2025-26 Australian Federal Budget: Please don’t ignore the red flags, complacency is our enemy

Please don’t ignore the red flags, complacency is our enemy
CANBERRA, 25 March 2025 - “Australia is sleepwalking into an economic wasteland, and successive governments have been ignoring the red flags,” says Institute of Public Accountants (IPA) CEO Professor Andrew Conway.
“Global organisations have been warning Australia about the state of our economy and the lack of attention to productivity boosting reforms and initiatives,” says Professor Conway.
Here are some of the disturbing trends we can’t ignore and why we should care:

  1. According to the 2024 ASBFEO report, small businesses' contribution to GDP has plummeted from 40% in 2006 to just 33% today, while their share of private sector employment has fallen from 53% to 42%. Small business matters in Australia.
  2. The level of indebtedness is the fastest growing in the developed world. Gross domestic debt as a proportion of GDP has increased from 15.2% in 2004 to 57.9% 2024. No other major economy has experienced an acceleration of debt on that scale.
  3. Successive Federal Budgets have been light on initiatives to boost innovation, which is directly linked to living standards.
  4. Dysfunctional tax and superannuation systems are not fit for purpose. Inertia is hurting growth, productivity and living standards. Total revenue for 2025-26 is expected to be $750.3B of which 67% will be from individual, company and resource rent taxes.
  5. Per capita growth has been negative, with a reliance on immigration-led population growth to lift our economy. This has been a short-term solution but now we need long-term vision and courage to sustainably grow the economy.

According to OECD data, Australia’s real wage growth has lagged behind other OECD countries, leaving us 4.8% below pre-pandemic levels. This exacerbates the cost-of-living crisis.


The IPA asks – where are the incentives and reforms focused on increasing sustainable and long-term business investment and risk taking?
Are we genuinely supporting and encouraging the next generation of entrepreneurs and start ups? These worrying trends provide the answer we don’t want to hear.