2025 Election: Stability, IAWO, Fuel Excise Cuts, and Minority Risks

As Australia approaches the federal election on May 3, 2025, voters face a pivotal choice that will shape the nation’s economic future. The two major parties—Labor and the Coalition—are offering starkly different approaches to small business support, cost-of-living relief, and energy affordability. However, the possibility of a hung parliament has raised concerns about political instability. A Labor minority government reliant on Greens and Teal independents could lead to policy gridlock and radical shifts. Amid this uncertainty, the Coalition’s proposal to halve the fuel excise stands out as a tangible measure to provide immediate relief for families and small businesses.

The Albanese Labor government has focused its small business agenda on temporary measures. A key policy is the one-year extension of the $20,000 Instant Asset Write-Off (IAWO) until June 2026. This allows businesses to claim immediate deductions for eligible assets such as vehicles, machinery, and technology. Labor argues that this extension incentivizes immediate spending.

• Energy rebates: An additional $150 for eligible small businesses, totalling $800 since 2022-23.
• National Small Business Strategy: A plan to streamline federal, state, and local support programs.
• Business creation: Labor claims that 25,000 new businesses are launched monthly under its administration.

While these measures provide short-term relief, critics argue that they lack long-term certainty. Bill Lang of Small Business Australia warns that temporary policies leave businesses vulnerable to shifting priorities. “Permanency is essential for long-term planning,” Lang says. “Without it, businesses hesitate to invest in growth.”

The Coalition offers a contrasting approach by pledging to make the IAWO permanent with an increased threshold of $30,000 for businesses earning up to $10 million annually. This policy aims to eliminate annual uncertainty and simplify compliance by removing depreciation schedules for smaller investments.

• Meal and entertainment deductions: A $20,000 annual tax cap designed to boost hospitality spending.
• Industrial relations reforms: Simplifying casual worker definitions and reversing Labor’s union-backed changes.
• Energy affordability: Fast-tracking gas projects and exploring nuclear energy as reliable alternatives.
• Business groups like CPA Australia have praised the Coalition’s focus on stability but caution that the higher IAWO threshold may primarily benefit larger SMEs rather than micro-businesses.

In a bid to address cost-of-living pressures, the Coalition has announced plans to reduce the fuel excise—a tax on petrol and diesel—by 25 cents per litre for 12 months. This policy has been described as a “masterstroke” by commentators like Peta Credlin in *The Daily Telegraph*. Credlin argues that this measure directly targets one of the most visible expenses for households and businesses.

• Lower transportation costs: Benefiting logistics operators, tradespeople, farmers, and other industries reliant on vehicle fleets.
• Immediate household relief: Particularly impactful in regional areas where driving distances are longer.
• Economic stimulus: Freeing up disposable income that can be reinvested into local economies.

For small businesses operating fleets or relying on deliveries—such as tradespeople or logistics companies—the excise cut could improve cash flow significantly during challenging economic conditions.

Labor has dismissed the fuel excise cut as a short-term “band-aid” solution that undermines funding for road infrastructure projects. Instead, it has focused on renewable energy investments as its primary strategy for reducing household bills over time. Critics argue that this approach overlooks immediate voter concerns about rising petrol prices—a pressing issue for regional Australians who rely heavily on private vehicles.

The proposed fuel excise reduction would have significant implications across various sectors:

Fuel costs are a major expense in transport-heavy industries:

• Logistics operators would benefit from lower diesel prices, improving profitability for trucking businesses with tight margins.
• Tradespeople, such as plumbers or electricians reliant on service vehicles, could reduce overheads and offer more competitive pricing.
• Farmers, who use diesel-powered machinery or transport goods over long distances, would see savings that offset rising costs in other areas like maintenance or wages.

For regional Australians who rely heavily on private vehicles due to limited public transport options, reduced fuel costs would provide meaningful financial relief. Small businesses in rural areas often face higher transportation costs due to longer distances travelled; this policy could help level the playing field between urban and regional enterprises.

Polling Points to a Hung Parliament

Recent polls suggest neither major party will secure the 76 seats needed for a majority:

• Newspoll: The Liberals lead Labor 51-49 on a two-party preferred basis.
• YouGov Polling: Labor is projected to win 75 seats—one short of an outright majority.
• Greens and Independents: The Greens are expected to gain two seats while influential independents like Andrew Wilkie retain their positions.

This deadlock raises fears that Labor will need to rely on deals with Greens leader Adam Bandt or Teal independents like Monique Ryan—a scenario reminiscent of Julia Gillard’s tumultuous minority government in 2010.

Prominent figures across industries have voiced concerns about minority rule:

• Graham Turner (Flight Centre CEO): “A Labor-Greens coalition would be the worst outcome… Radical ideas from the Greens will harm business confidence.”
• Tony Shepherd (GWS Giants chairman): “The extreme left will have too much power… By definition they are bad for business.”
• Bill Lang (Small Business Australia): Critical decisions on energy affordability “will be derailed if Greens and Teals are wagging the dog.”
• Victorian Chamber CEO Paul Guerra adds that minority governments risk “instability, delays, and compromises,” undermining Australia’s post-pandemic recovery.

Greens leader Adam Bandt has outlined demands for supporting Labor in a hung parliament:

• Rent caps aimed at addressing housing affordability.
• Medicare expansion covering dental care and mental health services.
• Halting new coal and gas projects—a move critics argue risks energy reliability during Australia’s transition to renewables.

While these policies appeal to progressive voters concerned about climate change or housing inequality, critics warn they could stifle economic growth or alienate centrist voters who prioritize stability over radical reform.

Temporary measures like Labor’s IAWO extension fail to address systemic challenges:

• Rising compliance burdens due to single-touch payroll systems.
• Insolvency risks in sectors like hospitality due to high operational costs.
• Energy insecurity threatening manufacturing output.

A hung parliament exacerbates these issues by delaying critical reforms or introducing fragmented policies driven by minority interests.