Mid-Year Economic and Fiscal Outlook – 2025-26
"Today's MYEFO affirms Australia is moving into an environment of likely higher interest rates and has reinforced we need to have a laser focus on lifting our national productivity, which remains stuck at a dismal level," said Innes Willox, Chief Executive of the national employer association, Australian Industry Group.
"The Government should be commended for making some modest but appropriate adjustments to spending — particularly in program reprioritisations and the responsible decision to exit from household energy subsidies.
"But the update is a missed opportunity to tackle the two big challenges facing the Australian economy today — inflation and productivity.
"Inflation has returned with a vengeance and Treasury forecasts expect CPI to now run at 3.75% this financial year. This is adding to cost pressures on business and is expected to see real wages turn negative again.
"We saw the pernicious effects of inflation on households and industry in 2022 and 2023, and we simply cannot afford to let this bout of inflation to linger.
"Productivity has picked up slightly over the past year but still remains well below the levels prior to the pandemic. Some elements from the August Economic Reform Roundtable — such as single economic market reforms, approvals reforms and the new National AI Plan — will begin to aid this effort.
"But we need this initial agenda delivered faster and then more productivity-enhancing reforms to follow. The MYEFO documents mention productivity 24 times, but the focus on lifting it needs to be more than just words on a page.
"Our productivity and inflation woes are clearly linked. If productivity growth was higher, the Australian economy wouldn't be now hitting the capacity limits that have sent inflation upwards again.
"We will continue to work with the Government on how to lift productivity — in turn, improving living standards, business conditions and increasing wages for every Australian," Mr Willox said.
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