Published 26 May 2026 by the RLM Consult Certify Comply team
The Federal Budget handed down on Tuesday 12 May 2026 was not an infrastructure budget in the way the 2010s budgets were, but it kept the pipeline moving: $3.8 billion for Melbourne’s Suburban Rail Loop and $8.6 billion for nationally significant road and rail projects across the states. The item that will matter most to mid sized contractors is quieter. Treasury proposes to raise the thresholds that define a large proprietary company to $100 million in revenue and $50 million in gross assets, which changes who is caught by mandatory climate reporting when Group 3 starts in July 2027. Here is what is funded and what the reporting change means.
What is funded
The headline commitments are the $3.8 billion Commonwealth contribution to Suburban Rail Loop East, which secures the federal share of Victoria’s largest project, and $8.6 billion for road and rail projects the Government describes as nationally significant, spread across the state pipelines. There is continued funding for Western Sydney’s roads and the airport connections, for the transmission projects under Rewiring the Nation, and for defence estate works, which are now among the largest sources of regional construction work in the country. For contractors the message is continuity: the projects announced over the last three years are funded, and the procurement schedules the state agencies have published stand.
The climate reporting change
Mandatory climate related financial disclosure under the Corporations Act is being phased in. Group 1, the largest entities, began with financial years starting on or after 1 January 2025. Group 2 starts with financial years beginning on or after 1 July 2026, catching entities that meet two of three tests: $200 million in revenue, $500 million in gross assets, or 250 employees. Group 3, from 1 July 2027, was to catch large proprietary companies at $50 million revenue, $25 million assets or 100 employees, which is where a lot of Tier 2 and Tier 3 contractors sit.
The Budget proposes to lift the large proprietary company thresholds to $100 million in revenue and $50 million in assets, with the 100 employee test unchanged. If legislated, a contractor with $70 million in revenue, $30 million in assets and 90 employees would fall outside Group 3 and would not have to produce a sustainability report. The change is a proposal and requires legislation, so nothing is settled, but it shifts the planning assumption for a large group of businesses.
Why the supply chain still needs to prepare
Falling outside the reporting threshold does not take you out of climate reporting. It moves you from the entity that reports to the supplier that is asked for data. Group 1 and Group 2 entities, which include every Tier 1 contractor, the major operators and most government business enterprises, have to report Scope 3 emissions, and the largest category of Scope 3 for a construction company is its supply chain. From this year, expect prequalification questionnaires and subcontract schedules to ask for fuel and electricity data, material quantities, and evidence of how you manage climate related risk. A contractor that can answer quickly from its management system is easier to engage than one that cannot.
The ISO standards are moving the same way. ISO 14001:2026, published last month, requires climate change to be considered in the organisation’s context, and the environmental management system is the natural home for the emissions data and the physical risk assessment your clients will ask about. Our note on the new edition covers what changed.
Other news this fortnight
Snowy Hydro announced on 15 May that the tunnel boring machine on the Snowy 2.0 tailrace tunnel had broken through, a milestone for a project that has tested every contractor on it. And reports on 11 May confirmed that a subcontractor and its downstream contractors had been removed from the Sydney Metro Western Sydney Airport project, with the line’s opening pushed back to 2027. The second item is a reminder that head contractors are auditing their supply chains harder than ever, and that a subcontractor’s compliance failure can remove it from a project regardless of the quality of its work.
What to do
- Work out which group, if any, your business falls into under both the current and the proposed thresholds.
- Whatever the answer, start collecting fuel, electricity and material data by project. Your clients will ask for it within the year.
- Add climate related physical risk (heat, flood, bushfire) to your context review and risk register as part of the ISO 14001:2026 transition.
- Assign ownership. Sustainability data that belongs to nobody is never ready when a tender asks for it.
Frequently asked questions
What did the 2026-27 Federal Budget commit to infrastructure?
The Budget handed down on 12 May 2026 included $3.8 billion for Suburban Rail Loop East and $8.6 billion for nationally significant road and rail projects, alongside continued funding for Western Sydney, transmission and defence estate works.
Who has to produce climate reports in Australia?
Mandatory climate related financial disclosure is phased in by group. Group 1 began for financial years from 1 January 2025, Group 2 begins for financial years from 1 July 2026 (two of: $200 million revenue, $500 million assets, 250 employees) and Group 3 from 1 July 2027 for large proprietary companies.
What are the proposed new large proprietary company thresholds?
The 2026-27 Budget proposes lifting the revenue threshold from $50 million to $100 million and the gross assets threshold from $25 million to $50 million, with the 100 employee test unchanged. The change requires legislation and Treasury is expected to consult on the detail before it is introduced.
Do subcontractors need to report emissions?
Not directly unless they meet the thresholds, but Group 1 and Group 2 entities must report Scope 3 emissions, which include their supply chains, so head contractors and operators increasingly require subcontractors to supply fuel, electricity and material data.