Small businesses across Australia are facing increasing pressure from complex regulatory requirements and rising operational costs, prompting widespread calls for government intervention to reduce red tape and provide greater tax relief. According to a recent survey conducted by the Growth Intelligence Centre, over 70% of respondents support larger tax breaks for small enterprises. This concern comes amid a sharp rise in business insolvencies, with more than 14,150 companies entering insolvency during the 2025-26 financial year.
Industry leaders have highlighted industrial relations frameworks, notably modern award classifications, as significant contributors to administrative complexity. Skye Cappuccio, chief executive officer of the Council of Small Business Organisations Australia, said that navigating the intricacies of award classifications, pay and penalty rates, rostering rules, and record-keeping obligations places a heavy burden on employers, many of whom lack dedicated human resources or payroll teams. Simplifying these awards, she suggested, would alleviate compliance difficulties and reduce errors.
The Council has urged the Albanese government to lower the company tax rate from 25% to 20% for businesses with annual turnovers below $20 million, aiming to provide relief for smaller operators. Bran Black, chief executive of the Business Council of Australia, underscored the broader issue of excessive regulatory complexity across various domains including payroll tax, occupational licensing, workers’ compensation, and long-service leave. He emphasized the confusion generated by multiple differing definitions of small business, advocating for a unified, streamlined classification system to ease compliance.
Research by the Australian Institute of Company Directors indicates that Australia’s regulatory burden is approximately 33% higher than the average among OECD countries. Mark Rigotti, the institute’s CEO, estimated that federal regulations cost businesses around AUD 160 billion annually—equivalent to roughly 6% of GDP—and linked the growing regulatory load over the past two decades to a 20% decline in economic activity.
Executives from major companies have echoed these concerns. Mike Schneider, managing director of Bunnings, acknowledged the vital role small businesses play in the economy and advocated for cutting back on red tape to reduce costs and encourage investment. Similarly, Andrew McKellar, CEO of the Australian Chamber of Commerce and Industry, described red tape as “a tax on time.” He cited a survey of over 1,100 small businesses revealing that 61% spend more than AUD 20,000 annually on compliance, and 39% dedicate over six hours per week to related tasks.
Small business owners themselves have recounted the challenges posed by regulatory and tax obligations. Renee Nightingale, founder of the OG Ponytail, spoke about the ongoing struggles to manage compliance demands, end-of-year tax responsibilities, and the psychological toll these pressures impose. She noted that while international clients may not fully understand the difficulties faced within Australia, the combination of regulatory hurdles and escalating taxes is contributing to business closures and significant mental strain.
The collective calls from business representatives, industry groups, and entrepreneurs highlight a growing urgency for policy reforms aimed at simplifying regulations and reducing financial burdens on small businesses to foster a more conducive environment for growth and sustainability.