It’s terrific to be with you and I’m sorry we’re not meeting in person in the Great Hall today. I acknowledge that I’m on Ngunnawal land today, and acknowledge all First Nations people joining us.
Thank you to the Canberra Business Chamber and the Institute of Public Accountants for again putting on this event, which is really a fixture in the budget calendar. I’ve done your event many times. I enjoy it more in person than virtually, but it is a real pleasure to be able to engage with the Canberra business community.
Let me start off with where we are in a global context, then go to a couple of the key measures in the Budget and finally finish up by asking the question: ‘What does the Budget mean for Canberra?’
If we look around the world, uncertainty is up. We’ve always lived in an uncertain world, but policy uncertainty is combining with geopolitical uncertainty. At this moment, we’ve seen a range of our counterpart economies go into recession as they’ve sought to battle inflation. The UK and New Zealand have suffered recessions, and many other economies around the world have experienced quarters of negative growth as they sought to tame the global cost‑of‑living challenge. Australia, uniquely in our history, has managed to bring inflation down into the Reserve Bank’s target band without a significant rise in unemployment. We should be collectively extraordinarily proud of this. It’s not the story of the 70s, the 80s or the 90s, where taming inflation meant increasing unemployment.
In Australia, we’ve managed to maintain full employment while getting prices back under control. And that in itself is a remarkable achievement. More than a million jobs created, interest rates now coming down, inflation back within the band, a strong labour market. So, while you look around the world and see a lot of uncertainty, there’s not many places you’d rather be than Australia.
The Treasurer last night talked about 5 big themes. I don’t have half an hour, so let me focus on 2: cost of living and productivity. In terms of cost of living, our biggest measure is continuing the tax cuts that we began last year. Last year as you remember, we adjusted the tax cuts so every taxpayer got a tax cut. Now we’re announcing that from 2026–27, we’ll be delivering a tax cut worth $268 for everyone earning over $45,000 per year, and the same again the year after that. That will be worth about $10 a week for the average worker, and it adds to the previous tax cut worth about $40 a week for the average worker to around $50 a week. That sits alongside the energy bill relief which will be extended for another half year, reflecting the pressure many households are under.
And then there’s the systemic changes: cheaper medicines, cheaper childcare. The work we’re doing in supermarket competition has a cost‑of‑living lens as well. We’ve commissioned the biggest review of the supermarkets in 17 years, and that review continues to make recommendations which build on the government’s work to tackle shrinkflation and ensure that Australian shoppers get a better deal at the checkout. You’ll soon be seeing the next iteration of CHOICE’s quarterly gross price grocery price monitoring, which is another measure that Labor has put in place to ensure that shoppers get a better deal.
Now, Emma [Alberici] talked about productivity and about a couple of the productivity boosting measures we have in place. I want to focus on those because it is really important that we as progressives, are focused on not only boosting demand, but also on the supply side, on ensuring that we’re unlocking the growth potential of the Australian economy. Emma rightly talked about the work that we’ve done on early learning, providing that 3 day guarantee, following the experts and getting rid of the activity test in order to unlock the productivity potential of the Australian workforce. We’re investing in skills, finally completing that Gonski project of ensuring that every school gets its appropriate level of funding, and that final agreement with the Queensland Premier that was announced this week is the last piece of the puzzle in those Gonski reforms. It’s not just money, it’s about reforms. It’s about more targeted teaching, more intensive literacy and numeracy education to tackle that challenge that we’ve seen in the OECD PISA tests, where Australian students since the beginning of the millennium have slipped back about a year of achievement. We need to do better, and this money will allow us to do that.
The boost in Free TAFE places is vital in ensuring that we have more skills for the jobs in the modern economy, particularly in construction. We understand that we need to increase uptake and we need to encourage apprentices to stay in on the tools. We recognise that by boosting investment in modular methods of construction, we can also unlock productivity in the housing sector. Housing sector productivity has gone down in Australia, as it has in many other advanced countries, and a recent Productivity Commission report talked about some of the challenges. They’re not bagging unions – far from it. They’re talking about the challenges of scale and about the way in which modular construction has sometimes struggled, about some of the regulatory challenges that housing construction faces, and our government is very focused on unlocking housing sector productivity.
Now, Emma also talked about one of our key productivity boosting measures in this Budget, which is around the competition reforms relating to non‑competes. When I first started looking at this about 5 years ago, people said ‘Oh, it’s just an American thing. Sure, one in 5 American workers have non‑competes but you won’t find the same in Australia.’ So, we worked with e61 and with the ABS in order to do surveys that revealed, lo and behold, that one in 5 Australian workers were subject to a non‑compete clause – a clause that stopped them from moving to a better job. And then the argument came ‘It’s just executives being put on gardening leave’. But it turned out in the surveys that it’s gardeners, it’s early childhood workers, security guards, a whole range of workers in low‑wage professions that have been caught by standard form employment agreements which are preventing them from moving to a better job.
Our reform will then unlock a productivity boost, because if you want to start a firm on a full‑employment economy, you need to hire workers from other firms. It’ll apply to workers earning under $175,000 – the Fair Work Act high‑income threshold. Our estimate, the estimates we have from the experts on this suggests that it will boost wages by around $2,500 per year. That means for those affected workers, those one in 5 – that’s a boost of around $50 a week, commensurate with the tax cut gains that I talked about.
Getting rid of non‑compete laws for low wage workers shouldn’t trouble businesses, because you can still put in place non‑disclosure agreements that ensure that your secrets can’t walk out. And in fact, what’s going on at the moment is that many of these non‑compete clauses are not legally enforceable. We’re tying up workers and firms in a thicket of legal regulations. By getting rid of non‑competes and encouraging firms to instead use targeted non‑disclosure agreements, we will unlock productivity.
Finally, for Canberra this Budget builds on the investments of past budgets. On our record investment in the national cultural institutions. Investment in the War Memorial and the National Security precinct. This Albanese Labor government hasn’t neglected Canberra’s infrastructure spend, as the previous government did in their final budget, when Canberra received just one‑fifth of our fair share of infrastructure investment from the Coalition. Instead, this Albanese government has invested in bike paths, roads, and light rail for the nation’s capital.
We’ve got a public service which is right sized for the needs of the nation, and the Coalition’s proposals for a public service cut would devastate the ACT. On one hand, they’re saying that they’re going to cut one in 5 public servants which suggests that frontline services such as people processing veterans’ claims or parental leave benefits would suffer. But then they try and say, ‘well we won’t hurt frontline services – we’ll only cut the Canberra public service’. If they rip 41,000 public service jobs out, and only in Canberra – that’s half the public service in Canberra. That would also devastate the nation’s capacity to deal with future pandemics, with national security risks, and with biosecurity challenges. The Coalition can’t have it both ways. Either their public service cuts are a threat to frontline services, or they will devastate the nation’s policy infrastructure, including our national security.
So, thanks for the chance to talk about Budget 2025. Jim Chalmers and Katy Gallagher have put together a fantastic Budget which invests in productivity, tackles the cost of living, and delivers for Australia.