CEO Update: Fiscal outlook strengthens, but long-term sustainability remains key

At the time of my last CEO update, we were digesting the updated fiscal outlook for the 2024-25 financial year, which revealed a deficit of $10 billion—over $17 billion better than anticipated.

This positive outcome is largely attributed to familiar factors: higher-than-expected commodity prices and a resilient labour market, which have led to increased company and personal income tax revenues. Spending grew by 8 per cent over the 2024-25 financial year, and while slightly lower than expected, it follows a similar increase from the previous year. As a result, spending as a percentage of GDP has risen to over 26 per cent, the highest level in nearly 40 years.

While a better financial bottom line is always welcome, it does not indicate significant structural improvements. It is not surprising that figures such as the Federal Opposition Leader Sussan Ley, e61 CEO Michael Brennan, and former Treasury Secretary John Fraser are emphasising, as we have, the necessity for long-term fiscal sustainability.

The growth in spending on services—particularly in health, aged care, and disability care—poses a considerable challenge. We cannot maintain an 8 per cent annual spending growth indefinitely.

As I mentioned in my presentation at the Ageing Australia National Conference earlier this month, we must tighten our spending targets. This shift in expectations is central to CEDA’s Progress 2050 agenda, which aims to redefine the social compact in Australia. The reality is that those who can afford it will need to contribute more towards their care. The Government's Support at Home reforms are a step in the right direction, but we must closely monitor the balance of this initiative.

Regarding aged care reforms, ensuring an adequate care workforce is crucial for their success. CEDA has consistently highlighted the significant structural worker shortages facing the sector. Last week, we released our latest research Duty of Care: How to fix the aged care worker shortage, which found that there are considerable workforce shortages in the sector and that the Aged Care Industry Labour Agreements are not attracting nearly enough workers to meet sector demands. We reiterated our call for establishing an Essential Skills Visa to help employers efficiently recruit the skilled workers they need. We look forward to collaborating with the Government in the coming months to work towards this goal.

Today I moderated a roundtable in Canberra with the Hon. Daniel Mulino. This is the final event in our productivity roundtable series, and it presented lots of interesting connections to CEDA’s Progress 2050 agenda, which I look forward to sharing in the future. Thanks to Deloitte and UNSW for their support in enabling these insightful conversations.

Next week, we will host our annual AI Leadership Summit in Brisbane. In preparation for discussions with some of the most influential AI leaders and organisations, I have been doing my homework, including listening to a podcast interview with Mustafa Suleyman. Although lengthy, I found it to be well worth the listen. Be sure to check out the full summit program and secure your spot, last tickets remaining—it's shaping up to be an exciting couple of days.

Join us in Perth on 22 October to hear from Productivity Commission Chair Danielle Wood, as she presents the Productivity Commission’s priority reforms to improve Australia’s productivity growth.

CEDA’s Charting the Future of Aged Care: WA event in Perth on 30 October will examine new sector reforms and opportunities for residential and in-home care providers to chart more sustainable models to meet increasing demands.

In Melbourne on 27 November the Hon. Jacinta Allan, Premier of Victoria, will deliver her 2025 State of the State address along with the priorities for the year ahead, the State's economic outlook, and the Government's key initiatives, as well as how business can collaborate with the Government to bring these to life.

To finish, I would like to warmly welcome Herbert Smith Freehills Kramer as new CEDA members joining us this month.

Melinda Cilento
Chief Executive, CEDA