Treasurer Jim Chalmers has spoken of delivering “five budgets in one” with cost of living and tax cuts forming the centrepiece of the federal budget, paid for by removing tax breaks for investors in a move he conceded was fraught with “political risk”.

Despite ruling out changes to negative gearing and capital gains tax before Labor’s landslide victory at last year’s election, the government has decided to change tack as part of what they have labelled a “broad and ambitious” housing package.

In addition to housing, the other pillars of the Tuesday night budget are fuel security, cost of living relief – including a $250 offset for workers – productivity, and budget sustainability.

Mr Chalmers has handed down what he said is “the most important and ambitious budget in decades”, as the Albanese government scrambles amid global economic shocks.

Framed by energy havoc spurred by the Iran war, the spending plan released on Tuesday night carved out $7.5bn to lock in more foreign fuel supply and a further $3.2bn to build up the country’s fuel reserves.

It also earmarked $1bn in interest-free loans to help manufacturers and logistics firms struggling with climbing costs.

“One of the things we’re proudest of in this budget is that we haven’t used the developments in the Middle East as a reason to delay some of the necessary longer term reforms in our economy,” Mr Chalmers said ahead of handing down the budget.

He said changing policies to help young Australians get into the housing market needed to happen.

“It’s become increasingly clear to us that even though the challenges in the housing market begin with housing supply … the main change in our thinking is the view that we can’t let the intersection of the housing market and the tax system continue to lock out so many people from getting a toehold in the housing market, particularly young people,” he said.

“I acknowledge that this is a controversial change, I acknowledge that this is a government coming to a different view to the view that we held 12 months ago.

“My view is that when government comes to a different view, as we have, and when it’s for the right and justifiable reasons, the onus is on the government to explain why.”

He added it would be “easy but wrong” to not change path.

“I know people have a view about that, and people who want to defend the status quo, people who would rather we didn’t touch the arrangements as they stand, they will try and make it about that rather than about the substance of the issue,” he said.

“We’d rather focus on the substance of the issue.

“Of course it invites an element of political risk when a government comes to a different view, but we’re explaining why we have, we’ve done that for the best reasons which is we can’t see these tax arrangements lock more and more people out of the housing market as the pressures on young people … intensify.”

Other elements of the billions in spending include pre-announced measures of a fuel reserve, halving the fuel excise for three months and ensuring 20 per cent of gas exports are reserved for Australians.

Addressing the Lower House, Mr Chalmers said “the world is throwing a lot at us, and this budget is about helping Australia deal with these challenges”.

“War in the Middle East has been pushing up prices, pushing down growth, and punishing Australians,” he said.

“It has exposed weaknesses in the global economy and intensified longstanding challenges here at home.

“We didn’t decide when this war began and have no control over when it will properly end.

“But how we respond is up to us – how we help each other through, and how we come out of this a stronger, fairer, more productive and more resilient nation.

“This budget is ambitious in the face of adversity.”

From July 1, 2027, the 50 per cent CGT discount will be replaced with a concession based on inflation and introduce a minimum 30 per cent tax on gains.

The change will be paired with a stripping back of negative gearing, with the concession limited only to new builds.

However, anyone negative gearing prior to Tuesday night was unaffected.

“Since 1999, house prices have risen over 400 per cent, more than twice as fast as average incomes,” Mr Chalmers said, adding that the reforms “will help about 75,000 Australians achieve the dream of home ownership”.

“This is about better aligning the taxes paid on these types of income with the taxes paid on wages.

“These changes will level the playing field for workers and first home buyers, and support investment in productive assets, including new housing supply.

“And they will fund our new round of tax relief for more than 13 million Australian workers.”

Slashing red tape was a key element of the government’s package to boost productivity, or how efficient the economy is.

The efforts spanned sectors, from streamlining housing approvals and simplifying payroll administration to cutting nuisance tariffs and opening up investment in start-ups, promising to reduce regulatory burden by $10.2bn each year and ultimately boost GDP by around $13bn.

Top ticket items included loosening rules for the finance industry in changes worth $790m per year and introducing a $20,000 instant asset write-off for small businesses.

The budget also introduced a permanent two-year loss carry back for companies up to $1bn in

turnover from July 1.

In effect, it will let companies use a current year’s tax loss against taxable income from previous profitable years.

Touting the package as “the broadest productivity push in a budget since the 1990s”, Mr Chalmers said it “will help us attract and absorb more investment, make it easier and quicker to build, and slash compliance costs”.

Other key elements included a refundable tax offset for start-ups from the 2028-29 financial year – giving new firms a tax refund before they are profitable – and expanded tax incentives for venture capital from July 1 next year.

Despite long-held concerns that government spending was driving inflation, Mr Chalmers insisted “savings and spending restraint” were doing the “heavy lifting” on improving the budget position, which was $44.9bn better off than the mid-year update.

Pointing to the $63.8bn in net savings and reprioritisations revealed last week, he said the budget delivered “the largest savings package on record”.

“A big part of our savings package will restore the (National Disability Insurance Scheme) to its original intent and secure its future, so it grows in a sustainable way in line with programs like Medicare,” he said.

“This difficult but necessary reform will save $37.8bn over the forward estimates.”

By freeing up funds, Mr Chalmers said the government could pump more into key areas, including national security amid an increasingly hostile Indo-Pacific.

“Economic security, economic resilience, and national security are now one and the same,” he said.

“We’re investing an additional $53bn over the next decade in our defence force to keep Australians and our region safe.”

Speaking to last year’s Bondi terror, which claimed the lives of 15 innocents, he said $600m was earmarked for a new Counter-Terrorism Online Centre, as well as “grants to support affected communities and money for our law enforcement agencies to crack down on the hate speech, violent extremism and terrorism which has no place in Australia”.

“Against a backdrop of global uncertainty, this budget invests in Australia’s resilience, economic sovereignty and national security,” Mr Chalmers said.

“At a time when Australians are under pressure, this Budget delivers more help with the cost-of-living and new tax cuts for workers.

“And in an era where people feel like the system no longer works for them, this Budget doesn’t just acknowledge that – it acts on it.”

Mr Chalmers’ opposition counterpart Tim Wilson took a different view of the spending plan, decrying it “a budget of broken promises, higher taxes, lower living standards and fewer homes”.

“It fails Australia’s future economy and has failed the basic test of restoring honesty, Australia’s security and living standards,” Mr Wilson said in a statement.

“It pulls the ladder of opportunity up from young Australians before they get their first foot on the rung.

“This budget is taking from the future to feed Labor’s spending addiction today by taxing growth and opportunity, and adding more debt.”

He went on to accuse Labor of governing “for themselves, not Australians”, adding “this budget is designed to feed their outdated economy, not build the economy Australians will need in the future”.

“Australians are living the consequences of Jim Chalmers’ active inflation agenda where he stokes inflation, taxes the inflation and then spends the inflation, eating away at Australians’ living standards,” Mr Wilson said.

“The Albanese government is ignoring warnings from the Reserve Bank and the International Monetary Fund and doubling down on pouring debt petrol on the inflation fire.”

Angus Taylor will on Thursday deliver the official opposition budget reply.