Portfolio — 19 March 2026

The Treasurer, Dr Chalmers, addressed the Australian Business Economists on 19 March, framing the May Budget around two forces: the Middle East conflict's oil shock and a structural reassessment of Australia's productive capacity. Treasury modelling indicates the oil shock could cut GDP growth by up to 0.2 percentage points across major trading partners and push headline inflation to peak in the high 4s [TA-260319-treasu-0a14936e660d].

Treasury has also revised its output gap assessment, concluding that economic slack has closed and that productivity convergence to trend will take closer to five years rather than two — a shift that moves Budget strategy toward a supply-side focus [TA-260319-treasu-0a14936e660d].

**Three reform packages**

The government is designing three reform packages — savings, productivity and investment, and tax — to expand capacity, lift potential growth, and deliver higher wages without adding to price pressures [TA-260319-treasu-0a14936e660d]. The Treasurer confirmed all non-appropriation Budget measures will be bundled into a single omnibus bill [TA-260319-treasu-99a142775bb9].

Dr Chalmers stated the government is considering the Productivity Commission's self-funding company tax reform model to spur a conversation on fiscally sustainable tax relief [TA-260319-treasu-99a142775bb9].

**Spending constraints and sectoral signals**

The Treasurer emphasised that fiscal constraints require sustainable spending on priority areas including aged care, the NDIS, and hospital funding [TA-260319-treasu-99a142775bb9]. On artificial intelligence, Dr Chalmers said the government's role is to provide leadership on copyright and security issues rather than lead massive direct investment, noting that private sector data centre spending is already rebounding [TA-260319-treasu-99a142775bb9].

Urgent work is underway on fuel security initiatives, with further announcements expected from the Prime Minister and the Minister for Energy before the 12 May Budget release date [TA-260319-treasu-99a142775bb9].

**Cabinet timing and equity framing**

Dr Chalmers affirmed that Cabinet shares an ambition for economic reform to navigate economic shocks, with most budget decisions to be finalised in April to account for global volatility [TA-260319-treasu-99a142775bb9]. The Treasurer linked social cohesion and intergenerational equity to economic policy, citing the recent reform to superannuation tax concessions and the low-income super tax offset as examples of difficult but necessary decisions [TA-260319-treasu-99a142775bb9].