The federal government has unveiled plans to abolish non-compete clauses for most Australian workers as part of a budget that was largely bereft of tech-related initiatives.

Treasurer Jim Chalmers handed down the 2025-26 budget in Canberra on Tuesday night, headlined by $17.1 billion in new tax cuts that will leave all Australian workers $268 a year better off from mid-2026 and a further $538 the following year.

The federal budget barely mentions the technology sector and includes few digital-related investments, leaving many industry groups and leaders frustrated and disappointed, particularly the lack of focus on artificial intelligence.

Non-competes scrapped

The tech sector will however be interested in plans to scrap non-compete clauses for low and middle-income earners which was announced by Chalmers in the budget.

From 2027, non-compete clauses will be banned for workers earning less than the high-income threshold in the Fair Work Act, which is currently $175,000 annually.

Non-compete clauses are rife in the tech sector, and while this cap may exclude some highly paid tech workers, the government also flagged that it will consult on expanding the ban to all workers, no matter what they are paid.

Chalmers said that more than three million Australians are covered by these clauses, and removing them will boost wages and productivity.

“Non-competes are holding too many Australians back from switching to better, higher-paying jobs,” Chalmers said in his budget night address to Parliament.

“People shouldn’t need to hire a lawyer to take the next step in their career.

“Or permission from their old boss if they want to be their own boss and turn an idea into a small business.”

The federal government will consult on exemptions to this ban, penalties and transition agreements before introducing legislation implementing it from 2027.

It will also prevent the use of “no-poach” agreements blocking staff from being hired from competitors.

Non-compete clauses are popular in the tech sector, where competition for talent can be extreme and rivalries strong.

They have been on the radar of the Labor government for several years, with the competition watchdog tasked with investigating non-compete clauses in 2023.

A report later that year estimated that more than 20 per cent of Australian workers are subject to these clauses, and that they are serving as a handbrake on productivity and preventing workers from finding higher paid work.

‘Missed opportunity’

The federal budget is largely quiet when it comes to other tech policies or spending.

It allocates $207 million over two years to the second phase of the Australian Securities and Investments Commission’s modernisation of business registers, and nearly $230 million in 2025-26 for continued work on My Health Record.

The government has also provided $55 million to maintain the research capability of CSIRO and for the agency to conduct research into gene technologies, while $47.9 million will go towards the Square Kilometre Array project.

The only mention of artificial intelligence in the budget was in the Treasurer’s speech, where he listed it and information technology as one of the five “seismic changes shaping this new world of uncertainty”.

There was no new spending in the federal budget focused on AI, leading to widespread disappointment among tech industry groups.

“Australian Computer Society (ACS) is concerned that the nation is not positioning itself to take advantage of the major changes artificial intelligence offers to the economy,” ACS CEO Josh Griggs said.

“We would like to see greater government investment and incentives for the private sector that would see increased funding for developing skills, investing in local data centres, boosting AI sovereignty and bolstering Australia’s cybersecurity readiness.”

This was echoed by Employment Hero CEO Ben Thompson.

“We’re surprised, and frankly disappointed, to see nothing on AI in this year’s budget, despite being mentioned in tonight’s speech,” Thompson said.

“If Australia wants to compete on the global stage, we can’t afford to fall behind in accelerating the adoption of AI.”

The Tech Council of Australia also issued a statement saying it was “disappointed that no explicit tech sector investment was included” in the budget.

“This is a missed opportunity to build our national competitiveness – at a time of domestic productivity decline, and of critical global trade volatility,” the Tech Council statement said.

Australia Academy of Science President Professor Chennupati Jagadish labelled the budget a missed opportunity.

“We need to see commitments that harness the potential of Australia’s advanced capabilities – this budget has missed that opportunity,” Jagadish said.

“The vital infrastructure of today is supercomputing – not just roads and rails.”

Fintech Australia CEO Rehan D’Almeida also lamented a lack of focus on the fintech sector.

“This latest budget has seen fintech fall off the federal government’s agenda, which is a shame, as it is perhaps one of the greatest solutions to boosting productivity and addressing cost of living,” D’Almeida said.

Migration

The budget signalled a sharp drop in net overseas migration in the coming years, listed at 335,100 in 2024-25 but falling to 262,300 the following year, a drop of 20 per cent.

From the current financial year to 2027-28, net overseas migration is forecast to fall by more than 30 per cent.

The federal budget also included $20 million for a Buy Australia campaign to encourage consumers to purchase Australian-made products, and a further $6.7 million in 2025-26 to extend the operation of the Anti-Scam Centre within the Australian Competition and Consumer Commission.

The Workplace Gender Equality Agency will receive $1.4 million to support its overseeing of public sector reporting of workplace sexual harassment, and $3.4 million will go towards the Australian Public Service Commission so it can continue to trial Academy Campuses to provide digital and data training and employment opportunities for regional Australians.