Mid-Year Budget Update Projects $36.8 Billion Deficit for 2025-26

Australia's mid-year budget update, delivered by Treasurer Jim Chalmers on Wednesday, November 26, 2025, projects a federal budget deficit of $36.8 billion for the 2025-26 financial year. This is $5.4 billion better than the $42.2 billion deficit forecast in the Pre-election Economic and Fiscal Outlook (PEFO) released before the May election. The update shows cumulative deficits over the four-year forward estimates improved by $8.4 billion compared to PEFO projections. The government anticipates $20 billion in savings and reports net policy decisions improving the bottom line by $2.2 billion, the first positive net decisions in eight years. Key factors improving revenue include higher-than-expected inflation, strong export prices, and surging gold prices boosting capital gains tax. However, the government revealed a $14 billion blowout in its home battery subsidy scheme, which is now set to cost $7.2 billion over four years following reforms.