CEO Update: Why so many Australians believe our social and intergenerational compact is broken

I visited Canberra last week, where the mood was quite stark. Conversations with senior public servants revealed a sharp focus on a “tough” Federal Budget in May and the need to address productivity and resourcing in their organisations.

More broadly, talk of spending cuts and possible tax changes has been sparked by media commentary and Treasurer Jim Chalmers inviting leading economists, including our Chief Economist Cass Winzar, to Canberra to present their views and priorities.

Throw into this mix federal independent MP Allegra Spender’s tax white paper and Parliamentary Budget Office (PBO) estimates of the cost to the Budget of capital gains tax discounts and negative gearing, and there is plenty to think about on the domestic policy front.
 
The analysis in these papers underscores why so many Australians believe our social and intergenerational compact is broken, as is the return on investment to education and work. Put simply, you pay a lot more tax on your income from work than on your income from a business, capital gains or earnings from super; and higher income earners benefit most from negative gearing and capital gains concessions. On top of this, population ageing is putting pressure on both sides of the budget ledger.
 
While most would agree with the aspiration that future generations should enjoy a life at least as good as ours, we are now facing the prospect that today’s young Australians will have a lower standard of living than their parents.

Strengthening our social compact requires improved fiscal foundations, spending that is better targeted and more effective, and a tax system that improves the returns on work and investment in Australia’s productive capacity. Any changes announced in the May Budget need to head in that direction and mark the beginning of a longer-term agenda.
 
Adding complexity to domestic conditions is the war in Iran. Higher oil and petrol prices mean higher inflation, and household budgets and confidence will take a hit. This is a messy mix for policy makers.

Media reporting of Treasury modelling suggests a prolonged period of oil at $US100 could add 0.5 percentage points to inflation and subtract 0.1 percentage points from GDP growth. While not great news, as CEDA economists noted in our recent Navigating 2026 series, Australia is in a reasonably solid position.

That doesn’t mean some groups aren’t already feeling economic pain. After drought in some areas and floods in others, farmers are now being hit by rising costs and supply pressures for both diesel and fertiliser. None of this is a reason to avoid undertaking the broader reforms required to strengthen our economic dynamism and resilience, as well as our social compact.

With the impact of global events on Australia front of mind, we are pleased to welcome Federal Infrastructure and Transport Minister Catherine King MP back to the CEDA stage in Melbourne on Wednesday, as she delivers a wide-ranging portfolio update and answers your questions.

Join us for The Scam Economy | How to Manage AI-Generated Threats and Build Trust in Sydney on March 26 and in Melbourne on March 31 to explore how to manage the economic risks of AI-generated fraud, with insights from leading communications, cyber, tech, finance and policy experts. When seeing is no longer believing, how can businesses build trust?

Join government, energy and infrastructure organisations at Environmental Approvals and Nature Impact NSW in Sydney on March 30 to explore how to streamline processes, ensure sustainable development and gain more project certainty.

And early-bird registrations close at the end of the month for our annual Climate and Energy Summit 2026 in Melbourne on 30 April. Hear from business, government and energy-sector leaders including Victorian Minister for Climate Action, Energy and Resources Lily D’Ambrosio and Climate Change Authority Chair Matt Kean. The summit will explore how Australia can accelerate the shift to a competitive net-zero economy while strengthening resilience and unlocking new opportunities. Secure your place now.

To finish, I would like to warmly welcome the Australian Renewable Energy Agency and British Solar Renewables as new CEDA members. Thank you for joining us.