Retail’s response to the 2025 federal budget: a closer look

When the 2025 federal budget was unveiled, retailers were eagerly waiting to see how their industry would be helped. As a powerhouse in the Australian economy, retail contributes to a staggering one-fifth of the nation's GDP. It's also the largest private-sector employer, with one in ten Australians working in the industry. In this critical role, however, retailers have faced immense challenges in recent years, testing their resilience like never before. The Australian Retailers Association (ARA) and the National Retail Association (NRA) submitted a pre-budget in response outlining key areas where support was needed.

Retailers’ recommendations

Retailers are facing a tough time right now, with labour shortages, supply chain issues, rising costs, and inflation all impacting their operations. It's a challenging environment, but the ARA and the NRA’s pre-budget submission highlighted some recommendations to help retailers thrive:

1. Embrace a growth mindset - reducing operational costs, making regulations easier to navigate and driving innovation. The main suggestions include:

- Red tape reduction taskforce: Streamlining the administrative burden to boost efficiency
- Harmonising regulations: Aligning things like payroll tax and workplace safety rules across states and territories.
- Boosting investment: Encouraging business investment to drive growth and productivity.

2. Grow the retail workforce - tackling labour shortages and skill gaps by building a resilient workforce. Here’s a couple of examples of how the board addressed this:

- Investing in VET: Channelling more funding into private RTOs to provide targeted, specialised training.
- Supporting Certificate programs: Reinstating incentives for Certificate III and IV programs to help develop the workforce.
- Supporting women in the workplace: For example, extending Paid Parental Leave (PPL) to ensure greater economic security for women in retail.

3. Collaborate on community outcomes - building stronger communities and social inclusion. Key recommendations include:

- Backing the retail crime strategy: Getting federal support for the 2025 retail crime strategy to tackle rising retail crime
- Improving supply chain resilience: harmonising freight regulations and upgrading logistics infrastructure to strengthen supply chains
- National Energy Policy: introducing a national policy to support businesses transitioning to cleaner, decarbonised energy.

Budget announcements

So, what has changed to help retailers? Here are some of the highlights of the budget, according to the ARA and NRA:

Personal income tax cuts: A reduction in tax which gives $268 back to workers, rising to $536 in 2027

General cost-of-living support: Student debt reductions, increased funding for PBS scripts, bulk-billed GP visits

Energy bill relief: $150 Energy bill relief for households and small businesses

Childcare access: Change to guaranteed 3 subsidised days a week

SMB digital capability: Ongoing investment in digital and cyber security

Payments: Tackling unfair card surcharges with plans to ban debit card fees for more affordable transactions

Supply chain funding: Investing $17.1 billion over 10 years to enhance freight logistics

It’s undeniable that the budget’s delivery of ‘hip pocket help for households’ is a win for workers, but retail leaders suggest that they may have hoped for even more long-term support to help stabilise the industry.

Retailers had initially called for a reduction in red tape, streamlining processes, and promoting innovation. While this budget provides vital support, its focus was on sustaining business support rather than introducing new transformative measures.

When it comes to skilling the workforce, there was new funding announced for construction apprenticeships and student debt relief which will provide help across the workforce. In response, industry leaders have suggested as a next step that targeted investments in VET and specialised skills development for the retail sector could help further to fill the critical skills gap.

In short, the budget delivers welcome relief for households with opportunities for further long-term systemic support as the next step for the retail industry.

Industry reactions and analysis

The response from industry leaders has been mixed. While there’s support for the cost-of-living relief, leaders expressed hope for further business support.

NRA Interim CEO Lindsay Carroll:

“The budget contains some important household relief measures such as previously announced childcare support, however we are concerned about the need for long term solutions [...] we can’t have economic recovery without a retail recovery, and we need to make sure they have the means to compete.”

While ARA Chief Industry Affairs Officer Fleur Brown:

“We need measures that reduce red tape, increase productivity or drive down costs […] We need big business in Australia, and we need our home-grown businesses to thrive, and that means acknowledging the mechanics of large-scale operations.”

What’s on the horizon for retailers?

Looking ahead, sustained support is crucial. With the upcoming election potentially introducing further uncertainty, it’s important that retail industry leaders continue to provide their expertise and knowledge to help guide further progress. This will ensure that the sector remains resilient and positioned for future growth.

Learn more about how we support the retail industry at readytech.io/retail