Business groups have sharply criticized the Federal Budget 2025, labeling it as “underwhelming,” “visionless,” and failing to provide meaningful support for private sector growth. These organizations argue that the budget does little to stimulate the economy and fails to meet expectations of driving a private sector revival.
On Budget night, Treasurer Jim Chalmers emphasized a shift towards a private sector-led economy, highlighting Australia’s resilience and forecasting a return to 2.5% growth. However, industry leaders disagree, pointing to the lack of policies aimed at fostering such a transition. Australian Industry Group CEO, Innes Willox, pointed out the downgraded growth forecast from 2% to 1.5% for the current financial year, signaling a stagnating economy rather than a promising recovery.
“The Budget highlights the deepening economic trough, with revised forecasts for growth, inflation, and business investment continuing to trend downward,” Willox stated. “The increase in public demand, projected to rise by 5% this year and 3.5% the next, shows no sign of a private sector-driven recovery.”
Luke Achterstraat, CEO of the Council of Small Business Organisations Australia, criticized the Government’s failure to address key concerns for small businesses, particularly the lack of mention of the Instant Asset Write-Off, a crucial tool for businesses managing rising costs. Achterstraat expressed frustration, calling the omission a “kick in the knee” at a time when small businesses face significant challenges such as higher energy costs, rent, and borrowing expenses.
“Small businesses are struggling, with many failing to break even,” Achterstraat remarked, citing the Small Business Ombudsman’s report that up to half of small enterprises are currently operating at a loss. “We see the cost of doing business crisis as being just as severe as the cost of living crisis.”
The struggles faced by Australian retailers are evident, with Jeanswest collapsing for the second time in five years, closing 90 stores and laying off over 600 employees. The company cited poor consumer demand as the key factor behind the closure.
While the Budget includes some relief for consumers, such as tax cuts and an energy rebate extension, Westpac’s economics team, led by Luci Ellis, believes these measures could provide a modest boost to household spending, potentially benefiting retailers. However, Andrew McKellar, CEO of the Australian Chamber of Commerce and Industry, described the Budget as “lacking vision and substance,” adding that the proposed tax cuts would do little to offset the inflationary pressures on wage earners.
McKellar also criticized the Government’s failure to tackle structural deficits and rising national debt. “Without addressing government expenditure, Australia will continue to fall behind in productivity reforms,” he warned. “The country needs to reduce its expenditure to about 25% of GDP to pave the way for real tax reforms, such as reducing the company tax rate, which is essential for attracting global investment.”
The Business Council of Australia (BCA), which represents the nation’s largest firms, also expressed disappointment, calling the Budget an “election budget” that provides no concrete solutions for Australia’s productivity decline, which is currently at a negative 1.2%. BCA CEO Bran Black emphasized the need for more detailed policies to tackle Australia’s growing housing crisis, healthcare challenges, and workforce shortages.
“The Budget offers no real solutions for the key issues affecting businesses, including cost of living, housing, and the transition to net-zero,” Black said. “While the National Productivity Fund is a step in the right direction, the Government must do more to drive genuine reform.”
The BCA and other employer groups also criticized the Government’s proposed ban on non-compete clauses for low- and middle-income workers, a move that the Productivity Commission claims could raise wages for affected workers by up to $2,500 annually and boost GDP by $5 billion. Black argued that such a policy would disincentivize small businesses from investing in their employees, fearing that key staff could leave with valuable company information.
Ben Thompson, CEO of Employment Hero, voiced his disappointment at the absence of significant support for innovation and the tech sector in the Budget. “Australia risks losing its next big tech unicorn to global competitors unless there is stronger backing for innovation,” Thompson warned. “The Government must step up its support for startups with more efficient funding and a regulatory environment that fosters growth.”
Overall, business leaders argue that the 2025 Federal Budget falls short of addressing the key issues facing Australia’s economy, offering limited solutions for driving private sector growth, addressing cost pressures, and improving long-term economic resilience.
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