Introduction

The Federal Government's 2026–27 Budget highlights the ongoing contribution of Australia's energy sector to the national economy. Higher oil prices, increased production volumes and strong LNG exports have contributed to stronger government revenue forecasts.

Several measures announced in the Budget may impact businesses across the resources, manufacturing, transport and logistics sectors.

‍

Budget Overview and Priorities

The Budget forecasts an underlying cash deficit of $31.5 billion in 2026–27. Despite ongoing deficits, Australia's energy exports continue to provide a significant contribution to government revenues.

Key highlights include:

• An underlying cash deficit of $31.5 billion in 2026–27, with projected deficits of $122.2 billion over the next four years.
• No adverse tax changes targeting Australia's oil and gas industry.
• PRRT receipts revised upwards by $1.6 billion over five years due to higher oil prices and production volumes.
• Company tax receipts revised upwards by $4.3 billion, supported by stronger commodity prices, including LNG exports.
• Higher energy export prices are expected to increase company income tax receipts by $19 billion over the forward estimates.
• Continued political scrutiny of industry tax contributions is expected as structural budget deficits remain forecast into the mid-2030s.

‍

Petroleum Resource Rent Tax (PRRT)

The Budget identifies PRRT reforms as a key tax achievement. Treasury forecasts stronger revenue collections due to higher oil prices and production levels.

Key measures include:

• PRRT receipts increasing by $400 million in 2026–27.
• PRRT receipts increasing by $1.6 billion between 2025–26 and 2029–30.
• Growth driven by higher oil prices and increased production volumes.
• Oil price forecasts averaging around US$100 per barrel during the June quarter of 2026 before easing to approximately US$80 per barrel by mid-2027.

‍

Domestic Gas Reservation and Offshore Consultation

The Government has confirmed plans for a Domestic Gas Reservation Scheme from 1 July 2027. The initiative is designed to increase local supply and strengthen energy security.

The scheme aims to:

• Increase domestic gas supply.
• Improve energy security.
• Reduce exposure to international market volatility.
• Apply downward pressure on domestic gas prices.

Government funding includes:

• $30.6 million for implementation and energy security initiatives.
• $4.9 million to modernise offshore resources regulation and support gas investment.
• Funding across key government departments and regulators.

‍

Fuel Security

The Budget commits $14.8 billion towards strengthening Australia's fuel security and supply chain resilience. The package focuses on fuel storage, supply and critical infrastructure.

Key investments include:

• $7.5 billion to support fuel and fertiliser supply and storage.
• $3.2 billion to establish a government-owned Australian Fuel Security Reserve.
• $2.9 billion to reduce fuel excise and eliminate the heavy vehicle road user charge for three months.
• $1 billion in interest-free loans for manufacturing and logistics businesses in critical supply chains.
• Additional support for Australia's refining sector and future refining capacity studies.

‍

‍

‍

This article is based on the 2026–27 Federal Budget summary and analysis published by Australian Energy Producers.

Dr Matt Steen
Principal Advisor – Economic Policy
Australian Energy Producers