2025-26 Federal Budget: What It Means for Australia’s Tender Market
The 2025–26 Federal Budget (Released 25 March 2025) confirms what many businesses have anticipated: the Australian Government is entering a significant investment phase. With public spending forecast at 28.5% of GDP, the Federal budget reflects a record-high commitment to government-led delivery.
For SMEs, CEOs, and procurement-facing teams, this budget signals more than just opportunity. It marks a generational shift in how, where and with whom government does business.
What does the new Federal Budget mean for the Tendering landscape?
Government Tender activity is entering a high-growth phase. We anticipate that government Tenders will be released more frequently and in higher volume than in previous years, providing companies with increased opportunities to bid to the Government.
Supporting Australian businesses
The Budget provides opportunities for small and medium enterprises by setting a target for SME procurement for contracts valued up to $20 million. Last year, the Government exceeded its 35% SME procurement target, and we expect to see that trend continue to grow, given the increased emphasis the budget places on local procurement and economic benefit.
The Federal Budget increased funding, allocating tens of billions of dollars across the following sectors:
Defence
$10.6 billion have been allocated over four years to strengthen Australia’s defence capabilities. 80% of the defence investment is earmarked for domestic spending. Key Defence projects include infrastructure for the AUKUS submarine program, missile manufacturing facilities, and frigate acquisition acceleration to build out sovereign defence capability.
ProposalPro tip: Defence will not wait for you to catch up. Ensure your internal company policies align with the Department of Defence’s requirements for Australian Industry Participation and that you have a comprehensive understanding of the Defence Industry Security Program.
Infrastructure
The Government has committed $17.1 billion nationally to road and rail upgrades, with a further $4.5 billion directed to local governments to address infrastructure backlogs. We expect there to see infrastructure Tenders released for both major state-managed projects as well as hundreds of local government Tenders for smaller works such as road resurfacing, bridge maintenance and community infrastructure upgrades.
ProposalPro tip: Preparedness matters. Track state and local government portals closely so you can begin preparing your proposal strategy as soon as the public is advised of a forthcoming Tender. Ensure your prequalification credentials are up to date.
Clean Manufacturing
The 2024-25 Federal Budget allocated $22.7 billion to A Future Made in Australia over a ten-year period. This strategy acts as a catalyst for clean energy and sovereign capability investment. Funding under this plan focuses on green metals such as steel and aluminium, hydrogen hubs, and modular housing (delivered through state agencies).
While many of these projects will be Grant funded, execution will depend on competitive procurement processes, especially in capital works and advanced manufacturing.
ProposalPro tip: Be proactive, not reactive. Position your business around value-add – sovereign capability, clean tech expertise and transparent local supply chains.
Digital projects
The 2025-26 Federal budget sets aside $3 billion for the national Fibre-to-the Node (FTTN) network with NBN Co contributing $800 million to the project. The Government has also earmarked hundreds of millions of dollars for upgrades to My Health Record and the ASIC registry. This will lead to an uptick in ICT procurement for government projects. Key focus areas are likely to include:
- Delivery, integration and capability uplift
- Digital identity programs
- Cybersecurity pilots
- Aged care systems modernisation
Housing, Water and Regional projects
These may not make front-page headlines, but for regional builders, consultants and engineers, housing, water and regional projects represent consistent Tender volume.
$54 million have been budgeted for modular housing in order to increase housing supply quickly and efficiently and support state and territory governments. The Government aims to construct 1.2 million new homes by 2029.
Additionally, the Government has increased its commitment to improving water infrastructure and land care and environmental restoration.
Conclusion
The 2025–26 Federal Budget underscores the Commonwealth’s commitment to high-impact public investment and local procurement, ushering in opportunities for Australian businesses to secure government contracts. The Tender landscape is poised for significant growth across several key industries.
Early preparation is key for businesses looking to capitalise on government Tendering opportunities. Aligning internal capabilities with government priorities, such as sovereign capability, sustainability, and SME participation, will be essential to staying competitive. This is an opportunity to win more work and position your business as a long-term delivery partner in Australia’s economic transformation, and ProposalPro is here to help with all your Tender preparation needs.
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