2026-27 Budget response: critical steps towards structural reform

Our take on the government’s measures to create greater equity between generations, and the challenging issues remaining that will require innovative, collaborative and courageous action in coming years.

For an Australia where all people and communities thrive, the Federal Government’s 2027 budget needed to tackle structural reform to set up for future success, and take steps to address current pressures, particularly for those doing it toughest. 

At SVA, we know how complex systems change is. Often it falls in the ‘too hard’ basket, and instead of brave and meaningful reform, we end up with bolt-on, quick fixes that don’t make enough of a difference to enough people.  

The 2027 budget embraces some ambitious structural change to address intergenerational inequity and start leveling the playing field for younger, working Australians. 

The government has been building to this. It was a theme that emerged strongly in the Treasurer’s Economic Reform Roundtable held in July last year, following the Productivity Commission finding that people born in the 1990s will be the first generation not to do better than their parents 

At SVA, we believe it is important for all people in Australia to see opportunity; to trust that if they seek work and training, and participate in society, they can build a stable, secure life for themselves and their family.

Here are the measures we were pleased to see in this years’ budget:

• A $2b investment to enable infrastructure for housing, contingent on states committing to reforms to improve housing sector productivity. This is expected to boost housing supply, and more than offset the reduction in supply anticipated from falling investor demand.
• $299m to create an additional 3,000 jobs under the Remote Jobs and Economic Development program, as well as funding to support reform of the employment services system. 
• $59m over four years to support Community Housing Providers to supplement rental income for 4,000 young people. SVA contributed to the evidence base for this reform, through our ‘Youth Housing in Australia’ paper. Read the full report.
• Measures to support children and families in the early years, including: 
  • Increased investment in programs for child and family support along with streamlined funding arrangements to reach more families in a more coordinated way; 
  • $139m over five years to deliver early intervention supports for young children with developmental delay and/or autism within early childhood education and care (ECEC) settings. This is a positive step towards more integrated delivery as part of the government’s Thriving Kids reforms. 
  • Consultation on establishing an ECEC Commission – another initiative we have advocated for with our partners in the Thrive by Five coalition. Take a look at the ECEC Reform Blueprint we contributed to earlier this year here.
• Targeted measures to make the child support system safer for women and children and to support initial actions under the Our Ways – Strong Ways – Our Voices: National Aboriginal and Torres Strait Islander Plan to End Family, Domestic and Sexual Violence 2026–2036.

We welcome these measures, though we know real change takes time to flow through and this budget will need to be backed by a long-term commitment to reform.  

Current day pressures too, need to be alleviated and here lies the balancing act. 

The government has taken little action to address the rising cost of living. There is no surge funding for the food relief sector and no increase in income support payments. The Budget position relies on significant cost savings from tightened eligibility criteria for the NDIS which will reduce participant numbers by 160,000 at the end of the decade. We urge the government to take a consultative approach as the detail of these reforms are finalised. 

Looking ahead, SVA wants to work with government and other partners to tackle challenging, systemic problems–using levers within and beyond government, spanning corporate, community and philanthropy, to effect lasting social change.

Here is where more action is needed:

• Concerted action between employers, governments and civil society to reverse the decline in economic mobility, which is threatening economic prosperity and social cohesion. The Budget papers forecast a softening labour market with continued uncertainty in global economic conditions. But the headline unemployment rate doesn’t give us the full picture – which is long-term deterioration of labour market outcomes and incomes for young people. This decline is most acute for those from low socioeconomic backgrounds, whose prospects of working their way up the income ladder are worse than their parents and grandparents. Through the Fair Chance Initiative, SVA and its partners are promoting greater employer action on economic mobility. The government needs to show stronger leadership in this area by adopting economic mobility objectives across relevant policies (like apprenticeships and industry plans), in its programs (like Workforce Australia) and in as a leading employer in its own right.
• A plan to better support young people to develop their critical thinking skills and agency. Schools, teachers and education systems are under stress and young people need opportunity to deliberately practice and refine skills for an increasingly complex world. Right now, our Education team is exploring innovative solutions that embed ethical understanding, critical thinking and personal purpose into everyday learning. As always, we will seek to scale successful initiatives with the right partner organisations once we have a robust evidence base to show that these programs are creating opportunity for kids at school.
• Reform of the ECEC funding model to better reflect the need of children, families and communities. This has potential to support improved access to quality early learning for all children, particularly those who are struggling the most and where we know it can have greatest impact on lifelong trajectories, as well as to improve service viability in thin markets.
• More housing for people at risk of homelessness, including options designed for women over 55. SVA is currently exploring funding models to catalyse private capital to facilitate delivery of safe, affordable, village-style homes tailored to this cohort. The homes combine trauma-informed design and wraparound support. We aim to develop a scalable national solution, enabled by state and federal government funding streams.
• Governments actively shaping social and care sector service systems to better support those who need it most. Measures to improve the aged care sector viability, reform the NDIS, invest in employment services reform and consult on an ECEC Commission highlight gaps in market stewardship in key sectors. SVA has valuable insights to share into different funding and commissioning models to inform future market and funding design. Read, for example, our recent article on bringing relational contracting to life. 
• Adopt a greater focus on where AI could be perpetuating disadvantage. Alongside the Budget’s focus on productivity improvements, there are signals of increasing use of automation and AI for decision making in the care sector. SVA is engaging across the sector about responsible application of AI to enhance outcomes, and also monitoring where AI could be causing harm to individuals or groups already vulnerable or excluded.

We look forward to working in partnership with governments, corporate, community and philanthropists to continue leading the charge on social challenges, towards a future where all Australians have the support and opportunity to thrive.