13 May 2026

 

Federal Budget Signals Stronger Focus on Fuel, Fertiliser and Supply Chain Security

Last night’s Federal Budget included several significant announcements relevant to Australian agriculture, anchored by a major national fuel and fertiliser security package and a suite of tax reforms. For the protected cropping sector, the announcements reinforce the growing recognition of controlled environment agriculture as part of Australia’s long-term food security and sovereign production capability.

 

National Fuel Security Plan – $11.9 Billion

The centrepiece announcement for agriculture is the Government’s $11.9 billion National Fuel Security Plan, designed to strengthen Australia’s ability to secure critical fuel and fertiliser supplies during periods of global instability and supply chain disruption.

 

The package includes:

$7.5 billion for the establishment of a Fuel and Fertiliser Security Facility, providing loans, equity, guarantees, insurance and    price support to increase domestic supply and storage of fuel and fertiliser
$3.2 billion to establish a Government-owned Australian Fuel Security Reserve of approximately one billion litres, increasing    Australia’s critical fuel reserves to 50 days
An uplift to the Minimum Stockholding Obligation (MSO) by approximately 10 days across all fuel types
$10 million for feasibility studies into new or expanded fuel refining capabilities
$1 billion Economic Resilience Program through the National Reconstruction Fund to support freight, fuel, fertiliser and  other  critical supply chains
The Government has confirmed that fertiliser supply is now being treated as a strategic national resilience issue, with work underway with leading fertiliser companies to secure ongoing access to key products including urea and ammonia-based fertilisers.

 

Temporary Fuel Excise Relief

The Budget confirmed the temporary halving of fuel excise, effective from 1 April to 30 June 2026. The reduction equates to approximately 32 cents per litre on petrol and diesel.

Important note for growers: the temporary excise halving also reduces Fuel Tax Credit (FTC) rates by a corresponding amount. Businesses claiming FTCs for off-road diesel use (e.g. farm machinery) should speak with their accountant about how this affects their claims during the relief period.

Interest-free loans are also available to manufacturing and logistics businesses impacted by elevated fuel costs – relevant for packhouses, cold chain and transport operators in the supply chain.

 

Small Business Tax Measures

The Budget included several measures aimed at easing pressure on small businesses:

The $20,000 Instant Asset Write-Off has been made permanent from 1 July 2026, for businesses with aggregated turnover of less than $10 million. This removes the annual uncertainty of temporary extensions and provides long-term certainty for investment in equipment, technology and infrastructure.

A new two-year loss carry-back regime has been reintroduced for companies with turnover up to $1 billion, from 1 July 2026.

A $1,000 instant tax deduction for work-related expenses (no receipts required) from the 2026–27 income year.

 

Tax Reforms – What Growers Need to Know

The Budget included major tax reforms that are directly relevant to farming families and agribusinesses:

  • Discretionary Trust Minimum Tax
    A new 30% minimum tax on discretionary trusts will apply from 1 July 2028. Importantly, an exemption for primary production income has been confirmed. This is a positive outcome for farming families who distribute income through family trusts, but growers should seek advice on how the changes may affect their broader structures.
  • Capital Gains Tax (CGT) Overhaul
    The 50% CGT discount has been replaced with a new inflation-indexation model from 1 July 2027. A 30% minimum tax on real capital gains will also apply. Notably, pre-1985 (pre-CGT) assets — including farmland held before 20 September 1985 — will now be subject to CGT on gains accruing from 1 July 2027. No carve-out for farmland was announced. Small business CGT concessions remain in place.
  • Negative Gearing Changes
    Negative gearing for residential investment properties will be restricted to new builds from 1 July 2027. Properties purchased before Budget night (7:30pm AEST, 12 May 2026) are fully grandfathered. While primarily a residential property measure, members with commercial investment properties should seek advice.
  • Agriculture Portfolio – Funding Concerns
    The Budget delivered limited new agriculture-specific measures. The Government will provide $77.1 million over four years to sustain export and trade functions. However, nearly $200 million will be cut over five years from agriculture, fisheries and forestry programs, including reductions to Pest and Disease Preparedness and Response Programs. The National Farmers’ Federation has raised concerns about the scale of these cuts, particularly given the ongoing biosecurity threats facing Australian agriculture.

 

What This Means for Protected Cropping

While the Budget does not include direct fertiliser subsidies or broad-based input cost relief for growers, the fuel and fertiliser security measures are intended to improve medium and long-term supply certainty. The trust tax exemption for primary production income is a positive outcome for the sector.

For the protected cropping industry, the broader policy direction – toward sovereign capability, domestic food production resilience, secure supply chains and strategic agricultural infrastructure – aligns with long-standing sector priorities around food security, production reliability, resource efficiency and national supply capability.

 

PCA will continue monitoring the detail of these announcements and advocating for practical measures that support growers, suppliers and the long-term sustainability of Australia’s protected cropping sector.

 

IMPORTANT DISCLAIMER

This announcement is provided for general information purposes only and does not constitute financial, tax, legal or investment advice. Members should seek independent professional advice from their accountant, financial adviser or legal counsel regarding the specific implications of any Budget measures for their individual circumstances. Protected Cropping Australia (PCA) does not accept any liability for decisions made based on the information contained in this announcement.

 

 

Further Information and Resources

Members seeking more detail on the Budget announcements can access the following: