More could be done for sustainability in Budget, say industry groups

The Australian Government’s 2026–27 Budget has been released with five main objectives. Get through the global oil shock; provide cost-of-living relief; increase productivity; reform the tax system for workers and first-home buyers; and make the overall budget stronger.

However, many believe what was left off this list, was increasing the country’s growth in sustainability. Industry leaders and environmental organisations have provided strong reviews of Treasurer Jim Chalmers’ Budget after green schemes and future electric vehicle owners took a hit.

Luxury electric vehicle drivers will lose tax exemptions

Electric vehicles (EVs) have become a new staple on Australian roads, with a huge uptake seen in recent years.

The tax exemption through the Electric Car Discount which promoted this EV uptake will be wound down, according to the federal Budget, with EVs worth over $75,000 losing the exemption from April 2027. EVs worth under $75,000 continue to receive the tax exemption until April 2029.

“Polling shows most Australians who bought an EV with the Electric Car Discount wouldn’t have without it, particularly cost-conscious households, blue-collar workers and outer-suburban families,” said NALSPA CEO Rohan Martin. “This budget reflects what Australians want – there is overwhelming support for the government to continue providing financial help for EVs.”

Early reports had stated the government would cut the discount in May’s Budget, so the extra year was celebrated by some industry groups.

Julie Delvecchio, Electric Vehicle Council Chief Executive Officer, said, “The EVC fought hard to retain the Electric Car Discount and we’re glad the government has listened. Keeping the discount [for another year] means more people can continue to access the $3000 annual savings from lower fuel and maintenance bills by switching to an EV. This is real cost-of-living relief, particularly for outer suburban households, where people are driving more and spending more at the bowser.”

Climate Council CEO Amanda McKenzie, however, believes the government could do more.

“People all over the country are clamouring for a broadscale shift to cleaner, more secure solutions like rooftop solar and electric vehicles, which give us control over our own energy. Unfortunately, this Budget leaves too many Australians wanting,” she said.

No new tax on gas exports

Although many expected the government to add a 25% tax hike on the export of gas, the Budget did not announce a new levy, despite estimating that the hike would have raised $17bn for the country annually.

“Taxing gas exports is an effective policy to support essential services and drive the rapid transition to renewables, but the government has misread the mood and missed the moment to do what’s needed,” said David Ritter, CEO of Greenpeace Australia Pacific.

McKenzie’s remarks agreed with this sentiment.

“If the government is serious about intergenerational fairness, the Budget must address not just housing but climate harm landing on young people. We can’t secure young Australians’ futures while expanding coal, oil and gas,” she said.

Green schemes funding axed

The Hydrogen Headstart project will lose government funding as it believes the program was not being adopted as anticipated. This project was providing tax credits for projects producing hydrogen from renewable energy.

Unallocated funding for the Solar Sunshot and Battery Breakthrough Initiative will be withdrawn. Financial savings will be made from other grant schemes, including the Powering the Regions Fund and the National Water Grid Fund.

Blair Palese, founder of Climate Capital Forum and Director of Philanthropy at Ethinvest, said, “In the midst of an energy crisis, this is a budget that has cut $1.3bn from Future Made in Australia, provides nothing to help electrify the freight and transport sectors, [and] creates a cloud of uncertainty with flagged changes to CGT regime for investment in the renewables sector.

“For a world in transition, this budget sends a message that Australia is still stuck in the past — it has missed the opportunity to send a strong signal to clean energy investors that Australia is growing its clean energy commitments and setting the conditions for them to invest in renewable energy projects, jobs and green industrial capability.”

National Environmental Protection Agency to be established

There was a positive win in the Budget for nature — a $500 million package to implement the country’s new nature reforms, including $250 million to establish the National Environmental Protection Agency.

“These laws have the potential to be a game changer for protecting nature and giving greater certainty to business, but their success will depend on sustained investment and strong delivery over time,” said Nicole Forrester, Chief Regenerative Officer, WWF-Australia.

Farmers for Climate Action also welcomed the announcement, with FCA CEO Verity Morgan-Schmidt saying, “We welcome funding for the establishment of the new national Environmental Protection Agency and EPBC implementation, investment in Nature Repair Markets ($36.9m), the commitments to fuel and fertiliser security, and investment in bioregional plans and assessments, alongside the $40m commitment to the rollout of fast EV charging networks and the $1.1bn cleaner fuels program.”

However, Forrester and other environmental groups believe more could be done to improve nature protection.

“This funding is a critical down payment, but it must be followed by ongoing support to ensure the new National Environmental Protection Agency, national standards and data systems are fully operational and effective,” Forrester said.

The Australian Conservation Foundation’s national biodiversity policy advisor, Brendan Sydes, said, “The funding for the new National Environmental Protection Agency is critical to ensure government hits the ground running to get on with the urgent task of improving Australia’s woeful record of enforcing national nature protection laws.

“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.

“There’s no commitment to make sure states and territories strengthen nature protection. If the government is serious about stronger nature protection, it needs to invest in the tools to deliver it — and this budget falls well short.”

Overall, industry and environmental groups see some positive changes to protect and grow the country’s sustainability sector in this year’s Budget, but believe it still falls short in creating long-term change.

“The government could have done much more to expand clean energy and electrification, which can deliver lasting cost of living relief and energy security, while reducing climate pollution,” said Climate Council councillor Nicki Hutley.

Forrester believes the government should invest at least 1% of the Budget in nature.

“Scaling up renewable energy, restoring landscapes and investing in nature-based solutions will reduce energy bills, create regional jobs and build the kind of long-term prosperity that no fuel stockpile can buy.”

For more Budget 2026–27 details, visit the website.

Image credit: iStock.com/RomoloTavani