Glen Innes Severn Council Mayor Margot Davis has voiced strong support for advocacy by Business NSW, warning that rising energy, insurance, compliance and interest rate costs are pushing otherwise viable regional businesses to the brink and hollowing out rural economies.
Cr Davis said the recent interest rate increase has compounded pressures councils are already seeing firsthand across regional, rural and remote communities.
“Business closures in regional towns aren’t abstract economic statistics,” Cr Davis said.
“They mean empty shopfronts on our main streets, lost local jobs, fewer services and declining confidence. Councils feel the impact immediately, and we live with the consequences long after the doors close.”
She said insolvency data continues to show cashflow stress as a leading driver of business failure, with rate hikes tightening margins further for small and family-run businesses operating in thin regional markets.
“This isn’t about poor decision-making. We are seeing well-run businesses struggling because fixed costs – energy, insurance, wages, compliance and now debt servicing – have simply outpaced what local markets can absorb,” Cr Davis said.
Interest rates compounding existing pressures
Cr Davis said interest rate rises are not occurring in isolation but are amplifying an already unsustainable cost base.
“When margins are already razor-thin, every increase in borrowing costs reduces capacity to invest, employ staff, or plan with confidence. In regional communities, that pressure flows straight through to jobs, services and population stability,” she said.
Councils on the frontline — without the levers
Local councils play a critical role in economic development – supporting small business, enabling investment, streamlining approvals and building liveability. However, Cr Davis said the primary cost drivers forcing businesses into distress sit outside local government control.
“Councils don’t set interest rates, energy prices, payroll tax, insurance levies or federal compliance rules. When those settings fail, the fallout lands squarely on regional communities,” she said.
She said rising energy prices, higher insurance premiums, increasing wage pressures, growing regulatory complexity and higher debt servicing costs are combining to create unsustainable operating conditions for small and medium businesses.
“This is economic leakage at scale. When businesses close, we lose jobs, skills and people. That directly undermines workforce attraction, population growth and long-term community sustainability,” she said.
Acknowledging rate pressures — and the reality councils face
Cr Davis acknowledged that councils themselves are not immune from rising costs. “Council recognises that any increase in rates is felt by households and businesses. But it’s critical to understand that local rate decisions are a response to long-term underfunding, cost shifting and rising statutory obligations, not the cause of the cost-of-doing-business crisis,” she said.
She said council rates are fundamentally different from market-driven cost shocks.
“Rates are transparent, phased and tied directly to maintaining the local infrastructure and services businesses rely on – roads, water, planning and town centres. A financially unstable council ultimately imposes far greater costs on local businesses through declining services and failing infrastructure,” Cr Davis said. Supporting practical, evidence-based reform
Cr Davis said Glen Innes Severn Council strongly supports the practical reforms being called for by Business NSW, including payroll tax reform for regional businesses, insurance levy reform, expanded business advisory support, and cutting red tape so compliance is proportionate for small and family-run enterprises.
“Keeping a business open is far more cost-effective than trying to rebuild a town centre after it collapses. Prevention is economic development,” she said.
Buy local as an immediate economic lever
Cr Davis also highlighted government procurement as a practical tool to support regional economies.
“Buy-local isn’t a slogan – it’s economic policy. When governments procure locally, supporting competitive businesses, public dollars circulate longer in regional communities, stabilising businesses and jobs without new programs or bureaucracy,” Cr Davis said.
A shared responsibility for regional economic health
Cr Davis said councils will continue to invest in place, reduce unnecessary local red tape and work closely with business communities. However, she warned councils cannot offset systemic pressures created at state and federal levels.
“If these cost pressures continue unchecked, the outcome won’t just be fewer businesses. It will be weaker towns, reduced services and greater long-term pressure on all levels of government,” Cr Davis said.
“The cost of doing business is not an abstract policy debate for regional Australia. It’s the difference between a town that grows, and one that slowly empties out,” she said.
Media Release: Glen Innes Severn Council
