Treasury’s forecasts are HR’s best economic crystal ball. But HR practitioners need to go beyond the Federal Budget headlines and look for specific signals to stress-test wage and hiring assumptions. This is where you should be looking for useful signals.

Most people read the Federal Budget headlines and await a summary email from their accountants or their bank. But while the media fixates on the surplus or the price of beer, the Federal Budget also tells a different story – a story important to workforce planning.

The economy changes for many reasons which the government can’t control. And Treasury lacks magical powers to see the future. But it does house many of the nation’s most skilled economic forecasters, and they have built sophisticated forecasting machinery. 

As independent economist and long-time Treasury-watcher Saul Eslake points out: “The only other available source of authoritative forecast is the Reserve Bank – and the Reserve Bank and Treasury try to minimise differences between the views that they have.” 

The Budget tells you what these Treasury experts think about where labour will be scarce, where wages will rise and where the regulatory net will tighten.

Governments are often first elected on promises not to change economic policy dramatically, says Eslake. So Budgets like this, the first since the Albanese government’s re-election, may drive more change than usual.

Where the signals for HR live

When downloading the Budget papers, it’s advised not to start with the glossy overview. The signals that matter to businesses live in the Budget papers’ dense, unloved corners.

Budget Paper No. 1 – and specifically Statement 2: The Economic Outlook – is where HR leaders should start. This contains:

• The government’s official forecasts for the Wage Price Index (WPI); and
• unemployment and participation rates over the forward estimates (the next four years).

These are not just estimations; Eslake notes that they usually form the baseline for non-government economists like himself.

HR leaders can usefully compare Budget numbers with their own estimates for, say, rises in corporate remuneration. If Treasury forecasts the WPI to grow at 3.5 per cent while a business’s enterprise agreement assumes 2.5 per cent, it may have a structural problem brewing, as, upon the EA’s expiry, employees will likely demand a significant re-basing of wages.

Eslake also points to the Budget’s Statement 3, where a table called “Reconciliation of general government sector underlying cash balance estimates” shows how the government expects its Budget decisions will change things.

Next, turn to the Portfolio Budget Statements. When the government commits billions in new spending to aged care or clean energy infrastructure, for example, it is not just buying more services; it is buying more people. It is aggressively entering the market for more project managers, engineers and trades.

In times of economic slowdown, such extra spending can help keep the economy afloat. But Leonora Risse, an assistant professor of economics at Queensland University of Technology, notes a problem. 

When the private sector is already spending, big new programs can leave private business effectively competing against the government for skilled and talented people. 

It can be easy to miss this crowding-out effect. If a massive infrastructure pipeline is funded in your state, the cost of retaining your maintenance crew just went up – even if you don’t work in construction.

Finally, scan the Statement of Risks (usually Statement 8). Eslake and Risse both identify this as containing useful insights for private organisations. It sets out fiscal risks and “contingent liabilities” – money that might have to be paid out if things go badly. 

This statement often sets out the likely consequences of events such as big changes in commodity prices or US economic policies. It also highlights possible legal challenges to the government’s economic decisions. A risk around “compliance activities”,  for instance, may warn of a coming regulatory crackdown.

How to read the tea leaves (member exclusive)

AHRI members have access to extra advice, such as how to translate the Budget outcomes into second-order impacts for their organisations and the questions to ask when preparing their post-Budget brief to the board.

What are the headlines telling us?

While HR’s deepest and most meaningful insights lie in the “unloved corners” of the Budget papers, as outlined above, it’s also worth keeping across the headlines.

So far, we know the Government will be talking about:

• Productivity: Keep an eye out for details about streamlining the process to recognise skilled migrant workers as part of a productivity-boosting initiative that the government says will boost the economy by $13 billion per year. (Source: The Guardian).
• Tax reform: Expect to hear more about changes to the capital gains tax discount, negative gearing and taxation of trust funds. (Source: ABC News).
• Public sector cuts: Expect cuts in the public sector, as the government has suggested its finding savings of up to $2 billion from cutting consultancy work and outsourcing. (Source: The Guardian).
• A one-time tax cut for workers, said to be up to $300, is potentially on the cards. (Source: ABC News).
• A $1000 instant tax deduction without receipts, for work-related expenses. This is expected to come into effect for the 2027 tax season. (Source: ABC News).
• Fuel security package: It’s no surprise that fuel security/sovereignty and costs have been front of mind for Australia’s politician leaders of late.
  
  We know from previous announcements that the Albanese Government has committed more than $10 billion to bolstering Australia’s fuel security, which includes $7.5 billion to provide financial support for fuel/fertiliser supply  and $3.2 billion to fund an offshore fuel reserve. (Source: ABC News).
  
  This is in conjunction with the government’s announcement that it is spending $2.55 billion to cut the fuel excise and heavy road user charge for three months to ease cost pressures.
• Bolstering defence: The Government is predicted to spend up to $53 billion on Defence over the coming decade, $14 billion of which is said to be spent over the coming four years. An additional $74million will be spent over the next two years to establish a new centre to fight terrorism and online threats. (Source: The Guardian).
• NDIS cuts: The government is looking to slash $15 billion from the National Disability Insurance Scheme (NDIS), which would mean approximately 160,000 people would be removed from the Scheme. (Source: The Guardian).

David Walker has analysed State and Federal Budgets for media and business groups over more than three decades. In his former role as economics writer for The Age, he was the first journalist to produce dedicated online coverage from inside the Federal Budget lock-up.

This is a condensed version of an article that was first published in the May, June, July 2026 edition of AHRI’s member magazine, The HR Agenda. Elements of this article remain exclusive to AHRI members.