Good morning, Thomas Morgan and Caitlin Rawling here with your budget edition of the AM NewsMail.

Treasurer Jim Chalmers has announced sweeping changes to Australia's tax regime in coming years, with negative gearing gone and capital gains discounts set to go. We've gone through the budget papers and picked out the key points, including some sweeteners for taxpayers, cuts for NDIS recipients, and big spends on housing and energy security. Plus, Ian Verrender and Annabel Crabb are along with their key analysis of what this budget means for Australians, and for the government.

Meanwhile, our Europe bureau is in Downing Street as Keir Starmer vows to cling on as UK prime minister against a growing number of his own MPs calling for him to go. 

It has been a busy 24 hours in the nation's capital, with the Albanese government unveiling a surprise tax cut, cuts to disability support, and the end of major tax breaks. These are the key points of Budget 2026-27:

• The top line: "This is the most important and ambitious budget in decades," Treasurer Jim Chalmers declared at the start of his budget speech last night. He argues it will address the challenges Australians face on multiple fronts, from an aging population and housing affordability to energy and fertiliser shortages sparked by the Middle East war. Here's our five-minute guide to what's in Budget 2026-27.
• Major tax changes: Two expected changes last night became a reality. Negative gearing perks have already been restricted, with only purchases of newly-constructed homes now able to qualify for the tax concession. The capital gains tax discount is set to end from July next year. But the treasurer has thrown in a sweetener in the form of a $250 tax break for all taxpayers and a $1,000 blanket deduction for workers.
• Tackling the cost of living: Treasury now expects inflation to peak at 5 per cent this year due to the Strait of Hormuz crisis (and it could hit 7 per cent if the war drags on), but Chalmers says "we are much better placed" than other economies to weather the storm. The government is pledging $14.8 billion to dampen the impact of the global energy shock.
• Debt and deficit: The budget papers show a $28.3 billion deficit in the 2026-27 financial year, with similar shortfalls forecast in the coming years. Those will push the balance on the commonwealth's credit card north of $1 trillion. But there are savings being made, with spending on the NDIS cut by $36 billion.
• So who wins and who loses? Landlords and investors are worse off under the government's changes, while income earners and homebuyers are winners. We've scoured the budget papers to figure out who's better off and and who's worse off after last night.

We're back online this morning and keeping across all the latest from Parliament House. Follow this morning's politics live blog as the government begins the tough sell of its biggest budget since coming to power.

PLUS: As is tradition, the treasurer went straight to ABC's 7.30 after handing down last night's speech. In his grilling by Sarah Ferguson▶️, Jim Chalmers said the decision to break major election commitments around negative gearing and capital gains was only made in recent weeks. 

• Rein me in: This year's budget is different, says our chief business correspondent Ian Verrender. Jim Chalmers's decision to go after negative gearing and capital gains breaks the cycle of budgetary short-term thinking. But will his changes work to address the inequality that is fuelling the populist wave crashing over politics here at home and around the world? Time will tell.
• Youth warrior Albo? There's a particular irony that Australia's likely last baby boomer prime minister may yet become king of the kids, writes Annabel Crabb. In this budget, Anthony Albanese is unwinding the policies that for decades have plumped his own generation's asset sheets at the expense of intergenerational equity.
• And from Clare Armstrong: Labor is betting the house on young Australians' desperation to buy their own. But breaking an election promise is a high risk strategy that leaves the door open to political opponents to exploit.

• The Starmer is not for turning: The British Prime Minister is staring down an insurgency within the ranks of his own Labour Party. But Sir Keir Starmer's defiance is failing to stem a steady flow of major resignations by key figures on his frontbench.
• Not decelerating: The trend of Australians opting for bigger and bigger cars isn't hitting the brakes despite the upward march of fuel prices in recent months. New data shows sales of large utes have remained steady in March and April, even as EVs continue to grow in popularity.
• 'Freedom of expression': After his 2024 show was cancelled for on-stage comments he made about Palestine, Jayson Gillham is showing no signs of backing down. The British-Australian comedian's lawsuit against the Melbourne Symphony Orchestra is set to come to a head in coming days, just two months before he brings a new, independently produced tour to Australia. 

—  Professor Helena Teede says the new name which emphasised the condition's hormonal and metabolic impacts, would mean fewer misdiagnoses and better treatment for those with the condition.

Polycystic ovary syndrome (PCOS) has been renamed polyendocrine metabolic ovarian syndrome (PMOS).

Last but not least, our friends at Double J are this morning wishing a very happy birthday to Blues on Broadbeach.

Despite many similar events struggling to stay on stage, Gold Coast Mayor Tom Tate is vowing the 25-year-old festival isn't going anywhere. 

And that's it from our budget edition of the AM NewsMail, but make sure to stay with the ABC throughout today for the latest federal politics news after last night's budget. We'll be back at the same time tomorrow.

Thomas, Caitlin and the ABC News Digital team.

Treasurer Jim Chalmers has defended negative gearing and capital gains tax changes unveiled in his fifth federal budget last night. Follow live.