With a federal election looming amid geopolitical volatility and economic uncertainty, the tax cuts and energy relief in Treasurer Jim Chalmers’ fourth budget were overshadowed by a lack of long-term vision for Australia’s small business sector.  There was very little on offer to assist small business with tax cuts and energy relief being the main attractions to buy votes for Labour.

On the other hand, Opposition Leader Peter Dutton’s budget reply outlined few alternative policies focusing on cost-of-living relief, energy security, and public sector reform with the biggest win for small business being making the instant asset write-off permanent with a $30,000 threshold and introducing tax deductions for business-related meal and entertainment expenses up to $20,000. Additionally, Dutton proposed increasing support for businesses hiring apprentices, particularly in the building and construction sectors.

However, in light of the global economic chaos being whipped up by Trump’s tarriff policies Australia really needs to adopt policies that promote market dynamism, cost competitiveness and productivity improvement without delay.  Here are some ideas on what could be done to respond to the volatile environment that we are now facing.

1. Trade Diversification and Free Trade Agreements (FTAs)

• Strengthen existing FTAs: Expand trade with Asia-Pacific partners (e.g., ASEAN, India, Japan) to reduce reliance on the U.S. market.

• Negotiate new agreements: Speed up deals with the European Union and other emerging economies.

• Deepen regional integration: Enhance cooperation within CPTPP and RCEP to provide Australian businesses with new market opportunities.

2. Boosting Domestic Competitiveness

• Lower business taxes and regulatory reform: Reduce red tape, simplify compliance, and offer tax incentives for export-oriented industries.

• Invest in skills and workforce training: Ensure workers are equipped for high-value industries like advanced manufacturing, clean energy, and tech.

• Encourage innovation and R&D: Expand grants and subsidies for Australian firms investing in automation, AI, and industrial innovation.

3. Infrastructure and Supply Chain Resilience

• Improve logistics and transport networks: Enhance ports, rail, and roads to reduce supply chain costs.

• Develop local supply chains: Support industries producing critical goods (e.g., semiconductors, rare earths, pharmaceuticals) to reduce vulnerability to external trade shocks.

• Strengthen energy security: Promote clean energy projects and ensure competitive energy pricing for industries.

4. Currency and Financial Market Policies

• Maintain a competitive exchange rate: A weaker AUD can make Australian exports more attractive globally.

• Support export financing: Expand programs through Export Finance Australia (EFA) to help businesses access foreign markets.

5. Diplomatic and Strategic Trade Engagement

• Leverage the WTO and multilateral institutions: Work with allies to challenge unfair trade barriers and push for rules-based trade enforcement.

• Build regional trade alliances: Partner with like-minded nations to develop alternative supply chains and reduce dependency on politically volatile trade partners.

Let’s hope that whoever gets in at the next election will have a vision that extends beyond their time in office and who has the strength, humility and integrity to deliver the policies we need to make this country more resilient.