Federal Treasurer Jim Chalmers addressed the Citi A50 Australian Economic Forum in Sydney today, outlining the government's growth agenda amid global economic turbulence. He argued that Australia remains an island of opportunity and stability, supported by private capital and strong institutions. Chalmers also confirmed that legislation covering startup capital gains tax concessions, Research and Development Tax Incentive changes, and expanded venture capital incentives will go to Parliament next week.
Global Pressures and the Fiscal Outlook
Chalmers described a combination of higher oil prices, rising global bond yields, larger sovereign debts, intense competition for capital from artificial intelligence, and accelerating structural change as testing market confidence. UK 10-year yields hit almost two-decade highs this month, while American yields reached a 24-year high. Australia's 10-year yields also touched a 15-year high, with the medium-term fiscal impact of debt rollovers estimated at more than A$30 billion.
Australia's Relative Strengths
The Treasurer argued Australia remains better placed than many peers, with growth outpacing most G7 economies and debt lower than every G7 country. Private demand contributed four times as much to growth as public demand last financial year, while business investment forecasts have improved significantly. If the mid-year update were released today, business investment this year could more than double from 2.5% to over 5%, following a revision from 4% to 7.4% last year.
Foreign Investment and Red Tape
Chalmers reported A$87 billion in additional foreign investment approvals last quarter, bringing total approved investment for the year to A$278 billion. That represents a 60% increase from the government's first year, with approvals growing at an average annual rate of 17%. Half of all applications are now processed within 30 days, more than double the 22% recorded in the previous government's final year.
Startup Tax Legislation Confirmed
The next tranche of tax reform legislation will go to Parliament next week and include CGT concessions for startups, changes to the Research and Development Tax Incentive, and new venture capital incentives. The revised Innovative Business CGT Concession proposal cuts the minimum holding period from five years to three, removes a proposed A$10 million lifetime cap, and extends company eligibility from 10 years to 15. It retains a 50% discount for qualifying early-stage investments subject to innovation requirements and a A$50 million turnover threshold.
R&D and Venture Capital Adjustments
The R&D changes would unlock an extra A$400 million in research spending by young firms each year, according to the Treasurer, with draft proposals applying from July 2028. Key measures include a higher A$50 million turnover threshold for refundable offsets and a 15-year eligibility window for qualifying therapeutic goods research. Venture capital proposals would lift the maximum size of Early Stage Venture Capital Limited Partnerships funds from A$200 million to A$270 million from July 2027.
AI Opportunities and Policy Support
Chalmers said AI will be the biggest economic transformation in our lifetime and Australia intends to capture more of the AI supply chain, not just data center investment. He noted more than A$150 billion of AI infrastructure is scheduled over the next five years, around 5% of current GDP. The National Reconstruction Fund will invest in competitive advantages in emerging industries, while Innovation Minister Tim Ayres is working with CSIRO to secure compute capacity for researchers and startups.
Chalmers framed the government's agenda as an effort to reward private capital and make Australia a more reliable partner in a world of accelerating risk. While the startup sector has welcomed some revisions, concerns remain about R&D eligibility, compliance requirements, and potential impacts on fintech and deep tech companies. The legislation next week will clarify the final shape of these reforms and shift attention to the Senate and crossbench.