With Labor prime minister Anthony Albanese now hinting at a federal election between 22 March and 12 April, all eyes are now on what’s in store for the business sector, assuming a Liberal coalition wins, albeit as a minority government requiring support from one or more other parties.
Based on Sportsbet numbers, punters see a Liberal coalition as odds-on favourites to win, with the Coalition paying $1.50 for a win versus $2.62 for a Labor victory.
Here's what we know so far about what a Liberal coalition would do for business.
While it’s not business related, a Peter Dutton-led coalition government has vowed to match Labor’s plans to provide an $8.6 billion funding boost to Medicare and in so doing avoid the election campaign becoming a referendum on health and Medicare.
However, the Liberal’s stance on Medicare is a major about-face given that the party has had a longstanding dislike for “socialised medicine”.
Small business
When it comes to small businesses (SMEs), the Liberal coalition has announced plans to cut red tape by introducing a capped tax deduction of $20,000 for business-related meal and entertainment expenses.
SME’s with a turnover of up to $10 million will be eligible, and the measure is expected to run for an initial two years and be exempt from Fringe Benefits Tax (FBT).
The Liberal coalition expects to see a deduction for business-related meal and entertainment expenses to help struggling SMEs in the café, restaurant and hospitality sector get back on their feet.
“It builds on our commitment to rebuild small business by making the Instant Asset Write Off permanent, saving more than 98% of businesses that hassle of dealing with depreciation schedules [once] they invest in their business,” said shadow treasurer Angus Taylor.
Meanwhile, Labor’s $20,000 instant asset write-off and tax penalty reform is still unclear, after the House of Representatives adjourned without delivering a final vote on key measures within a multi-purpose bill affecting small businesses last week.
However, assuming the prime minister calls an election between now and 25 March, the parliamentary calendar and those budget plans are expected to be scrapped entirely.
Also included with this multi-purpose bill are provisions to remove tax deductibility for the General Interest Charge (GIC) and Shortfall Interest Charge (SIC), giving some extra bite to penalties for late or incorrect payments to the Australian Taxation Office.
ESG-related compliance
Assuming it wins the next federal election, the Liberal coalition has vowed to repeal new mandatory climate reporting laws that recently came into effect.
From 1 January 2025 companies with at least two of the following: Consolidated revenue of $500 million or more; consolidated gross assets of $1 billion or more; or employees of 500 or more are required to complete mandatory climate reports.
However, unless mandatory climate reporting laws are repealed, the business entities required to participate in climate reporting will decrease in 2026 and again in 2027, which will lead to the requirement for more SMEs to complete climate and net-zero policies.
According to Macquarie’s analysis, a coalition party victory at the next federal election (due before 17 May) could lead to major policy changes in Australia.
While the Coalition remains committed to a net-zero ambition by 2050, the broker suspects an inbound Liberal-led government could lead to Australia unwinding its 2030 emission reduction target of -43% on emissions against 2005 levels, which would limit the impacts on the mining, agriculture, and energy sectors.
Big end of town
Meanwhile, the Coalition’s proposed nuclear strategy coincides with plans for growing support for new natural gas production and infrastructure such as storage and pipelines.
Given the expected timeline for coal-fired plant closures, AGL Energy (ASX: AGL), Origin Energy (ASX: ORG), and other energy utilities have been advocating gas as a transition fuel. As a result, Origin’s Eraring plant could have its life extended to 2029 from 2027.
AGL’s Bayswater plant is due to close between 2030 and 2033 and Loy Yang A Power Station by June 2035.
The Coalition is also expected to examine the safeguard mechanism, which could provide more “flexibility” for emission-intensive industries, including delaying timelines for emission reductions.
Overall, the ASX has 27 companies subject to the safeguard mechanism, including BHP Group (ASX: BHP), Fortescue (ASX: FMG), and Wesfarmers (ASX: WES).
Assuming there are major policy changes in Australia under a Liberal-led coalition, Macquarie foresees greater attention to EV tax credits and home-energy rebates than to carbon capture and storage, hydrogen, and clean fuels.
In light of these developments, Jarden expects changes in Australian energy policy and uncertainty around regulations and political changes, including the Trump administration, which will likely impact ESG and the Inflation Reduction Act, only to create more uncertainty for local companies.
IR minefield
Meanwhile, in the lead up to the election, a Liberal coalition may also find itself dragged into calls by the unions to join retail workers and the government opposing a bid to "wipe out retail penalty rates by big business."
Employment and Workplace Relations Minister Murray Watt announced this week he is intervening in the Fair Work Commission hearing to support retail workers trying to stop their penalty rates from being taken away by big retailers, including Woolworths, Coles, Kmart, Costco and 7-Eleven.
Unions argue that the Fair Work Commission's ruling could have a knock-on effect for more than a million workers within key award-reliant sectors, on enterprise agreements or contracts that these awards underpin.
Unions fear a roll-back on penalty rates in retail could trigger further challenges to penalty rates across other award-reliant industries, including hospitality, healthcare, fast food and administration.
More to come as the federal election 2025 unfolds…
