Business chiefs to PM and Jim: It’s time to stop the spending
Originally published by Geoff Chambers of The Australian
03.05.2026
Australia’s biggest employers are pushing Anthony Albanese and Jim Chalmers to impose strict limits on spending, debt levels and the tax-to-GDP ratio, as the Treasurer promises to save more than he spends in next week’s budget.
The Albanese government is pledging to bank all windfall revenues in the May 12 budget, which is expected to impose sweeping tax changes to trusts, capital gains tax discounts and negative gearing.
After The Australian last week revealed none of the revenue from housing tax reforms would be funnelled into income tax cuts or new spending, Dr Chalmers on Sunday said the post-Iran war budget would focus on restraint and paying down debt.
“There will be more savings and more spending restraint helping to pay down more of the trillion dollars of debt that the Liberals left behind,” he said. “We’re getting the budget in better nick because that helps to fund the things that Australians need and deserve, like Medicare, aged care and cost-of-living relief.”
The yet-to-be disclosed results of the government’s 2025-26 savings drive, aimed at improving the bottom line and keeping spending under a mammoth 27 per cent of GDP, are on top of the more than $38bn the government hopes to save from NDIS cuts and changes to private health insurance rebates for older Australians.
The May 12 budget will be the second consecutive document to include a net saving from the government, and Labor sources said government payments as a percentage of GDP will be well below the 27 per cent projected for this year in the last budget.
The BCA, which represents more than 130 chief executives from the nation’s top companies, including BHP, Rio Tinto, Wesfarmers, Coles, the big banks and accounting firms, Transurban, Qantas, Microsoft, LendLease and Santos, is advocating for a budget based on fiscal discipline and sound economic fundamentals that fix Australia’s broken tax system and lift business investment levels, which remain stuck at near 30-year lows.
Warning that failure to restore fiscal guardrails next week would fuel inflation and impose “lower living standards for everyone”, the industry group’s plan to restore Australia’s fiscal firepower includes imposing a cap on real spending growth of 2 per cent per year.
The BCA also wants to put a ceiling on net debt by ensuring it never exceeds the pandemic peak of 28.3 per cent of GDP, and capping the tax-to-GDP ratio to prevent ongoing tax increases from bracket creep.
With federal government spending projected to hit 26.9 per cent of GDP in 2025-26, the highest level outside the pandemic since the 1980s, the BCA submission said: “Public finances have deteriorated as spending rises, deficits persist and debt resumes growth.”
“Structural weaknesses, optimistic assumptions and mounting federal-state pressures underline the need for disciplined, transparent budget repair. The budget is weaker than it should be in this stage of the economic cycle,” the BCA told Treasury.
Amid fears of a third rate hike this year at Tuesday’s Reserve Bank of Australia board meeting, BCA chief executive Bran Black told The Australian: “We must get our economic fundamentals right or, in the long term, the country will pay through lower living standards for everyone.
“When global shocks hit, Australians pay higher prices through bills and everyday costs, so it’s vital we support households with productivity-enhancing measures that reduce inflationary pressures.”
As Australia’s gross debt bill inches closer to $1 trillion, fiscal measures backed by business chiefs include stabilising and reducing government debt, moving the headline cash position to balance or surplus, which has been put in place by most state governments, and requiring new capital investment to meet independent cost-benefit analysis.
For the first time, big business is also calling for greater scrutiny of the Albanese government’s growing list of off-budget funds, which are being used to underpin Labor’s priorities in clean energy, housing and manufacturing.
The BCA says off-budget financial investments, including in the NBN, Snowy 2.0, the $15bn National Reconstruction Fund, $10bn Housing Australia Future Fund and $20bn Rewiring the Nation fund, should be “independently assessed as producing an adequate financial return including an appropriate premium for risk”. The business lobby group is calling for more “details of off-budget investments when they occur, including expected returns, assumptions, expected impairments and impact on interest payments”.
Mr Black said next Tuesday’s budget “must reduce spending to curb inflation, include significant reductions in red tape, and deliver tax changes that drive investment by companies of all sizes”.
“It must also do the hard work, such as establishing a spending cap, to ensure we have the fiscal firepower to get through the next economic shock – because if recent experience is anything to go by, we know we’ll have one,” he said.
In its 106-page pre-budget submission lodged with Treasury, the BCA also urged the Albanese government to not impose an investment-sapping cashflow tax or squander a new national resilience blueprint by abandoning genuine productivity and growth measures.
After Productivity Commissioner Danielle Wood last week again spruiked the Commission’s cashflow tax proposal to government, the BCA on Sunday released new EY modelling warning such a tax would materially weaken investment, shrink the economy and put downward pressure on wages.
Under a 2036 scenario, the modelling shows investment would fall by 3.3 per cent, constituting about $29bn less capital in the economy, and that GDP would be 1 per cent lower, the equivalent to a $36.8bn hit to the economy. National income is predicted to drop by $21bn, while real wages are forecast to fall by 1.1 per cent. The BCA is warning of longer-term impacts that compound over time as lower investment reduces capital stock that permanently drags on productivity and economic growth.
In addition to railing against cashflow or gas taxes that would drive up consumer costs, the BCA restated support for more competitive business tax settings, including through an investment allowance, immediate expensing and simplified R&D tax incentives.
In a separate pre-budget report, released on Monday by Infrastructure Partnerships Australia, the government is being urged to implement a national productivity growth target and regulatory impact statement frameworks that explicitly account for productivity.
The influential infrastructure lobby group, chaired by Sir Rod Eddington, one of Mr Albanese’s closest and long-time business confidants, calls on the federal government to tie project funding to productivity outcomes, and for governments to leverage private finance in infrastructure delivery and adopt transparent long-term targets for infrastructure investment as a share of GDP in their budgets.
As the Prime Minister and Treasurer spruik a “resilience” budget, Mr Black said national resilience cannot be delivered “without boosting productivity and growing the economy, and this must be at the heart of the government’s approach to this budget”.
“Every country in the world is fighting harder than ever for investment, and we can’t see Australia fall behind. When investment goes elsewhere it takes Australian jobs, wages and living standards with it,” he said.
While the Albanese government is not expected to immediately proceed with the cashflow tax in next week’s budget, EY scenarios predict larger economic losses than potential gains.
Criticism of the Productivity Commission’s assumptions is that projected gains rely on the new tax being neutral and not changing investment behaviour. The modelling showed small changes to investment incentives could have outsized long-term consequences, including projects becoming uneconomic at the margin, businesses scaling back expansion plans, and capital that shifts to lower-risk and lower-growth activities.
On the issue of immigration, business leaders are backing a “growth-focused permanent migration intake”, which sets permanent skills migration as a stable share of Australia’s population. As the Coalition and One Nation demand deeper cuts to Australia’s migration numbers, the BCA supports increasing the share of employer-sponsored visas.
Under a proposed “population plan”, the BCA says permanent skilled migration settings would integrate workforce needs, demographic change, housing supply and infrastructure delivery.
The BCA welcomed the Albanese government’s increase in the permanent migration planning level to 190,000 in 2023-24 and 185,000 in 2024-25 and 2025-26, but said “these settings still represent a contraction in per-capita terms relative to population growth and labour market demand”.
“As a result, current planning levels are insufficient to meet Australia’s skills needs, support productivity growth or offset mounting demographic pressures,” the BCA submission said.
Infrastructure Partnerships Australia chief executive Adrian Dwyer said Dr Chalmers should establish a clear national productivity growth target because “if we don’t measure it, we can’t manage it”.
“Everyone accepts that we have a national productivity problem, so setting a national productivity growth target provides the mechanism to be explicit about the aspiration to improve and ruthlessly transparent about what gets us there, and what doesn’t,” Mr Dwyer said.
“There is no productivity silver bullet; but a series of targeted, practical reforms that each deliver sustained gains is needed – and infrastructure is at the very centre of that equation.
“Productivity isn’t some abstract concept. Done right, it is better roads to drive on, upgraded schools to educate our kids in, safer sites to work on, and a growing economy to support our prosperity.”
As the government prepares to use the budget to deliver cost-of-living supports and fuel security investments, while overhauling property taxes and imposing other new revenue measures, the BCA is pushing for growth-targeted policies in red tape reduction, tax and housing.
The BCA wants the government to lower regulatory costs by 25 per cent within 3½ years through cutting red tape and prioritising major regulatory reviews to reduce costs in housing construction, corporate reporting and telecommunications.
Australia’s biggest employers are pushing Anthony Albanese and Jim Chalmers to impose strict limits on spending, debt levels and the tax-to-GDP ratio, as the Treasurer promises to save more than he spends in next week’s budget.
The Albanese government is pledging to bank all windfall revenues in the May 12 budget, which is expected to impose sweeping tax changes to trusts, capital gains tax discounts and negative gearing.
After The Australian last week revealed none of the revenue from housing tax reforms would be funnelled into income tax cuts or new spending, Dr Chalmers on Sunday said the post-Iran war budget would focus on restraint and paying down debt.
“There will be more savings and more spending restraint helping to pay down more of the trillion dollars of debt that the Liberals left behind,” he said. “We’re getting the budget in better nick because that helps to fund the things that Australians need and deserve, like Medicare, aged care and cost-of-living relief.”
The yet-to-be disclosed results of the government’s 2025-26 savings drive, aimed at improving the bottom line and keeping spending under a mammoth 27 per cent of GDP, are on top of the more than $38bn the government hopes to save from NDIS cuts and changes to private health insurance rebates for older Australians.
The May 12 budget will be the second consecutive document to include a net saving from the government, and Labor sources said government payments as a percentage of GDP will be well below the 27 per cent projected for this year in the last budget.
The BCA, which represents more than 130 chief executives from the nation’s top companies, including BHP, Rio Tinto, Wesfarmers, Coles, the big banks and accounting firms, Transurban, Qantas, Microsoft, LendLease and Santos, is advocating for a budget based on fiscal discipline and sound economic fundamentals that fix Australia’s broken tax system and lift business investment levels, which remain stuck at near 30-year lows.
Warning that failure to restore fiscal guardrails next week would fuel inflation and impose “lower living standards for everyone”, the industry group’s plan to restore Australia’s fiscal firepower includes imposing a cap on real spending growth of 2 per cent per year.
The BCA also wants to put a ceiling on net debt by ensuring it never exceeds the pandemic peak of 28.3 per cent of GDP, and capping the tax-to-GDP ratio to prevent ongoing tax increases from bracket creep.
With federal government spending projected to hit 26.9 per cent of GDP in 2025-26, the highest level outside the pandemic since the 1980s, the BCA submission said: “Public finances have deteriorated as spending rises, deficits persist and debt resumes growth.”
“Structural weaknesses, optimistic assumptions and mounting federal-state pressures underline the need for disciplined, transparent budget repair. The budget is weaker than it should be in this stage of the economic cycle,” the BCA told Treasury.
Amid fears of a third rate hike this year at Tuesday’s Reserve Bank of Australia board meeting, BCA chief executive Bran Black told The Australian: “We must get our economic fundamentals right or, in the long term, the country will pay through lower living standards for everyone.
“When global shocks hit, Australians pay higher prices through bills and everyday costs, so it’s vital we support households with productivity-enhancing measures that reduce inflationary pressures.”
As Australia’s gross debt bill inches closer to $1 trillion, fiscal measures backed by business chiefs include stabilising and reducing government debt, moving the headline cash position to balance or surplus, which has been put in place by most state governments, and requiring new capital investment to meet independent cost-benefit analysis.
For the first time, big business is also calling for greater scrutiny of the Albanese government’s growing list of off-budget funds, which are being used to underpin Labor’s priorities in clean energy, housing and manufacturing.
The BCA says off-budget financial investments, including in the NBN, Snowy 2.0, the $15bn National Reconstruction Fund, $10bn Housing Australia Future Fund and $20bn Rewiring the Nation fund, should be “independently assessed as producing an adequate financial return including an appropriate premium for risk”. The business lobby group is calling for more “details of off-budget investments when they occur, including expected returns, assumptions, expected impairments and impact on interest payments”.
Mr Black said next Tuesday’s budget “must reduce spending to curb inflation, include significant reductions in red tape, and deliver tax changes that drive investment by companies of all sizes”.
“It must also do the hard work, such as establishing a spending cap, to ensure we have the fiscal firepower to get through the next economic shock – because if recent experience is anything to go by, we know we’ll have one,” he said.
In its 106-page pre-budget submission lodged with Treasury, the BCA also urged the Albanese government to not impose an investment-sapping cashflow tax or squander a new national resilience blueprint by abandoning genuine productivity and growth measures.
After Productivity Commissioner Danielle Wood last week again spruiked the Commission’s cashflow tax proposal to government, the BCA on Sunday released new EY modelling warning such a tax would materially weaken investment, shrink the economy and put downward pressure on wages.
Under a 2036 scenario, the modelling shows investment would fall by 3.3 per cent, constituting about $29bn less capital in the economy, and that GDP would be 1 per cent lower, the equivalent to a $36.8bn hit to the economy. National income is predicted to drop by $21bn, while real wages are forecast to fall by 1.1 per cent. The BCA is warning of longer-term impacts that compound over time as lower investment reduces capital stock that permanently drags on productivity and economic growth.
In addition to railing against cashflow or gas taxes that would drive up consumer costs, the BCA restated support for more competitive business tax settings, including through an investment allowance, immediate expensing and simplified R&D tax incentives.
In a separate pre-budget report, released on Monday by Infrastructure Partnerships Australia, the government is being urged to implement a national productivity growth target and regulatory impact statement frameworks that explicitly account for productivity.
The influential infrastructure lobby group, chaired by Sir Rod Eddington, one of Mr Albanese’s closest and long-time business confidants, calls on the federal government to tie project funding to productivity outcomes, and for governments to leverage private finance in infrastructure delivery and adopt transparent long-term targets for infrastructure investment as a share of GDP in their budgets.
As the Prime Minister and Treasurer spruik a “resilience” budget, Mr Black said national resilience cannot be delivered “without boosting productivity and growing the economy, and this must be at the heart of the government’s approach to this budget”.
“Every country in the world is fighting harder than ever for investment, and we can’t see Australia fall behind. When investment goes elsewhere it takes Australian jobs, wages and living standards with it,” he said.
While the Albanese government is not expected to immediately proceed with the cashflow tax in next week’s budget, EY scenarios predict larger economic losses than potential gains.
Criticism of the Productivity Commission’s assumptions is that projected gains rely on the new tax being neutral and not changing investment behaviour. The modelling showed small changes to investment incentives could have outsized long-term consequences, including projects becoming uneconomic at the margin, businesses scaling back expansion plans, and capital that shifts to lower-risk and lower-growth activities.
On the issue of immigration, business leaders are backing a “growth-focused permanent migration intake”, which sets permanent skills migration as a stable share of Australia’s population. As the Coalition and One Nation demand deeper cuts to Australia’s migration numbers, the BCA supports increasing the share of employer-sponsored visas.
Under a proposed “population plan”, the BCA says permanent skilled migration settings would integrate workforce needs, demographic change, housing supply and infrastructure delivery.
The BCA welcomed the Albanese government’s increase in the permanent migration planning level to 190,000 in 2023-24 and 185,000 in 2024-25 and 2025-26, but said “these settings still represent a contraction in per-capita terms relative to population growth and labour market demand”.
“As a result, current planning levels are insufficient to meet Australia’s skills needs, support productivity growth or offset mounting demographic pressures,” the BCA submission said.
Infrastructure Partnerships Australia chief executive Adrian Dwyer said Dr Chalmers should establish a clear national productivity growth target because “if we don’t measure it, we can’t manage it”.
“Everyone accepts that we have a national productivity problem, so setting a national productivity growth target provides the mechanism to be explicit about the aspiration to improve and ruthlessly transparent about what gets us there, and what doesn’t,” Mr Dwyer said.
“There is no productivity silver bullet; but a series of targeted, practical reforms that each deliver sustained gains is needed – and infrastructure is at the very centre of that equation.
“Productivity isn’t some abstract concept. Done right, it is better roads to drive on, upgraded schools to educate our kids in, safer sites to work on, and a growing economy to support our prosperity.”
As the government prepares to use the budget to deliver cost-of-living supports and fuel security investments, while overhauling property taxes and imposing other new revenue measures, the BCA is pushing for growth-targeted policies in red tape reduction, tax and housing.
The BCA wants the government to lower regulatory costs by 25 per cent within 3½ years through cutting red tape and prioritising major regulatory reviews to reduce costs in housing construction, corporate reporting and telecommunications.