Liberals warn 10,000 firms at risk of bankruptcy

The Coalition has forecast an extra 10,000 businesses will go under by the time the next parliament sits as economists say neither Anthony Albanese nor Peter Dutton have credible plans to address the nation’s economic challenges.

An extra 10,000 businesses will fold by the next time parliament sits, according to a Coalition forecast.

The Coalition has forecast an extra 10,000 businesses will go under by the time the next parliament sits as economists say neither Anthony Albanese nor Peter Dutton have credible plans to ­address the nation’s economic challenges.

In an attempt to shoot down Jim Chalmers’s claim that the economy will perform better this year than in 2024, the Coalition has released analysis claiming the nation was on track to lose 10,200 businesses between December and June, which will be the month the next parliament first convenes if the election is held in May.

The analysis assumes business insolvencies will continue at the same rate since July last year, which was on average 50.8 per cent higher than the year to June 2024.

The Coalition prediction would see more than 35,000 businesses fail since the Albanese government was elected – the most in any parliamentary term.

Several economists on Monday backed former prime minister John Howard’s warning that Australia was at risk of eventually losing its AAA credit rating, although part of the blame was put on the states.

Combined federal, state and territory net debts are expected to reach $881.9bn in 2024-25, according to forecasts released by the Parliamentary Budget Office, with KPMG chief economist Brendan Rynne saying the AAA rating was at risk if the “current level of government spending and deficits continue along (this) path for a sustained period of time”.

“There’s a disconnect between our spending and our taxes and revenue – that can’t continue,” Dr Rynne said.

Deputy Liberal leader Sussan Ley said it was a political tactic for the Treasurer to claim in The Australian on Monday that the economy was improving. “The Australian economy has not been magically fixed by some Christmas miracle – thousands and thousands of businesses are going to the wall because of Labor’s failures on the economy and we will lose thousands more,” she said.

Deputy Liberal leader Sussan Ley. Picture: NewsWire / Martin Ollman

“Labor wants Australians to believe 2025 will be better than 2024 because that suits Anthony Albanese’s political brand but the data shows business failures are accelerating under Labor’s failed economic management.”

A spokesman for the Treasurer said the proportion of corporate insolvencies was lower under the Albanese government than what it was under the former Coalition government, suggesting the reason business failures were at record levels was because there were more companies in 2024 than when the Abbott government was elected in 2013.

He said Australia would have been in recession if the Opposition Leader had been prime minister.

“Instead of making up misleading numbers, the Coalition’s time would be better spent explaining why business investment fell under them and rose under us, or coming up with actual policies, not just talking our economy down at every opportunity,” he said.

“The progress Australians have made together, with inflation falling, real wages rising, the economy still growing, and more than a million jobs created on our watch, is at risk under Peter Dutton, who wants a hard landing for the economy and whose cuts would have driven the economy into recession.”

As Workplace Relations Minister Murray Watt opened 2025 by attacking the Coalition and employer groups for opposing the government’s industrial relations reforms, Australian Chamber of Commerce and Industry chief executive Andrew McKellar said the new workplace laws were ­contributing to insolvencies.

“There is no doubt there is ­immense pressure on business, but particularly small and medium sized businesses,” he said.

“A lot of that pressure is coming from the increased regulatory burden.”

With the federal election set to be dominated by cost-of-­living issues and a deteriorating budget, economists say there is little sign that Labor or the ­Coalition will head to the polls with policies to put downward pressure on inflation, increase productivity and slash debt.

Independent economist Chris Richardson said “we will yet again in Australia have a Seinfeld election about nothing”, with both short-term and longer-term challenges being largely ignored by major parties.

“Neither side is making promises that will improve living standards in the near term by helping the Reserve Bank get on top of inflation, or living standards in the long term by helping us improve productivity,” Mr Richardson said.

“The International Monetary Fund says that to help central banks, governments should cut spending and raise taxes. The reason is, inflation is too much money chasing too little stuff.

“Neither really are proposing things that would help the short-term fight against inflation. The only good news is that the fight against inflation is being won regardless of governments, not because of them.”

Economist Saul Eslake said neither the Coalition nor Labor had a plan to return the budget to a balance or surplus over the next five years, declaring the lack of policy ambition “worrying”.

“Instead, the Albanese government is relying on bracket creep to do that over a 10-year period,” Mr Eslake said.

“The Coalition hasn’t laid out any policies at all to do that.

“To be as fair as I can, there is probably at least 2½ months and maybe 4½ months, depending on when the election is called, in which they could announce something.

“So I’m not going to give up hope completely, but so far there is not much basis for hope.”

AMP chief economist Shane Oliver said there needed to be a strategy to boost productivity “that goes beyond nuclear power stations in a decade or two and more government spending on things like childcare”.

“If the Coalition is going to provide an alternative to Labor which gives confidence to economists, they will have to address the big challenge which Australia faces: that is weak productivity growth and it’s an ongoing threat to our living standards,” Dr Oliver said.

“To address that, the ­Coalition really needs to go to the election with hard-nosed tax reform, hard-nosed labour market reforms, which means deregulation, hard-nosed compe­tition reforms, and measures to revitalise the public service.”

The opposition’s Treasury spokesman, Angus Taylor, said the Coalition would “announce its detailed policies in due course”.