represents thinly veiled fossil fuel subsidies, including $10.7bn for fossil fuel and fertiliser stockholding and $10m to subsidise feasibility studies for new oil refineries. The notorious Fuel Tax Credit scheme is also expected to grow over the forward estimates, providing a $46.2bn handout and allowing multinational mining giants like BHP and Glencore to get their diesel tax-free.

The Albanese government has retained the $1.9bn subsidy for the proposed Middle Arm Gas Precinct in Darwin, instead of redirecting those funds to supporting immediate cost of living relief for people in the NT.

Against this backdrop of fossil fuel corporate welfare, the Albanese government did not respond to strong community campaign for a 25% tax on gas exports. Instead the government capitulated to Big Gas and kept the broken Petroleum Resource Rent Tax (PRRT) in place.

The budget estimates the PRRT will generate just $1.4bn in revenue for 2025-2026 – equivalent to around 50 days of federal government payments to big miners under the Fuel Tax Credit subsidy.

Authored by:

Brendan Sydes

National Biodiversity Policy Adviser, ACF

Annika Reynolds

National Climate Policy Adviser, ACF