What would happen to your business if you ran it the way the Government is running the economy with the 2025 Budget?
Peter Ambrosiussen
April 6, 2025
Listening to the treasurer delivering this year’s budget, you would think our economy is doing wonderfully and there is nothing to be concerned about. However, when you look behind the gloss to the real numbers, the story is very different.
The treasurer was making the deficit of $42 billIon for the coming year seem very small. However, what received no mention, was the $85 billion for “off budget” spending over the next four years. In four years time, the government debt will reach $1.22 trillion. The interest bill on this debt, at the Reserve Bank rate of 4.1%, is $50 billion per annum.
If your business had an interest cost like that you would be doing everything to cut your costs or sell assets to reduce the debt levels. The Government on the other hand is increasing its spending. Public sector spending continues to rise at a higher rate than the economy is growing. The biggest increased area of spending is government employment costs.
Long Term Solutions
Despite the huge growth in debt, in our high interest environment, the Government is also offering voters token benefits to keep them happy. Do you find that works in business? My years of being in business tell me that customers want real and long term solutions to their problems. It is providing real help to customers where they need it that makes them loyal to your business and provides real benefit to them.
Instead of a short term $150 energy rebate, work on solutions that will provide long term energy savings. Likewise, the token tax cuts in the budget are masking the lack of resolve to address the long term underlying tax problems. The taxation system does not provide equity or incentives for tax payers. It has been in need of an overhaul for decades. Token tax cuts put a small band aid on the problem, so the Government can continue to ignore the
real problem.
Positive Takeaways
Was there anything good in the budget? One positive thing is the $20,000 instant asset write off being extended until 30 June 2025. This does enable businesses to get an immediate tax deduction when purchasing assets under $20,000. This is useful to tuck away over the next coming weeks when you are doing your year end tax planning.
The answer to the question we asked at the top; would you run your business the way the Government runs the economy? NO! You would not. You are smart enough to realise you would have very few customers and you cannot spend more than you are earning.
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