Australia, California, October 30, 2026 — Australian companies want governments at all levels to reduce the cost of doing business. They are being hit hard by rising costs and can’t pass on these increases to their customers because of low demand. They say that the combination of high compliance costs and increasing prices make it harder for them to do well. The call to action comes after the Reserve Bank increased interest rates again last month to try to control inflation, which is currently running higher than its target.
The Scale of the Regulatory Burden
The Australian Institute of Company Directors (AICD) and Mandala Consulting have estimated that federal regulation compliance is costing the Australian economy approximately $160 billion annually. This estimate is equivalent to over 6% of Australia’s total annual economic output and exceeds the total amount spent by the federal government on both Medicare and education. Business organizations contend that the duplication of regulations across the federal, state, and territory levels of government adds additional costs to businesses while providing no additional benefits.
Almost thirty industry associations representing agriculture, mining, small business, etc., have collectively requested a twenty-five percent decrease in cost of regulations by 2030. According to the Alliance of Industry Associations, these costs are eventually borne by employees and households when they purchase goods or services. Mining and agricultural sectors in particular have identified delays in obtaining approvals for projects as a negative influence on the competitive position of investments.
Inflation Adds to the Pressure
As of 2026, the Australian Industry Group (AIG) Outlook Survey has found that many Australian businesses are very concerned about how they will manage increasing costs of inputs and energy. This is due to the fact that inflation is now higher than what the Reserve Bank of Australia (RBA) targets (2-3 percent). Because of this increase in inflation, the RBA began raising interest rates again in 2026. Almost 40% of the industry leaders surveyed by the AIG anticipate that business conditions will continue to worsen throughout 2026.
According to the results of the survey, cost pressures from wages, energy, and overall inflation are at an all-time high. When asked what issues they would face during this year, business leaders identified wage pressure and rising costs as some of the most critical. Many businesses stated that the combination of these cost pressures is hindering their ability to make investments in either expanding or growing.
Calls for Government Spending Restraint
The federal government was also called upon by the business lobby groups to use more restraint with its public spending, as they believe that if it continues with high levels of spending then there will be an increase in inflationary pressures. There are some economists who have made a direct link between the amount of money spent by the government and the decision by the Reserve Bank to increase the rate of interest on several occasions. This link has increased the discussion around whether the current level of inflation is being driven primarily by fiscal policy (the government’s spending), rather than private sector demand.
Small and medium enterprise groups are asking for tax reductions, changes to regulations and assistance with their cash flow in future budgets. A “tell us once” concept is being advocated by the Australian Chamber of Commerce and Industry to help decrease the amount of information that businesses must report to multiple levels of government. It is believed by business groups that if there are fewer costs associated with doing business and we change how things are regulated, then this will be more effective than just raising interest rates in order to lower inflation.
Government Response and the Path Forward
The finance minister addressed concerns expressed by businesses prior to budget deliberations and also advised caution when considering implementing regulatory reforms as a whole instead of in a series of steps. Additionally, officials have stated that regulatory reforms would be included in the budget planning process, although they may not be as extensive as some business organizations would like. This measured approach reflects the government’s dual responsibility of addressing business interests while simultaneously pursuing other public policies.
Without significant changes to regulations, businesses are concerned that the high costs and slow growth rates we’re seeing now may become permanent parts of the global economy. In response to these concerns about high costs, many companies say they plan to invest more heavily in technology during the next 12 months. Ultimately, whether or not the government takes action to match the concern expressed by companies will determine how much money companies can spend on growth initiatives over the next few years.
