The stakes of the roundtable
Australia has entered a period of renewed policy ferment. From 19 to 21 August 2025 Treasurer Dr Jim Chalmers is hosting the three-day Economic Reform Roundtable inside Parliament House. Business chiefs, union leaders, academics and senior officials have cleared their diaries to address a blunt agenda: how do we lift productivity, repair the budget and modernise a tax system that many say has drifted out of shape?
These conversations can sound abstract, yet they have immediate consequences for family groups, private investors and business owners. Tax schedules, concession rules, subsidies and service outlays all feed directly into after-tax cash flow and long-term portfolio returns. When Canberra rewrites the rules, the wealth you retain or forfeit can change dramatically. That is why following the roundtable, and acting early, has become essential risk management.
Canberra gathers: who is in the room and why it matters
Treasury has cast the net wide. Around the Cabinet table sit representatives from the Business Council of Australia, the Australian Council of Trade Unions, the Productivity Commission, the Australian Industry Group, leading universities and the big four accounting firms. Energy producers argue for quicker approvals; tech founders push for innovation incentives; social-service advocates defend safety-net spending.
The Treasurer’s office describes the event as “a working retreat on productivity and budget resilience”. In practice it is a live policy laboratory. Departments arrive with discussion papers, costings and draft legislative options. When consensus forms, a proposal can move from talking point to Cabinet submission in weeks. Investors therefore treat the gathering as an early warning system for the May 2026 Budget and the election platform that follows.
Australia’s budget reality check
Any serious reform talk starts with the fiscal scoreboard. Commonwealth gross debt is projected to pass $1 trillion within the forward estimates. Servicing that debt already absorbs more than the entire annual defence budget. Meanwhile total spending remains above 26 per cent of GDP, a ratio Australia has only previously recorded during world wars or deep recessions.
The numbers are stark enough to demand a rethink. Treasury modelling shows that if spending stayed at current trajectories and tax settings remained unchanged, the structural deficit would widen to 2 per cent of GDP by 2030. Ratings agencies have warned that persistent deficits could eventually threaten Australia’s coveted AAA sovereign rating. That would raise borrowing costs across the economy, from government bonds to home loans.
Table 1 places the challenge in context.
| Indicator | 2019-20 (pre-COVID) | 2024-25 (estimate) | 2029-30 (projection, no reform) |
|---|---|---|---|
| Commonwealth gross debt ($bn) | 684 | 1 005 | 1 245 |
| Interest payments (% of revenue) | 6.7 % | 8.9 % | 11.4 % |
| Total expenditure (% of GDP) | 24.8 % | 26.3 % | 26.8 % |
| Structural budget balance (% of GDP) | ‑0.4 % | ‑1.4 % | ‑2.0 % |
Sources: 2025-26 Budget Paper 1; Treasury Long-Term Fiscal Model.
The numbers tell a simple story: without productivity gains or tax changes, Canberra will spend more, borrow more and allocate a rising share of revenue to interest instead of essential services or growth-enhancing investment. That pattern pressures policymakers to hunt for savings and fresh revenue.
How tax reform could reshape your cash flow
Every dollar the government raises must come from somewhere. Since the early 2000s Australia’s personal income tax has done ever more of the heavy lifting. Bracket thresholds are fixed in nominal dollars, so inflation and wage growth quietly push workers into higher marginal rates. Economists call this bracket creep; households call it a pay-packet squeeze.
If the thresholds are not indexed, the average rate paid by someone on $120 000 will climb from 29 per cent today to nearly 32 per cent by 2028, according to Parliamentary Budget Office estimates. Company tax remains one of the highest in the OECD for large firms at 30 per cent. Meanwhile, reliance on property transaction duties by state treasuries distorts investment decisions.
The roundtable is canvassing options such as indexing personal brackets, lowering the company rate for internationally mobile capital, broadening the GST base, or introducing a soft cap on work-related deductions. None of these ideas is new, but the fiscal outlook lends them renewed urgency.
Table 2 illustrates the cost of bracket creep for a typical professional couple.
| Tax year | Nominal salary each | Combined taxable income | Combined tax payable | Average tax rate | After-tax income | Real-terms change* |
|---|---|---|---|---|---|---|
| 2025-26 | $120 000 | $240 000 | $70 820 | 29.5 % | $169 180 | , |
| 2028-29 (no reform) | $132 000 | $264 000 | $86 330 | 32.7 % | $177 670 | ‑3.2 % |
*Adjusted for 3 per cent inflation. Source: Parliamentary Budget Office scenario modelling, July 2025.
The table shows how nominal pay rises do not guarantee real progress if tax creep silently bites. Any household budgeting for school fees or mortgage repayments must model these trajectories, preferably with conservative assumptions.
Subsidies under scrutiny: the electric vehicle test case
Nothing symbolises the new climate of cost review more than the electric vehicle fringe benefits tax exemption. When the Treasury Laws Amendment (Electric Car Discount) Act passed in late 2022, officials estimated an annual cost of around $55 million. By mid-2025 updated take-up rates pushed that figure above $560 million, ten times the original forecast. Because the saving rises in line with the recipient’s marginal tax rate, senior executives reap the largest benefit, prompting critics to brand the scheme “welfare for the wealthy”.
Treasury officials arrived at the roundtable armed with spreadsheets showing that one subsidy directed to a relatively small demographic now costs more than the entire Regional Arts Fund. Opposition finance spokesman Angus Taylor has already signalled support for winding the exemption back if cost blowouts continue.
Table 3 sets out how the concession affects different salary bands.
| Employee salary | FBT otherwise payable (on $60 000 EV) | Saving from exemption | Effective net benefit after GST | Share of total programme cost |
|---|---|---|---|---|
| $80 000 | $11 400 | $11 400 | $12 540 | 9 % |
| $150 000 | $21 375 | $21 375 | $23 513 | 28 % |
| $250 000 | $35 625 | $35 625 | $39 188 | 41 % |
Source: ATO FBT calculation guide 2025; Treasury cost estimates.
Such distribution profiles sharpen the political appetite for reform. Investors who rely on the concession for salary-sacrifice arrangements should map alternative strategies, leasing structures, novated arrangements or outright purchase, before policymakers move the goalposts.
Dependency and the politics of spending restraint
Winding back concessions is difficult because many households now depend on direct or indirect government support. The National Disability Insurance Scheme, family tax benefits, childcare rebates and public-sector salaries touch a growing share of voters. Treasury analysis shows that 52 per cent of Australian households receive more in transfers and public services than they pay in income tax. That majority makes broad-based cuts politically sensitive.
The roundtable must therefore weigh fiscal arithmetic against electoral reality. Economists argue that the only sustainable path is to focus on measures that lift productivity, because rising output expands the tax base without lifting rates. However, productivity growth has averaged just 1.1 per cent a year since 2010, well below the 1990s average. Without policy to unlock new output, bracket creep and spending restraint remain the default levers, and both hit private wealth directly.
Winners and losers across income bands
When reform packages land, they rarely spread pain and gain evenly. High-income earners and capital-intensive businesses occupy the bullseye because concessions they enjoy, such as discounted capital gains or trust distributions, appear large on budget scorecards. Middle-income households may dodge direct tax hikes but face indirect effects if the GST base broadens to fresh food or health. Low-income families risk losing purchasing power if bracket indexation pushes them off transfer-payment eligibility thresholds.
Small businesses could benefit if company tax steps down to 25 per cent for all entities, not just those under $50 million turnover. Retail investors might find franking credit refunds curbed. Resource companies could gain from faster approvals but pay higher environmental levies. The mosaic is complex, which is why scenario planning matters.
Practical moves to protect and grow your wealth
EEA Advisory’s position is clear. Households and businesses should prepare for a future in which tax concessions are less generous and government money less freely available. Fortunately, active strategies can offset much of the pressure.
First, model cash flows under higher average tax rates. Use conservative wage growth of 3 per cent and assume no bracket indexation until at least July 2028. Stress-test mortgages or business loans against after-tax income at those settings.
Second, audit reliance on subsidies. If your remuneration package hinges on the EV FBT exemption, set a sunset date in your budget. If your enterprise enjoys R&D tax offsets or export grants, factor in dilution scenarios.
Third, pivot portfolios towards sectors likely to benefit from productivity investment. The Productivity Commission’s briefing to the roundtable highlights faster approvals for critical minerals and renewable projects as top priorities. Exposure to mining services, grid infrastructure and skills-training providers may capture upside.
Fourth, review business and investment structures. Discretionary trusts remain effective, but policymakers periodically float minimum tax rates on trust distributions. Consider whether corporate beneficiaries or investment bonds offer more predictable outcomes. Superannuation continues to deliver long-term tax deferral, yet the recent Division 293 threshold reduction to $220 000 of income shows that high-balance accounts invite scrutiny. Diversification across vehicles is prudent.
Finally, maintain liquidity. Legislative change often includes grandfathering clauses, but transition windows can be brief. Holding adequate cash or short-duration bonds lets you pounce on opportunities or settle liabilities without forced asset sales.
Timing and next steps for investors
The roundtable itself will not pass laws; that happens in Parliament. Yet history shows that big-ticket ideas floated in August frequently appear in the following May Budget. Draft legislation can then pass by Christmas, with effect from the next 1 July. Investors therefore have roughly nine months to pre-empt reforms flagged this week.
Treasury will release a formal communiqué in September summarising consensus points. Senate Estimates hearings in October allow cross-benchers to signal support or objection. By January departments start writing exposure drafts. Monitoring each stage can deliver critical lead time.
Many clients schedule a comprehensive tax-structure review each November, after the Mid-Year Economic and Fiscal Outlook provides the latest fiscal pulse. That timing remains sound. However, the unusual concentration of policy firepower at this roundtable argues for an earlier check-in. August and September conversations with your adviser can flag the most pressing exposures and line up contingency plans.
Planning with confidence amid reform
Economic reform cycles can unsettle even seasoned investors, yet they also create fertile ground for disciplined strategy. The 2025 roundtable spotlights three unavoidable realities: the budget cannot carry on as usual, productivity growth must accelerate, and the taxpayer will fund the gap until it does. That means concessions you enjoy today may shrink or disappear, while new incentives and growth avenues emerge elsewhere.
By interrogating your reliance on government programmes, stress-testing after-tax income against bracket creep, and positioning capital where policy tailwinds gather, you can convert uncertainty into advantage. Canberra’s policy maze may look daunting, but with timely advice and decisive action you can protect and grow your wealth no matter how the rules shift.
EEA Advisory stands ready to run bespoke modelling, weigh structural options and guide you through each legislative milestone. Reach out to your adviser now, stay close to the data and remember: the earlier you adapt, the greater your margin for success.
