What the federal budget holds for businesses ahead of the election
Businesses reliant on Australian workers to buy their goods and services will cheer news the federal budget will leave more cash in the pockets of their customers.
Australian firms big and small have faced the crunch of higher costs. At the same time, households have seen their own budgets squeezed.
The pre-election budget will provide small relief on both sides of the ledger — with about 1 million small businesses to receive another $150 in energy bill rebates, while a worker on average earnings will receive a $536 additional tax cut from 2027-28.
But businesses may face more competition to hang on to their staff, with the budget providing reforms to abolish non-compete clauses for most workers — a development attracting criticism from the Australian Industry Group.
Industry lobby groups have mostly expressed disappointment with the budget, which did not extend the instant asset write-off from recent years.
Here's what's in the budget for business.
Tax cut will equal more cash for customers
At their cafe in Sydney's inner west, owners Ali and Ahmed have with great trepidation recently increased the cost of a cup of coffee for the first time in many years.
"We were afraid of doing it, to be losing customers … that people who come to you two, three times a day [will] now probably come to you once a day, but you've got to do it," Ahmed said ahead of the federal budget.
Cafe owners Ali and Ahmed have had to lift prices to cover costs but are worried about putting off customers.
But small business owners, like the brothers, may pick up an extra coffee order or two per person once a newly announced income tax cut phases in.
The budget states it will put an average of $50 a week back in the pockets of workers, in combination with previous tax cuts.
At a cost of $17.1 billion over five years, a worker on an average wage of $79,000 will see their tax bill fall by an extra $268 in 2026–27 and reduced by $536 per year from 2027-28.
On a Sydney suburban shopping strip, Lily Tan has seen a steady flow of customers at the perfume shop where she works, but they are spending less.
"People are spending less and more wisely, not spending like crazy, like before … If a birthday is coming up, they choose the budget from $50 to $100. Two years ago they were choosing like $100 to $200," she said.
"The household … has to save the money the whole year round, right? You have to just give more incentive for the parents or for the family [to spend].
"A tax cut is better for every family in Australia — I think more tax cuts are good."
Retail worker Lily Tan hopes a tax cut will increase her customers' spending. (ABC News: Nadia Daly)
It is a measure likely to please large businesses, in addition to the smaller operators — particularly those reliant on discretionary spending.
However, AMP chief economist Shane Oliver described the additional tax cut as "trivial" for individual households, despite the cost to the budget.
"For the first year they operate … it's just $5 a week for a person on average wages, and for the second year, it's just $10 a week, so it won't even buy you a sandwich and a milkshake," Dr Oliver said.
Despite the modest size of the cuts, independent economist Nicki Hutley expects them to be broadly welcomed.
"Yes it's at the margin, but it's not the first time governments have delivered small, cup-of-coffee-type tax cuts and got rewarded for it."
Previously announced changes to cut the student loan debts of 3 million Australians will leave many with more money to spend as well.
Energy rebates welcome but will not make much of a dent
The other pain point for businesses has been rising costs.
As flagged ahead of the budget, the government will spend $1.8 billion to extend its energy-bill relief to the end of this year.
In addition to households, it will apply to about 1 million small businesses.
But for Cam Van, a seamstress running a clothing and alterations business, the $150 rebate — doled out in two lots of $75 — will barely touch the sides.
Seamstress and store owner Cam Van has seen her energy bill surge in recent years. (ABC News: Nadia Daly)
Her electricity bill has almost doubled in the last few years: "Basically it's gone from about $800 to $1,600."
Similarly, for butcher Quang Dinh, the $150 will help "a little bit" but it pales in comparison to the extra cost he is carrying.
"In the three, four years before … the electricity is about $1,500 or $1,600 a month, but now it's up to $2,000 to $3,500 a month … a big jump."
More competition to keep workers?
Perhaps welcome for some businesses, but not others, will be reforms to abolish non-compete clauses for most workers.
Lobby group for employers the Australian Industry Group has criticised it as a "deep concern" for Australian businesses.
The clauses put limits on workers moving into similar roles at other firms or starting their own business in the same industry.
Treasurer Jim Chalmers said the clauses currently covered more than 3 million Australians, including those in childcare, construction and hairdressing.
"Non-competes are holding too many Australians back from switching to better, higher-paying jobs," the Treasurer said in his speech.
"People shouldn't need to hire a lawyer to take the next step in their career."
The clauses would be banned for workers earning less than the high-income threshold in the Fair Work Act, which is currently $175,000.
The rationale is to increase productivity by removing barriers for workers opening their own business or moving into a higher-paid role.
The treasurer cited research from firm e61, which suggests the reforms could lift the wages of affected workers by up to 4 per cent, or about $2,500 per year for a worker on median wages.
Productivity Commission modelling indicates the changes could improve productivity, adding $5 billion or 0.2 per cent to gross domestic product annually.
"It would be great if there was a productivity silver bullet, but as we know, we need to build on lots of these smaller issues to get the bigger, economy-wide impact, so I'm encouraged," independent economist Nicki Hutley said.
For businesses that can afford to pursue the best talent and lure them from competitors, the removal of non-competes may present an opportunity.
For small business owners facing difficulty finding, and affording, the right workers, it could be another challenge.
"Australian business — large and small — spend a tremendous amount of resources hiring, engaging, training and building up their staff.
"[They] now risk having that lost, and losing all the intellectual property that has been built up," Australian Industry Group chief executive Innes Willox said.
"We suspect if this measure does go ahead, in the months and years ahead we will see an enormous amount of litigation… and also the rewriting of hundreds of thousands of contracts for Australian workers to try to protect employers and their rights."
Ahead of the budget, butcher Quang Dinh said he was working more hours in his own business to avoid having to hire more staff.
"The people I'd hired before now, they cost too much and I can't handle [it]. That's why I work for myself and cut the price."
Butcher Quang Dinh says he is doing more work himself due to the expense of hiring more workers. (ABC News: Nadia Daly)
Business calls for extension of instant asset write-off
One measure missing from this year's budget was the instant asset write-off scheme, which has been a popular incentive for operators in recent years' budgets.
It allowed businesses with turnover of less than $10 million to immediately deduct the cost of assets up to $20,000, rather than depreciate them over time.
Without an extension, it is due to end on June 30 this year, and would revert to a $1,000 limit.
"Its absence from the budget is a real concern," Mr Willox said.
"It's a kick in the teeth for Australian business and we hope in the next few weeks leading into the election that omission is rectified."
Business association the Australian Chamber of Commerce and Industry echoed the sentiment, arguing it should be legislated permanently.
"This is a very important measure for many small businesses," ACCI boss Andrew McKellar said.
No fix for global uncertainty
The recent profit reports released by some of Australia's largest companies revealed a sense of uncertainty around the future, in large part due to the constantly changing tariff threats from the United States.
The trade ructions affect a wide range of businesses, from those that directly trade with the United States, to those who deal with targets of US President Donald Trump's tariffs, such as China, and firms selling affected products and services.
"The global economy is volatile and unpredictable," the treasurer said his speech, noting gathering "storm clouds".
Jim Chalmers says Australia is among the best-placed countries to weather global economic disruptions. (ABC News: Matt Roberts)
"Trade disruptions are rising, China's growth is slowing, war is still raging in Europe, and a ceasefire in the Middle East is breaking down.
"Treasury expects the global economy to grow 3.25 per cent for the next three years — its slowest since the 1990s …
"Australia is neither uniquely impacted nor immune from these pressures, but we are among the best placed to navigate them."
The budget includes $20 million next financial year for a "Buy Australian" campaign to support local businesses by encouraging people to buy products made here, but there's no detail about what it will involve.
What else is in there for businesses?
Aside from the measures that can be neatly categorised, there are a slew of others affecting businesses in specific sectors or locations.
"We're particularly disappointed that the budget does not present a coherent strategy for many hundreds of thousands of small businesses who are doing it tough in the current economic environment," ACCI's Mr McKellar said.
"Unfortunately, there seems to be pretty much a random list of measures, many of them re-announcements."
The Australian Competition and Consumer Commission (ACCC) will receive $7.1 million over two years to increase its oversight of franchises and enforcement of the Franchising Code of Conduct.
There is $38.8 million for the ACCC to investigate misleading and deceptive pricing practices and unconscionable conduct among supermarkets and retailers.
$2.9 million will go towards helping fresh produce suppliers, as announced when the supermarket inquiry report was released.
The federal government announced funding to improve transparency for produce suppliers to supermarkets last week. (Gary Rivett: ABC News)
"I think there was a lot of talk in the budget for small business but, to be honest with you, I don't think there was a lot in there that was really substantial," AMP's Dr Oliver said.
"There's nothing in there about injecting more competition into our airline industry or our supermarkets or lots of other industries where we have oligopolies, and that's probably where we need to do all the work."
"I would've liked to have seen a bolder budget — this is a very 'blah' budget."
There is $3 million for the corporate regulator, the Australian Securities and Investments Commission, to crack down against businesses illegally phoenixing.
Hospitality businesses will receive a boost from pausing indexation on the draught beer excise for two years, from this August.
There is an agreement between the Commonwealth and state and territory governments to design a national licensing scheme for electrical trades, allowing electricians to move where they are most needed.
Over 19 years, there is $3.2 billion for "the future of Australia's metal industry", including support for aluminium smelters to switch to renewable energy, similar funding for iron projects and support for the Whyalla steelworks.
Childcare providers affected by ex-Tropical Cyclone Alfred will receive a one-off "business continuity payment" if they were closed for eight or more days due to the storm, costing $2.5 million over two years — it is contingent on those businesses not charging families a gap above the child care subsidy during the closure period.
And of particular interest to Tasmanian salmon businesses, while the government is pushing through legislation to guarantee farming continues on the state's west coast, the budget contains $3 million over three years for a Maugean Skate breeding program.
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