Business confidence in Australia has declined across most states amid growing concerns over government policies, economic conditions, and rising costs, according to recent data and industry commentary. The downturn reflects unease within the non-mining business sector as it navigates a complex environment shaped by domestic policy changes and international uncertainties.
As of September 2026, business confidence dropped by more than 20 percent compared to a year earlier in every state except Victoria, where the decline started earlier but accelerated significantly in recent months. New South Wales remains the only state with a confidence index above the critical threshold of 80 — often associated with recession risk — but concerns persist due to anticipated energy cost increases linked to infrastructure projects such as Snowy 2.0.
The business community expresses growing dissatisfaction with federal government policies, particularly those involving tax reforms related to capital gains, negative gearing, and trust structures. There is a perception that increasingly heavy regulation, expanding welfare, rising government debt, inflationary pressures, and higher interest rates are creating an unfavorable operational climate. These factors, combined with industrial relations challenges, have contributed to slow productivity growth and a stagnant standard of living.
Employment statistics underscore the economic strain, with the total Australian workforce shrinking by an estimated 216,000 over the September quarter. The most significant contraction occurred in the final month, with a reduction of 132,000 jobs, reflecting ongoing job cuts across many firms seeking to adjust to the current fiscal and regulatory environment.
The housing market has also experienced a setback after a brief recovery in 2025. New home sales declined by 17.5 percent in the September quarter, while established home sales fell nearly 21 percent year-on-year. The median time to sell a property extended from 26 to 41 days, signaling weakening demand.
Industry leaders underscore the need for a shift from a heavily regulated and interventionist framework to one fostering entrepreneurship and innovation. Charles Goode, chairman of Australian United Investment Company, voiced concerns that current government approaches hinder a dynamic business environment, advocating for policies that promote a “can-do” culture.
Energy costs, particularly in New South Wales and Victoria, are areas of particular concern. The Snowy 2.0 renewable energy project in NSW and infrastructure projects like the Victorian Suburban Rail Loop have contributed to rising operational expenses for energy-intensive sectors, often necessitating government subsidies to offset these increases.
The situation in Victoria has prompted alarm among business figures who warn of a trajectory reminiscent of socio-economic challenges seen in other nations. Six prominent Victorian business leaders, including Ahmed Fahour and Tim Gurner, have publicly voiced concerns regarding state government borrowing, crime rates, and legislative issues affecting economic stability.
Across states, business leaders are increasingly focusing on internal consolidation rather than expansion as a strategy to mitigate exposure to economic and policy uncertainties. The intersection of state-level challenges with federal fiscal strategies and global geopolitical pressures has created a complex environment that continues to weigh heavily on Australia's broader economic outlook.