Hospitality industry left starving and on life support after federal budget - ARCA demands action ahead of election

In the wake of a Federal Budget that delivered crumbs to hospitality and an election announcement that ignores the crisis gripping Australia’s restaurants and cafes, the Australian Restaurant and Cafe Association (ARCA) is sounding the alarm: the industry is in freefall.

With 9.3% of the hospitality industry already plunged into insolvency and more than one in eleven venues predicted to close this year according to CreditorWatch, ARCA is launching its national ‘Positive Hospo’ Campaign – an unapologetic push to put hospitality front and centre in the 2025 Federal Election.

“We are at breaking point,” said Wes Lambert, CEO of ARCA. “Costs are up. Tourism is down. Staff are scarce. Profits are vanishing. And yet the Federal Budget offered little more than a beer excise freeze and a power bill rebate. It’s not enough. The government has left the industry on life support — and the time for polite advocacy is over.”

The reality is a system in crisis - there are over 56,000 restaurants and cafes in Australia employing more than half a million people. These are the lifeblood of cities and regional towns — but soaring costs, red tape, and worker shortages have eroded average profit margins to below 4%.

“This isn’t just an economic crisis — it’s an Australian cultural one,” Lambert said. “When restaurants close, communities lose jobs, vibrancy, and connection.”

On the back of ARCA’s positive advocacy wins in FY25-helping to keep Cooks and Chefs on the Core Skills and Occupations List, leading the discussion on FBT reform now adopted by the Coalition as a key election promise and the $12,000 apprentice and trainee wage subsidy announced in Peter Dutton’s Budget Reply last week, along with advocating alongside the industry for the excise relief-ARCA plans to “Lead the Positive Hospo Campaign during the Federal Election campaign”. 

With the election called for 3 May, ARCA’s Positive Hospo Campaign for restaurants & cafes will keep the spotlight on its 10 Point Policy Plan highlighted in their Pre-Budget Submission including; 

1. Remove Fringe Benefits Tax (FBT) on Hospitality - instated as a key election policy for the Coalition
2. Freeze Alcohol Excise Increases for 24 Months - announced by the Labor government, effective 1 March, effective August 2024 - August 2026 and matched by the Coalition
3. Freeze Income Tax on Tips (Gratuities) 
4. Digital Tax Rebate 
5. Fee Free VET 
6. Supporting Apprenticeships in the restaurant and cafe segment-announced as a promise by the Coalition in their Budget Reply
7. No changes to Junior Rates 
8. Cafe & Restaurant Managers to be Added back to CSOL List 
9. Index changes to TSMIT to Fair Work Annual Wage Review Outcomes.
10. Increase International Student Hours

From March 31 to April 2, ARCA board members and over 1,100 members will gather in Sydney, Melbourne and Brisbane for national Positive Hospo Campaign Kick-off events, rallying the industry to come together for its future and to Join ARCA-We Deliver.

“We will not let this election pass with hospitality ignored,” said Lambert. “The next government must choose: support the survival of one of Australia’s largest employment sectors, or be remembered for guaranteeing its collapse.”

Business owners and executive level representatives from Lucas Restaurants, Fink Group, Renascene Group, Trader House Group, House Made Hospitality, Mangan & Co, The Grounds, Delia Group, Van Haandel Group, The Lake House and Tim Johnson Group form the ARCA Board.

Australian Restaurant and Cafe Association (ARCA), 31^st March 2025