Federal Budget 2025-26: Business risk and resilience 

• $500 million Clean Energy Manufacturing Fund aimed at bolstering the production of renewable energy components.
• Critical Minerals Production Tax Incentive, offering a 10% production credit on relevant processing and refining costs for battery production, green hydrogen, and critical minerals to bolster domestic supply chain resilience
• Significant investments in vocational education and training, including additional fee-free TAFE places, aimed to enhance skill development, and strengthen economic stability, equipping Australia to thrive in a transitioning global economy.

The 2025-26 Federal Budget acknowledged that the current economic landscape is shaped by global uncertainties, climate disruptions, and evolving geopolitical risks. Following a challenging year marked by ongoing trade tensions, supply chain instability, and the economic cost of natural disasters such as Ex-Tropical Cyclone Alfred, there’s a role for business leaders in coordinating with the Government in a forward-focused approach to national resilience.

As anticipated, Treasurer Jim Chalmers delivered a budget aimed at balancing inflation control with strategic investments in sovereign capability, digital transformation, and workforce productivity. While Australia’s projected $1.16 trillion debt (equivalent to 49% of GDP) remains manageable by global standards, it reflects a sharp increase over recent years. If this trajectory continues, it could limit future public spending, potentially affecting business investment and confidence. Ongoing attention to fiscal strategy will help ensure continued public investment capacity and support long-term economic stability and resilience.

The Budget expanded on the government’s existing resilience agenda, with continued focus on strengthening domestic supply chains and reducing reliance on vulnerable international networks. Investments supporting core sectors including energy, defence, and critical technologies were announced, with an emphasis on:

• Accelerated clean energy manufacturing under the Future Made in Australia framework
• Supply chain resilience through incentives in battery production, green hydrogen, and critical minerals
• Strengthening Australia’s industrial base in response to growing geoeconomic tensions.

These measures extend previous Budget commitments, such as the $50.3 billion National Defence Strategy investment and the $6.7 billion Hydrogen Production Tax Incentive announced last year, highlighting the government’s intent to shield the economy from escalating global risks through targeted investment and strategic capability development.

Key takeaways for businesses looking to increase their resilience include:

• Diversify supply chains: The introduction of U.S. trade tariffs poses a significant potential risk to Australian businesses. The government’s focus on strengthening domestic supply networks underscores the importance for businesses to review and reduce their dependence on international suppliers, particularly in critical areas like energy and manufacturing.
• Align with strategic sectors: There are clear opportunities for businesses operating in or adjacent to clean energy, defence, and advanced manufacturing to tap into government funding and incentives aimed at boosting local capability.
• Anticipate regulatory and strategic shifts: With heightened geopolitical tensions driving national resilience strategies, businesses should monitor policy developments closely and prepare for changes in procurement, compliance, and industry engagement.

In light of increasing frequency and intensity of weather-related events, such as droughts and cyclones, the 2025-26 Budget reinforced the provision of $1 billion funding for climate adaptation and natural disaster preparedness. Funding may be allocated toward:

• Regional resilience grants
• Enhanced forecasting and emergency response systems
• Community-led climate adaptation projects.

This reinforces the role of both federal and local governments in enabling business continuity and insurability across climate-vulnerable sectors, especially agriculture, transport, and construction.

Building societal and economic resilience also means addressing the spread of misinformation and ensuring digital integrity. The 2025-26 Budget has built upon existing initiatives with increased funding for:

• Cybersecurity upgrades across key public agencies including ASIC, APRA, and the ATO
• Transparency and counter-disinformation strategies, particularly in areas like climate policy and AI
• Continued development of a National AI Centre to promote safe and responsible innovation.

As misinformation rises as a key global risk, budgetary support for education, digital media literacy, and regulatory capacity will serve to strengthen public trust and informed decision-making.

A core theme of this Budget was the future of work; especially enhancing sovereign capability and productivity through workforce development. Investment in vocational education, training, and strategic immigration reform emphasised:

• Delivering additional fee-free TAFE and clean energy training places.
• Supporting transitions for workers impacted by industry transformation (e.g., energy sector).
• Enhancing pathways for critical skill migration in line with long-term population planning.

These efforts are expected to align with the broader resilience agenda, addressing both immediate skills shortages and long-term capacity in priority sectors.

While the 2025-26 Budget delivered cost-of-living relief through pre-committed tax cuts, it clearly shifted focus toward long-term economic growth over short-term fixes. Investments in digital infrastructure, skills, innovation, and advanced manufacturing aim to make the economy more productive and resilient.

This signals to businesses that the government is prioritising efficiency, innovation, and capability-building, creating opportunities for those ready to align with structural reforms. In this context, businesses should prepare for a policy environment focused on long-term resilience, from climate and cyber risks to supply chain security and technological transformation. Collaboration between government and industry will be key to navigating current volatility while building lasting national capability.

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