Business NSW New England North West (NENW) is calling for targeted reforms in the upcoming NSW Budget, warning that rising energy, insurance and compliance costs are pushing many small and medium-sized businesses (SMEs) to the brink.
The regional peak body said the burden of rising operational expenses is undermining business viability and threatening jobs in local communities.
Rising Insolvencies Highlight Business Stress
Recent insolvency data highlights the growing pressures on businesses across New South Wales:
- More than 6,200 NSW businesses entered insolvency in 2025.
- The construction sector was the most affected, with 1,473 companies entering liquidation.
- Hospitality recorded 752 businesses placed in external administration.
- Retail saw 387 insolvencies, and manufacturing reported 436 business closures.
Business NSW NENW Regional Director, Stephanie Cameron, said rising input costs are hitting businesses hard.
“The cost of doing business has become unsustainable for too many operators in our region and across NSW. Energy, insurance and compliance costs are rising faster than small businesses can manage, and the result is a wave of insolvencies that is hollowing out local economies,” Cameron said.
“We’re hearing from members that red tape and cashflow pressures are tipping otherwise viable businesses into administration. Without staff, without sensible compliance relief, and without a level playing field on costs, businesses can’t grow—or even maintain operations.”
“The NSW Government has a real opportunity in this year’s Budget to deliver practical, achievable reforms that restore confidence—cut payroll tax, back our small business advisory services, and make it easier to hire. These steps would help keep doors open and jobs local.”
Key pressure points
Energy
Energy costs have increased significantly for SMEs. According to Business NSW, small business energy bills are up 30–40 per cent over the past five years. The 2025–26 Default Market Offer is expected to add a further 8–10 per cent. While the NSW Government continues to offer targeted assistance, the end of federal energy bill subsidies in 2025 has left many small businesses exposed to higher base costs.
Insurance
Business NSW argues that the Emergency Services Levy (ESL) is driving up insurance costs in NSW, making premiums up to 23 per cent higher than in Victoria or Queensland. Business members expressed their concerns in anonymous comments:
“Insurance, levies and wages keep rising, but my customers are paying less and we have less customers. This is a recipe to close the business.”
“2026 will be our toughest year out of the past five.”
“I see no change to the population’s ability to spend more on non-essentials; we will look to sell or close in 2026.”
Business NSW has welcomed the NSW Government’s commitment to ESL reform this term, describing 2026 as a critical year for progress.
Wages
The Wage Price Index rose by 3.4% per cent over the past year, placing additional pressure on small businesses already navigating tight cash flows.
Red Tape
Business NSW cites survey data from February 2025 showing that 39 per cent of small businesses were considering selling or closing due to compliance burdens, compared to 36 per cent of medium and 23 per cent of large businesses.
“Small businesses cop the brunt of the red tape burden. Compliance should be proportionate and practical—especially for family businesses without dedicated legal and finance teams,” Cameron said.
“Streamlining approvals, simplifying reporting, and reducing duplication would free up time and cash to invest in jobs and growth.”
She added that stronger support for local suppliers through government procurement could offer a meaningful boost for regional businesses.
“Stronger buy‑local sentiment—especially through government procurement—would deliver an immediate boost to small businesses and regional economies. And easier access to skilled workers is vital; without staff, businesses simply cannot grow.”
Business NSW is advocating for several reforms in the 2026 NSW Budget, including:
- Restore and expand Business Connect: Doubling funding to $20 million and launching a more targeted “Business Connect 2.0” with a focus on energy efficiency, cash flow, digital skills and workforce development.
- Payroll tax relief: Reducing the rate from 5.45 per cent to below 5 per cent and lifting the threshold to $1.5 million, aligning NSW with Victoria and Queensland.
- Regional incentives: Introducing a permanent concessional payroll tax rate of 1.2 per cent for regional businesses to drive local job creation.
“These are realistic, achievable reforms that businesses say would restore confidence and help prevent further insolvencies. They would put NSW back on a competitive footing and send a powerful signal that the state backs small business,” said Cameron.
Business NSW is also calling on the Australian Taxation Office (ATO) to adopt a more flexible approach to repayment obligations. It says that post-COVID, tighter enforcement has contributed to insolvency growth—though some increase reflects a return to pre-pandemic norms.
Members have reported struggling to meet ATO debts, citing 12 per cent interest charges (no longer tax-deductible since July 2025), limited flexibility in payment plans, and difficulty accessing capital—sometimes borrowing at rates of 20 per cent to pay tax liabilities.
“We support compliance and fair competition, but there must be sensible flexibility for small businesses trying to get back on track. Where businesses are viable, time‑to‑pay arrangements and interest relief can make the difference between survival and closure,” Cameron said.
Cameron also provided a comment regarding ongoing uncertainty around tax structures.
“Many family businesses use trust structures legitimately. With the Bendel case before the High Court, we urge the ATO to deal sensitively with small businesses that lack access to sophisticated tax advice, ensuring taxpayers are not unfairly disadvantaged.”
“If NSW and the Commonwealth take these practical steps—cutting costs, reducing red tape, backing skills and buying local—we can stem the tide of insolvencies, keep Australian industries alive, and give businesses in the New England North West the confidence to invest and hire,” Ms Cameron concluded.
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