Focus on Emissions Funding and Energy Transition
On 13th May 2026, the Federal Budget drew criticism for lacking significant changes in fossil fuel taxation, despite global and domestic energy challenges.
The budget redirects $1.3 billion over ten years from the $19.7 billion Future Made in Australia (FMIA) programme and cuts $1.9 billion from the Hydrogen Headstart initiative. New commitments for renewable energy ambitions were overshadowed by these cuts.
However, $12.3 billion is allocated over the forward estimates for net zero transformation, combining the December 2025 MYEFO figures with the current budget. This is misleading since $2.5 billion in cuts to emissions programmes are not included in this figure.
Missed Opportunities in Tax Reform
Fossil fuel tax reform was a major missed opportunity. A proposed 25% gas exports levy, which could have generated $17 billion annually, was not implemented. The Petroleum Resource Rent Tax (PRRT) remains unchanged, projected to yield only $1.6 billion per annum over four years.
Tim Buckley, director of Climate Energy Finance, stated, “This budget reflects the many competing needs facing Australians, and the challenge of addressing decades of systemic privilege that has locked in intergenerational inequity into our tax system.” He highlighted the need for greater spending and tax reform.
Blair Palese, founder of Climate Capital Forum, criticised the budget for cutting $1.3 billion from FMIA and ignoring support for the electrification of the transport sector. “For a world in transition, this budget sends a message that Australia is still stuck in the past,” she said.
Critics argue that the budget’s inaction on fossil fuel tax reform means continued reliance on imported diesel. The introduction of a $7.5 billion Fossil Fuel and Fertiliser Security Facility and a $3.2 billion Fuel Reserve are seen as measures that maintain dependency rather than promote energy independence.
The government struggles to balance emissions funding with necessary tax reforms. A major financial update expected later this year may address some of these concerns.
Last updated: 29 June 2026, 12:10 pm
