Business NSW New England North West (NENW) says mounting energy, insurance and compliance costs are tipping too many small and medium businesses over the edge and is urging practical reforms in the upcoming NSW Budget to restore confidence and keep jobs in local communities.
New insolvency statistics reveal the gravity of the situation across NSW in 2025:
More than 6,200 NSW businesses entered insolvency.
- Construction was hardest hit with 1,473 companies going into liquidation.
- Hospitality saw 752 businesses fall into external administration.
- Retail recorded 387 collapses.
- Manufacturing saw 436 businesses wound up.
Business NSW NENW Regional Director Stephanic Cameron said, “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.”
“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.”
The pressure points: energy, insurance, wages and red tape:
- Energy: Small business energy bills are up 30–40% over five years, with the 2025–26 Default Market Offer adding a further 8–10%. Federal bill subsidies ended in 2025; while NSW continues targeted support, most small businesses now face higher underlying prices without relief.
- Insurance: NSW businesses pay up to 23% more than Victoria or Queensland for general business insurance due to the Emergency Services Levy (ESL). Members tell us:
- “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 is encouraged by the NSW Government’s ambition to reform the ESL this term and create a state‑wide contribution for emergency services; 2026 will be crucial to achieving this.
- Wages: The Wage Price Index increased 3.4% over the past year—another unavoidable cost pressure for employers already in a cashflow crunch.
- Red tape: In February 2025, 39% of small businesses said they were considering selling or closing due to regulatory and compliance requirements (compared with 36% of medium and 23% of large businesses). Cutting red tape would save time, reduce costs and help SMEs thrive.
Ms Cameron said, “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. Streamlining approvals, simplifying reporting, and reducing duplication would free up time and cash to invest in jobs and growth.”
“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.”
What the NSW Government can do — practical reforms for 2026
- Restore and expand Business Connect: Double the budget to $20 million and launch a more ambitious “Business Connect 2.0” targeting priority areas (cashflow management, energy efficiency, digital adoption, workforce).
- Cut payroll tax: Reduce the rate from 5.45% to below 5% and lift the threshold to $1.5 million, aligning NSW with more competitive rates in Victoria and Queensland.
- Regional boost: Introduce a permanent 1.2% concessional payroll tax rate for regional businesses to supercharge local investment and 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,” remarked Ms Cameron.
ATO obligations: strike the right balance
During COVID, the ATO took a more flexible approach to tax and GST timing. Since 2022, tightening on obligations has contributed to increased insolvency in 2023–24, which is in part a normalisation of the business cycle. Some level of insolvency is natural, but businesses should not go under due to insurmountable cost burdens.
Members report that falling behind on ATO debt is a difficult spiral: 12% interest (non‑deductible since July 2025), rigid payment plans, and borrowing at ~20% to meet tax obligations—not sustainable for small firms.
“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.”
“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,” stated Ms Cameron.
Media Release: Business NSW New England North West (NENW)
