Federal Budget 2025: 7 Initiatives That Impact Hospitality and Retail

The 2025–26 Federal Budget offers a mixed bag for the hospitality and retail sectors. While some measures provide some relief, they fall short of addressing key challenges like rising costs and staffing shortages. In this article, we narrow down seven budget initiatives impacting the hospitality and retail industries—both directly and indirectly. 

1. Cost-of-living relief
2. Energy bill relief and efficiency grants
3. Alcohol excise
4. Buy Australian plan
5. Card surcharges
6. Instant asset write-off
7. Additional budget updates

1. Cost-of-living relief: modest lift for consumer spending

The centrepiece of this year’s Budget is targeted cost-of-living relief, including: 

• $150 energy rebate for all Australians
• 20% reduction in outstanding student loans (HECS-HELP)—subject to the passage of legislation
• Income tax cuts from July 2026: The lowest tax rate will drop from 16% to 15%, then to 14% by 2027, giving average earners up to $536 more annually by 2027–28

While these measures are modest, their combined impact could free up additional disposable income and support discretionary spending—positive news for businesses that rely on customer activities like dining out, shopping locally or indulging in small luxuries. However, some industry voices argue that this support may not be enough, with hospitality owners and retailers still facing significant challenges.

2. Energy bill relief and grants for energy-efficiency upgrades

A key measure for eligible small businesses, echoing the household relief, is a rebate of up to $150 on energy bills, available from 1 July 2025 through to the end of the year. Most operators will receive these rebates automatically, applied in two $75 quarterly instalments.

In addition, the Budget introduced Energy Efficiency Grants of up to $25,000 for over 2,400 small to medium businesses. Hospitality venues and retailers can access these funds to make energy-efficient upgrades, which could include:

• Replacing outdated, energy-intensive kitchen appliances or refrigeration units
• Upgrading heating, cooling or ventilation systems
• Installing more efficient lighting or front-of-house equipment

Given that rising energy costs are impacting profit margins, these grants could provide long-term savings—particularly for businesses with older infrastructure. Details on how to apply will be available here once the grants are open for application.

3. Draught beer excise freeze and alcohol excise relief

The Budget introduces two key measures that will benefit pubs, brewers and alcohol producers:

• Draught beer tax freeze: From August 2025, the excise on draught beer will be frozen for two years. This change only affects draught beer, meaning taxes on bottled and canned beer and spirits will still increase as usual.
• Increased tax relief for alcohol producers: Starting in July 2026, the caps on excise remission claims and the winemaker rebate will increase from $350,000 to $400,000, giving brewers and winemakers more financial support.

While these changes may not significantly alter profit margins, they are expected to help operators maintain pricing stability and better navigate the financial challenges of running a venue. It’s estimated that these measures will improve the industry’s position by $165 million, helping to keep alcohol prices stable while providing vital support for businesses.

4. Buy Australian plan

The federal government committed $20 million towards its Buy Australian plan to encourage consumers to buy locally-made products. The campaign aims to make it easier for shoppers to find Australian-made goods, support local manufacturers and drive job creation.

For retailers, this means a chance to attract customers who prioritise buying Australian-made products. However, experts argue that the campaign may face challenges as price sensitivity and global competition influence consumer choices, which would impact how effectively retailers can tap into this initiative.

5. Possible shift in card surcharges

The government has indicated plans to address excessive card surcharges, including the potential ban of debit card surcharges. While no decisions have been confirmed yet, this signals positive news for hospitality venues and retailers who often absorb these costs or face customer dissatisfaction when passing them on. The final decision will depend on further work by the RBA, as well as ensuring that any changes do not disadvantage small businesses.

6. Instant asset write-off

One of the biggest changes for businesses on the horizon was the scheduled end of the $20,000 instant asset write-off, set to drop to $1,000 from 1 July 2025—a financial hurdle for operators relying on immediate deductions for larger equipment purchases.

Since the budget was announced, Prime Minister Albanese has shared that a re-elected Labor government would extend the $20,000 threshold for another year.

7. Additional budget updates

In addition to the highlights above, here are four other initiatives that could affect various areas of the hospitality and retail sectors.

• Mental health and financial well-being support: The budget allocated $25.9 million to programs like NewAccess and the Small Business Debt Helpline, offering support to small business owners navigating the stresses of running a business.
• Extending protections for small businesses: Retailers and other small businesses will benefit from extended protections to shield them from unfair trading practices by larger companies, such as contract pressure or supplier retaliation.
• Stronger protections for franchisees: The government is investing $7.1 million over two years to boost ACCC enforcement of the Franchising Code of Conduct, ensuring fairer treatment and more transparency for franchisees, including in sectors like hospitality and retail, with extended protections against unfair contract terms and trading practices.
• Proposed ban on non-compete clausesfor employees earning under $175,000 could make it easier to hire senior staff for management or key roles at venues and stores, offering more flexibility in recruitment.

Final thoughts

The 2025 Federal Budget offers a mix of relief and challenges for the hospitality and retail sectors. While some measures—like energy rebates and alcohol excise relief—provide targeted support, they only go so far in alleviating the challenges businesses face. Moving forward, operators will need to stay agile, making the most of the available support, while continuing to seek more comprehensive strategies for long-term sustainability.