Theme 03 — Productivity

Source: https://budget.gov.au/content/03-productivity.htm Fact sheets: Productivity Package · Backing Small Business · Whole-of-Government Regulatory Reform Agenda

The Productivity Package targets the slowest decade of labour-productivity growth in 60 years. The headline ambition is $10.2 billion / year reduction in regulatory burden by the end of the forward estimates.

Hierarchy

03 Productivity
├── 3.1  Regulation reduction ($10.2B/yr)
├── 3.2  Skills, migration & credentials
├── 3.3  Research, development & science
├── 3.4  Digital & data infrastructure
├── 3.5  Small-business productivity
├── 3.6  Housing supply
└── 3.7  Energy & infrastructure

3.1 Regulation reduction — $10.2 billion / year

$780 million / year in reduced financial-sector compliance via 14 legislative reforms (including higher company reporting thresholds).
13 financial-regulator actions to streamline data collection.
497 nuisance tariffs abolished from 1 July 2026 — saves $157 million / year.
Whole-of-Government Regulatory Reform Agenda (see factsheet).

3.2 Skills, migration and credentials

$85.2 million to accelerate skills assessments for migrant trades workers and occupational licensing.
National Credit Recognition Framework — faster university degrees that recognise TAFE credit.
Permanent migration points test reformed to favour younger, higher-skilled, better-educated migrants.

3.3 Research, development and science

Program	Amount
R&D Tax Incentive reform	unlocks $400M / year for young R&D firms
Research institutions (CSIRO, NMI, SKA)	$1.5 billion
Medical Research Future Fund disbursement uplift	$508.5 million

R&D Tax Incentive detail (effective 1 July 2028):

Experimental core R&D offset +25–50%; expenditure that only supports R&D loses eligibility.
Intensity threshold cut to 1.5%.
Refundable-offset turnover threshold raised to $50 million.
Refundability limited to firms <10 years old (older firms get equivalent non-refundable offset).
Minimum expenditure threshold: $50,000 (R&D below this must run through a Research Service Provider or CRC).
Maximum expenditure cap: $200 million.

3.4 Digital and data infrastructure

Program	Amount
Digital ID expansion	$654.3 million
Consumer Data Right expansion	$62 million
AI Accelerator grants	up to $70 million

AI deployment in environmental approvals and the National Construction Code.

3.5 Small-business productivity

See factsheet and cross-ref Theme 04 §4.4.

Measure	Detail
Permanent $20,000 instant asset write-off	For businesses with aggregated turnover up to $10 million. Estimated $890M cash-flow improvement over 5 years, $32M / yr compliance savings.
Loss carry back	Offset losses against tax paid in the prior 2 years. Up to 85,000 companies benefit.
Loss refundability for start-ups	From 2028–29, refund capped at FBT + WHT paid for first 2 years. ~25,000 young companies annually.
Expanded venture-capital incentives	From 1 July 2027.
PAYG instalments — monthly opt-in	From 1 July 2027.
Dynamic instalments pilot	Expanded via business software.
ASBFEO restructuring support	From 1 January 2027.

Worked example — Coffee Co (Backing Small Business fact sheet):

Daniel and Eloise run a café through Coffee Co Pty Ltd. The business generated $40,000 profit and paid $10,000 tax in 2025-26 (25% rate). In 2026-27 they buy a $19,000 coffee machine, $19,000 of tables and chairs, and $17,000 of outdoor heaters — all immediately deductible under the permanent $20,000 IAWO. The deductions flip the year into a $15,000 tax loss. They then carry that loss back to recover $3,750 in cash (loss × 25%).

A parallel Dining Co worked example for a $1m-turnover restaurant appears in the Budget Overview.

3.6 Housing supply

Up to 65,000 homes unlocked through last-mile infrastructure funding (Local Infrastructure Fund — see Theme 02).
Free access to building standards — saves tradies up to $1,600 / year.
National Construction Code modernisation (with AI assistance).

3.7 Energy and infrastructure

Domestic Gas Reservation — 20% of LNG export volumes from 1 July 2027 (see Theme 01).
Energy market reforms enabling household solar/battery participation.
$125 billion deployment through government specialist investment vehicles.