Election 2025: Economy  

Prof. Syed Munir Khasru

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Ahead of the Australian 2025 Federal Election

As Australia heads into the 2025 federal election, the question on everyone’s mind is whether the economic recovery is truly sustainable or merely a temporary respite. On the surface, key indicators such as GDP growth and inflation suggest that the country is on a path to stabilization. GDP growth is projected to be between 2% and 2.1% in 2025, an improvement from 2024’s 1.3%, the slowest in over three decades. Inflation, which peaked in previous years, moderated to 2.4%, partly due to the Reserve Bank’s monetary policy tightening; however, the government’s continued household spending support has somewhat counteracted these anti-inflationary measures.

However, a deeper look at the numbers reveals a more complex and precarious situation. The recovery has been driven largely by government stimulus measures and public spending, but questions arise about whether this approach can sustain long-term growth as we assess the current economic landscape, scrutinize strategies of the Albanese government, explore opposition’s proposals, and analyze what the 2025 election could mean for Australians. Australia’s trade in 2025 is driven by key partnerships with China, Japan, South Korea, and India. As the election approaches, Labor focuses on trade diversification, digital modernization, and public investment, while the Coalition prioritizes deregulation and private sector growth. Both parties aim to strengthen trade to ensure economic stability amid global uncertainty. China remains Australia’s largest trading partner, with bilateral trade rising significantly under ChAFTA. Japan’s trade continues to grow, especially in agriculture, and trade with South Korea reached $20.9 billion in exports. Trade with India surged to $24 billion after the ECTA. However, President Trump’s 2025 tariff policy, imposing a 10% tariff on Australian exports, strains Australia–US relations. The policy impacts industries like steel, aluminum, and beef, but Australia seeks to diversify trade and avoid retaliatory tariffs. While immediate economic effects are small, risks remain if global tensions escalate, requiring strategic adaptability.

What has worked well  

The Albanese-led Labor government has implemented economic and social reforms to stabilize Australia’s post-pandemic recovery. Key initiatives include reducing unemployment, modernizing trade systems, and enhancing social protections, yielding visible benefits in clean energy, digital innovation, and fiscal relief, showcasing the government’s commitment to inclusive growth and structural transformation.

• Stage 3 tax cuts: Modified to benefit middle and lower-income households, improving income redistribution.
• Wage increases in care industries: Significant pay hikes in childcare and aged care via award system adjustments and additional government funding.
• Competition reforms: Updates to merger laws and wage thresholds for non-compete clauses, along with state-level competition incentives.
• Low unemployment: The unemployment rate reached a historic low of 3.7%, reflects significant public sector hiring, though approximately 14,000 positions replaced external contractors and concerns remain about the sustainability of this growth.
• Inflation control: Inflation moderated to around 2.4%, due to the Reserve Bank’s monetary policy tightening; however, the government’s continued household spending support has somewhat counteracted these anti-inflationary measures.
• Digital trade advances: Significant progress in digitizing trade through blockchain-enabled customs and regional trade partnerships, reducing inefficiencies.
• Social spending: Expansion of Commonwealth Rent Assistance and enhanced healthcare services benefiting lower- and middle-income Australians.
• Climate policy: Efforts to invest in renewables and improve grid infrastructure, though progress has been delayed by regulatory hurdles.
  
  

The unfulfilled expectations

The Albanese government has faced criticism for delays and shortcomings in housing affordability, private sector confidence, and real wage growth. Concerns about bureaucratic inefficiencies, slow policy execution, and reliance on state-led interventions have raised doubts about the recovery’s sustainability. As Australia approaches the 2025 election, these issues have become key points for opposition parties and frustrated voters.

• Overdependence on public sector for jobs: While employment has increased, much of it is public sector driven. Private sector investment remains weak, raising concerns about long-term job sustainability and economic dynamism.
• Wage growth lags behind living costs: Real wage growth has not kept pace with inflation and housing costs, leaving many households under financial pressure despite overall economic recovery narratives.
• Slow housing rollout: Labor’s promise to build 100,000 homes is behind schedule, and housing affordability remains one of the nation’s most pressing crises—exacerbated by high migration levels and urban demand.
• Digital trade implementation challenges: Although promising on paper, cybersecurity concerns, regulatory inconsistency, and SME digital adoption gaps have hindered the full realization of digital trade reforms.
• Skilled labor shortages persist: Even with visa reforms and migration support, Australia is still facing acute shortages in key sectors like tech, engineering, and healthcare, partly due to bureaucratic lags and insufficient retention strategies.
• Proactive climate policy: Although Labor’s proactive climate policies have laid groundwork through renewable investments, actual progress remains well short of promises due to regulatory and permitting delays in essential grid infrastructure—a challenge neither party has effectively addressed beyond acknowledging the issue.
  
  

What lies ahead

As the 2025 election approaches, voters seek future-focused, private sector-driven, and equitable solutions. Key demands include housing reform, real wage growth, skilled workforce expansion, and climate-smart transitions. The next government must show both vision and the ability to implement these reforms to secure voter trust and address these pressing challenges.

• Private sector revival: Voters expect the next government—regardless of party—to stimulate private investment, reduce business uncertainty, and shift away from over-reliance on public jobs.
• Affordable housing at scale: One of the top electoral priorities is mass-scale delivery of social and affordable housing, as voters grow impatient with delayed rollouts and rising rents.
• Real wage growth and living cost relief: Australians want tangible improvements in wages that outpace inflation, alongside continued relief for essentials like rent, energy, and food.
• Climate action with economic payoffs: There’s growing support for green energy transitions—but with a demand for more visible job creation and regional development, especially in areas affected by fossil fuel phase-outs.
• Resilient trade and skilled workforce policies: Voters seek leadership that can diversify trade partners beyond China and fix migration and skills pathways to ensure domestic industries are well-staffed and competitive.
• Trade diversification urgency: Recent US tariffs reinforce the need to broaden Australia’s export markets and reduce reliance on major partners.

Strategic industry support: Affected sectors like agriculture and metals will need targeted support to remain competitive amid shifting global trade dynamics.

2025 election manifesto by party

The Greens Party

• Greens would target net-zero emissions by 2035, investing heavily in renewables and green jobs.
• Introduce Universal Basic Income and expand affordable housing with rent controls.
• Fund programs through progressive taxes on the wealthy and high-polluting industries.
• Face challenges from traditional industries and concerns over financial sustainability.