ADIA Budget Analysis: Federal Budget Delivers Practical Wins for Australia's Drilling Industry

13 May, 2026

The Australian Drilling Industry Association (ADIA) has welcomed key measures in the 2026-27 Federal Budget, identifying material benefits for drilling contractors operating across the resources, energy, water, geotechnical and infrastructure sectors.

ADIA CEO Jeff Miller said the Budget contained the most significant package of small business tax reform in more than a decade, alongside structural decisions on fuel security, critical minerals and project approvals that directly affect the operating environment for drilling contractors.

"This is a Budget that, on balance, recognises the realities of running a capital-intensive, fuel-dependent, cyclical business," Mr Miller said. "There are genuine wins for our members, and there are also signals our industry needs to plan around carefully."

Fuel security and excise relief

The temporary fuel excise cut from 52.6 to 20.6 cents per litre, combined with the heavy vehicle road user charge reduction to zero for three months from 1 April 2026, provides immediate cashflow relief for fleet-heavy drilling operations.

More significantly, the Government's $7.5 billion Fuel and Fertiliser Security Facility, $3.2 billion Australian Fuel Security Reserve, and the expansion of the Minimum Stockholding Obligation to 50 days for diesel and jet fuel represent the largest structural reshaping of Australia's fuel security framework in decades.

"Diesel logistics is the silent cost centre of every remote drilling program in this country," Mr Miller said. "The short-term excise relief is welcome, but the long-term fuel security architecture is what really matters to operators running rigs in the Pilbara, the Northern Territory or the Cooper Basin. Supply certainty is operational certainty."

Tax reform for drilling SMEs

ADIA highlighted three tax measures of particular relevance to its membership:

• The permanent $20,000 instant asset write-off for businesses under $10 million turnover, from 1 July 2026
• A two-year loss carry-back available to companies up to $1 billion turnover, from 1 July 2026
• Loss refundability for start-ups in their first two years, from 1 July 2028

"The instant asset write-off being made permanent removes a perennial source of uncertainty that has hung over capital equipment decisions for years," Mr Miller said.

"Tooling, downhole equipment, survey gear and ancillary kit under $20,000 can now be planned with confidence rather than on a year-by-year political timetable."

"Loss carry-back is the standout reform for our sector. Drilling is a cyclical business. When commodity cycles soften, contractors take the hit on utilisation. The ability to recover tax paid in better years against losses in tougher ones is a meaningful new tool for managing that volatility."

Critical minerals and exploration outlook

The establishment of a Critical Minerals Strategic Reserve, supported by $1 billion drawn from the expanded $5 billion Critical Minerals Facility, sends a clear demand-side signal for exploration drilling on antimony, gallium and rare earth element targets.

"A strategic reserve is, in effect, a buyer of last resort for critical minerals," Mr Miller said. "That changes the risk profile for junior explorers and, by extension, for the drilling contractors who service them. It is one of the more consequential resources policy decisions in this Budget."

Approvals reform

ADIA welcomed more than $500 million committed to EPBC Act reforms and the broader $10.2 billion annual reduction in regulatory burden, including a new 30-day target for low-risk foreign investment decisions and modernisation of the offshore resources regime.

"Approval delays are the single biggest source of stop-start utilisation across our exploration members," Mr Miller said. "Anything that compresses approval timelines flows directly to better planning, lower standby exposure and more predictable cashflow for contractors."

Henderson Defence Precinct and WA opportunity

The $12 billion initial investment in the Henderson Defence Precinct, alongside the $53 billion uplift in Defence investment over the decade, was identified as a significant medium-term opportunity for geotechnical, marine geotechnical drilling and water well contractors.

"Henderson is a generational piece of infrastructure for Western Australia," Mr Miller said. "The site investigation, foundation work and ancillary drilling associated with that build-out, and the AUKUS pipeline behind it, will be substantial. WA drilling contractors should be positioning now."

Skills, migration and apprenticeships

ADIA welcomed the $85.2 million commitment to accelerate skills assessments for migrant trades workers and the apprenticeship reforms prioritising small and medium employers from 1 January 2027.

"Our industry is chronically short of qualified drillers, offsiders, fitters and supervisors," Mr Miller said. "Faster recognition of overseas qualifications and an apprenticeship and traineeship system that dynamically responds to the needs SMEs are both overdue. We will engage closely with Government on the implementation detail."

Areas of caution

Mr Miller noted the Budget's explicit reference to "short-term profile adjustments" in the infrastructure pipeline, and changes to the R&D Tax Incentive from 1 July 2028 that will narrow eligibility for R&D-supporting expenditure.

"Geotechnical contractors should expect some scheduling slippage on major road, rail and tunnel projects through 2026 and 2027," Mr Miller said. "And METS suppliers and technology-focused contractors developing new bit designs, measurement while drilling (MWD) and logging while drilling (LWD) systems, automation and fluid chemistry need to start reviewing their R&D claim strategies now, not in 2028."

Members should also be aware of changes to discretionary trust arrangements and consult with their professional advisers now about potential implications for their business.

Summary

"Overall, this is a Budget that gives our industry real tools to manage cost, cycle and capital," Mr Miller said. "The work for ADIA now is to make sure the implementation detail, particularly on fuel security, approvals and skills, lands in a way that actually reaches operators on the ground."

About the Australian Drilling Industry

The drilling industry in Australia generates nearly $4 billion in annual revenues and contributes approximately $2.2 billion to annual Gross Domestic Product. Drill contractors employ more than 12,000 Australians, supporting regional communities across the country.

Each year the drilling industry unlocks nearly $500 billion of economic activity across mining, water supply and construction.

ADIA promotes four pillars for sustained drilling industry success:

• Reliable and Skilled Workforces
• Business Confidence
• Responsible Sustainability
• Industry-led Regulation

Further details are available by contacting ADIA and in the Association's inaugural Economic Impact of Drilling in Australia Report.

ENDS

Media enquiries: Australian Drilling Industry Association (ADIA) Jeff Miller - CEO 0418 425 180 [email protected]