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2025: A Year of Transformation and Growth

Celebrating milestones, client success, and global impact.

Year in Review and a Look Ahead

Dear Clients and Friends,

As 2025 draws to a close, it is worth stepping back from the volume of commentary and focusing on what the year has revealed about the environment in which businesses, investors and families are now operating.

The defining feature of the past year has not been a single disruption, but the convergence of tighter economic conditions, more interventionist policy, unsettled trade dynamics and rapid technological change. Together, these forces have reshaped decision-making and narrowed the margin for error.

Three realities stood out clearly. Economic growth can appear stable while remaining fragile beneath the surface. Policy and tax change can be technically complex, but deeply human in its consequences. And technology can expand what is possible without making decisions any simpler.

Cameron Allen

CEO & Office Managing Director

Economic Conditions and Key Indicators

Growth Returning, Slack Still Limited.

2025 reinforced the distinction between economic momentum and economic comfort.

According to the Mid-Year Economic and Fiscal Outlook (MYEFO) released in December, the Australian economy is expected to gather momentum over the next two years, with real GDP growth forecast at around 2¼ per cent in both 2025-26 and 2026-27. Importantly, the composition of growth is shifting—private sector activity, including household spending and business investment, is expected to contribute more than public demand.

Inflation has moderated materially from its post-pandemic peak, although recent increases highlighted temporary and structural cost pressures. Underlying inflation is expected to return to the Reserve Bank’s target band by the end of 2026, without a sharp deterioration in labour market conditions.

Labour Market & Business Conditions.

The labour market remains relatively tight by historical standards. Unemployment sat at approximately 4.3 per cent in late 2025 and is expected to remain around 4½ per cent over the forward estimates. Participation remains high and wage growth, while easing, continues to exceed pre-pandemic averages. For many businesses, labour availability and cost remain material constraints.

Despite these indicators, conditions on the ground remain challenging. Higher living costs, cautious consumers and selective access to credit have compressed margins and reduced tolerance for error. Interest rates remain restrictive, and while they may have peaked, the path ahead is uncertain. This places greater emphasis on cash flow, balance sheet strength and disciplined capital allocation decisions.

Government Spending, Global Trends & Resilience.

Government spending continues to play an important role, particularly through infrastructure investment. In Victoria, large-scale projects associated with the Big Build remain economically significant, while Queensland continues to invest heavily in infrastructure linked to population growth and major events. Other states have shifted toward more selective programs, reflecting fiscal constraints and rising debt servicing costs.

Globally, growth continues but remains subdued by historical standards. Trade policy has become more interventionist, with tariff settings and geopolitical tension reshaping supply chains and investment decisions. While Australia has been less directly exposed, global trade patterns are still adjusting.

The practical implication is clear: Resilience is no longer simply about weathering downturns—it’s about operating effectively in an environment with limited slack, tighter financial conditions and greater sensitivity to policy and execution.

Tax, Policy and Governance Developments

Reduced tolerance for passive structures.

Domestic Reforms and Superannuation Changes: The past year marked a meaningful shift in tax, superannuation and governance settings, particularly for private groups, high-net-worth individuals and internationally active businesses. Domestically, superannuation reform, including the introduction of Division 296, reinforced a broader policy direction for retirees. While design details continue to evolve, the message is clear: long-standing assumptions about the stability of concessions can no longer be relied upon indefinitely. Long-term planning now requires greater flexibility and a willingness to revisit arrangements previously considered settled. The superannuation system also reached important structural milestones, including the final increase in the Superannuation Guarantee rate to 12 per cent and continued progress toward more immediate contribution obligations. These changes heighten the importance of cash-flow management and operational discipline for both employers and individuals. Next year sees the introduction of Pay Day Super as well, and employers will need to factor this into their planning so as to meet their obligations.

International Tax Developments and Governance: Internationally, the OECD/G20 global minimum tax rules moved decisively from theory into practice. For groups within scope, 2025 was less about restructuring and more about systems, data quality and governance. Effective tax outcomes increasingly depend on process, documentation and defensibility, not just technical design. Alongside this, expanded transparency regimes and increased regulatory scrutiny mean tax is no longer viewed as a back-office function. Boards and family decision-makers are expected to engage directly with tax risk, disclosure and governance as core strategic considerations.

International Trade and Geopolitical Settings

Policy now drives outcomes.

Global trade dynamics remained unsettled throughout 2025. US Tariff changes, geopolitical tension and economic fragmentation are reshaping supply chains, pricing models and investment decisions.

For Australian businesses with international exposure, this has practical consequences. Assumptions about frictionless trade, stable counterparties and predictable policy settings are no longer safe. Diversification, contingency planning and jurisdiction-specific analysis have become central to risk management rather than peripheral considerations.

Technology, AI and Decision Governance

2025 saw a further acceleration in the practical use of artificial intelligence, automation and data analytics across industries where information and process matter.

AI is now routinely used in organisations for research, document analysis and workflow automation. When deployed thoughtfully, these tools deliver genuine efficiency and insight. But the past year also highlighted their limits.

In areas such as tax, governance, valuation and cross-border planning, accuracy, explainability and accountability remain critical. Outputs that cannot be understood, documented or defended do not satisfy regulators, boards or clients, regardless of how quickly they are produced. We have seen clients using these tools with often incorrect results.

The organisations making the most progress are those treating technology as infrastructure rather than novelty. That is, integrating it carefully, governing it properly and ensuring professional judgment remains central where consequences are material.

Regional Developments and Client Needs

Cross-border reality, local execution.

During the year, we hosted the Andersen Oceania regional meeting in Melbourne, bringing together senior colleagues from eight firms in Australia and New Zealand across tax, legal, valuation and consulting. The focus was on how we work together across firms and disciplines to serve clients seamlessly and deliver integrated solutions.

We also formally launched our Private Client practice in Australia, reflecting growing demand from individuals, family businesses and family offices dealing with complex questions of structure, succession, residence and intergenerational wealth transfers.

Looking Ahead to 2026

Designing for uncertainty.

Several themes are likely to shape the year ahead.

Growth is expected to continue, but unevenly and with limited slack. Trade and investment decisions will remain influenced as much by policy as by economics. Regulatory and tax complexity is unlikely to recede as governments confront ongoing fiscal pressure. Technology will increasingly underpin standard systems, with governance becoming the differentiator.

Across all of this, demand will continue to grow for advice that is integrated rather than siloed, independent rather than conflicted, and informed by both local insight and global perspective.

Those who succeed in 2026 will be those who design for uncertainty, rather than waiting for conditions to revert to the past.

Season’s Greetings

As the year comes to a close, I would like to thank our clients and colleagues for the trust, engagement and resilience shown throughout 2025.

I wish you a safe and restful holiday season, and I look forward to working with you in the year ahead.

Kind regards,

Cameron Allen

CEO & Office Managing Director

Andersen Australia

Congratulations!

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