From Parliament House, Canberra: Last year Australia experienced record numbers of business failures. While the percentage of businesses was not as high as in 2013, the actual number of failed businesses was higher. Further, productivity growth, a key driver of living standards, has been negative and remains flat. Yet underpinning this election budget is a rebound in private sector growth that is difficult to justify.
Even with tax cuts that equate to an extra cup of coffee each week, these do not kick in until July 2026. I lined up in Parliament House today to ask the Treasurer to respond to his assumptions behind the rebound in private sector growth at his Budget address, but we ran out of time. (In the meantime, I have written to the Treasurer and the Shadow Treasurer to respond to the issue.) In my opinion, however, it will be difficult to justify the assumption that private final demand will suddenly rebound next financial year and grow more than public final demand in 2026-27 given present circumstances.
The concept of ‘final demand’ in the Budget papers means, for the public sector, ‘expenditure on goods and services by all public sector entities’. Whereas private final demand means ‘the total spending by households and private businesses on goods and services within an economy, excluding government spending’.
The Budget papers suggest that private final demand decreased in 2024-25 but will grow in 2025-26 and will grow more than public final demand (as a percentage of growth) by 2026-27.
However, given the lack of focus on the regions beyond mythical concepts like green metal industries and Net Zero economies, it is hard to see how this can be achieved.
Where will all this disposable income come from?
Rex Airlines went into voluntary administration in July 2024. The government rightly supported creditors to enable essential flights to continue to the regions while a buyer is sought. But it wasn’t just last year that businesses were doing it tough.
Today, for example, iconic Australian brand Jeanswest entered into voluntary administration.
To demonstrate the breadth of the economic impact of three years of Labor, even a stock and station agent in Wagga, established in 1899 and employing some six generations of Australians, has closed its doors. This was partly due to a lack of staff to implement the new electronic sheep tagging system.
To make matters worse, Custom Denning, the iconic Sydney bus manufacturer, has warned that it may need to close its doors due to the NSW government purchasing cheaper Chinese-made electric buses.
So much for a Net Zero Economy and a Future Made in Australia…
There have already been allegations in the major newspapers that the Treasurer’s Budget is comparing the current circumstances to a ‘phantom’ measure from 2022.
Further, at the National Press Club event held in Parliament House today, one senior journalist asked the Treasurer if he was a hypocrite after quoting the Treasurer’s own words while in opposition.
According to the Treasurer, the economy has ‘turned a corner’ but it may not be Australian-made electric buses turning that corner.
Taking into account the demise of regional businesses and iconic Australian brands, too, it is difficult to see how private sector spending is going to rebound any time soon.
For most households, the inflation figures mean nothing when council rates are exploding in many local government areas, the cost of meat and dairy is through the roof, and the cost of motor vehicle fuel has stayed around its highest levels for years. One might wonder where all this disposable income is going to come from. (Unless you are in one of Labor’s favourite employment categories, of course.)
Underpinning the continued government spending is a desire by some groups, such as the left-leaning Australia Institute, to raise taxes. This would enable Labor to continue its social democratic economic policies at the expense of individual freedoms and choice in what for now remains a market-based economy.
Regrettably, our education system seems to be producing citizens who are happy to lean on the government, rather than lift themselves through hard work and enterprise. The attacks on the family in recent years all point to a form of modern communism that was once considered abhorrent by ordinary Australians.
Key to the Albanese government’s problem, however, is that one cannot get blood out of a stone.
As the resources and agricultural sectors are continually hounded by the Net Zero movement, Australia’s prosperity is increasingly at risk. Add to the mix the volatility in the global economy and the Albanese government’s inability to engage with US President Donald Trump, and it is clear that this budget is little more than a house of cards built on shifting sands. Hopefully Australians will see through the smoke and mirrors and bring an end to the left’s dominance as in the US last year, and hopefully in Canada next month.
Byline: Dr Michael de Percy FRSA FCILT MRSN @FlaneurPolitiq is a political scientist and political commentator. He is a member of the Federal Parliamentary Press Gallery, Editor-in-Chief of the Journal of Telecommunications and the Digital Economy, Chairman of the ACT and Southern NSW Chapter of the Chartered Institute of Logistics and Transport, and a member of the Australian Nuclear Association. Michael is a graduate of the Royal Military College, Duntroon and was appointed to the College of Experts at the Australian Research Council in 2022. All opinions in this article are the author’s own.