As Australia approaches its Federal Election scheduled for 3 May, 2025, CEOs, C-suite executives, and HR leaders face a pivotal moment. The nation has been grappling with economic malaise for an extended period, and the looming election, combined with its five-week campaign, introduces a layer of uncertainty that complicates strategic decision-making.
Election periods often amplify existing economic and operational challenges, requiring leaders to adopt a proactive, adaptable approach.
The article outlines many of the key dynamics at play, their implications for business confidence and investment, and the specific HR considerations—including layoffs and outplacement support—that leaders must address to steer their organisations through this period.
Uncertainty Leading Up to the Election
Uncertainty is an inherent feature of election cycles, and Australia’s 2025 Federal Election is no exception. The precise timing of the election call has been a moving target, with Prime Minister Anthony Albanese’s initial plans disrupted by external factors like Tropical Cyclone Alfred.
This unpredictability, layered on top of an economy already strained by stagnant productivity, high inflation, and declining real wages, has kept businesses in a holding pattern.
Australian employers, particularly in sectors like manufacturing, retail, and construction, have deferred capital investments and hiring decisions due to unclear policy signals from both the Labor Party and the Liberal-National Coalition.
The five-week campaign, officially kicking off on 28 March, 2025, intensifies this uncertainty. During this period, both major parties will unveil detailed policy platforms, yet their promises—whether Labor’s focus on bigger government and cost-of-living relief or the Coalition’s push for smaller government and tax cuts—often lack the specificity businesses crave.
Moreover, global headwinds, such as potential U.S. tariffs under a Trump administration, add external pressure, threatening Australia’s export-driven sectors like mining and agriculture.
For C-suite leaders, this confluence of domestic and international factors creates a fog of ambiguity, making it challenging to forecast regulatory changes, tax policies, or labor market conditions.
Economic Malaise and Election Timing
Australia’s economic malaise predates the election cycle.
Over the past decade, real household disposable income has stagnated, productivity growth has flatlined, and public spending has surged, crowding out private sector activity. The prolonged uncertainty about when the election would be called, exacerbated by the government’s hesitation amid natural disasters and global volatility, has only deepened this malaise. Businesses have hesitated to commit to long-term strategies, fearing a shift in fiscal or industrial policy that could upend their plans.
Historically, the lead-up to elections often sees subdued business activity, as companies adopt a wait-and-see approach. The 2025 election, set against a backdrop of structural deficits and global trade risks, amplifies this caution. For CEOs, the challenge is to balance short-term resilience with readiness to pivot once the election outcome clarifies the policy landscape.
Post-Election Confidence: The Typical Timeline
When an election delivers a clear result—whether a strong majority for Labor or the Coalition—business confidence typically rebounds within three to six months.
This timeline reflects the time needed for the new government to form, articulate its agenda, and begin implementing policies. Historical data suggests that share markets often track sideways during campaigns, reflecting uncertainty, followed by a relief rally post-election. For example, after the 2022 election, which saw Labor secure a narrow majority, business investment in non-mining sectors began to stabilise by late 2022 as policy priorities like energy rebates and tax relief took shape.
However, this recovery assumes a decisive outcome. With current polling indicating a tight race, a hung parliament or slim majority is a real possibility. Such scenarios extend the uncertainty, as coalition-building or crossbench negotiations delay policy clarity.
The Risks of a Hung Parliament or Slim Majority
A hung parliament, where neither party secures the 76 seats needed for a majority in the House of Representatives, or a slim majority (e.g., Labor losing two seats or the Coalition gaining fewer than 20) poses significant risks.
In these cases, government stability hinges on deals with independents or minor parties like the Greens or Teals, whose priorities—housing affordability, climate action, or regional development—may not align with business needs. Hung parliaments, such as those in 2010-2013, prolong business uncertainty by up to 12-18 months, as legislative gridlock stalls reforms like tax incentives or deregulation.
For business, this means delayed investment decisions, as firms await clarity on critical issues like the instant asset write-off (set to lapse in July 2025 unless extended) or infrastructure spending.
A slim majority, while less chaotic, still risks paralysis if internal party dissent or by-election losses erode the mandate.
What’s the implication? Businesses may face a prolonged period of caution, with cash hoarding replacing growth initiatives.
HR Implications: Layoffs and Outplacement Support
The uncertainty and potential for a drawn-out post-election period directly impact HR strategy.
Economic malaise has already strained profitability, with rising input costs and wages outpacing revenue growth in many sectors. If a hung parliament delays economic stimulus or productivity-enhancing reforms, companies may resort to layoffs to protect their margins.
HR leaders must prepare for this scenario, particularly in industries like retail, hospitality, and manufacturing, where labor costs are a significant lever.
Should layoffs become necessary, providing robust outplacement support is critical, not just for ethical reasons, but to safeguard employer reputation and retain talent in a tight labor market. Australia’s unemployment rate, projected at 4.25% in 2025, masks sector-specific vulnerabilities, and laid-off workers may struggle to find new roles amid sluggish private-sector hiring.
Best-in-class outplacement programs mitigate legal and reputational risks while positioning the company as a responsible employer, a key factor for attracting talent once conditions stabilise.
On the other hand, HR leaders should also scenario-plan for a swift recovery.
A decisive election result could spur hiring as confidence returns, requiring a pipeline of skilled workers. Flexibility—through contingent staffing or upskilling existing employees—will be key to balancing these outcomes.
Strategic Recommendations
- Scenario Planning: CEOs should model three outcomes—clear majority, hung parliament, slim majority—assessing impacts on revenue, costs, and investment timelines. Stress-test cash reserves to withstand up to 18 months of uncertainty.
- Engage Stakeholders: Proactively lobby policymakers during the campaign, focusing on priorities like tax reform or infrastructure funding, to shape the post-election agenda.
- HR Agility: Prepare a dual-track HR strategy—cost containment (including layoffs with outplacement) and talent readiness for growth. Invest in digital tools to optimise workforce planning.
- Monitor Global Risks: Factor U.S. tariffs and China’s economic slowdown into supply chain and export strategies, as these could compound domestic uncertainty.
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The 2025 Australian Federal Election presents a complex challenge for business leaders. Economic malaise, a five-week campaign, and the specter of a hung parliament or slim majority demand a blend of resilience and foresight.
By anticipating prolonged uncertainty, preparing for HR contingencies, and positioning for a post-election rebound, C-suite and HR leaders will need to navigate this period effectively.
The next few months will test business leadership to emerge strongly after the election.
**** Source: https://www.thesaturdaypaper.com.au/news/politics/2024/06/15/exclusive-inside-the-coalitions-climate-division
