Industry leaders say a renewed national focus on regulatory reform this year is critical to unlock much needed investment and productivity growth, the latest Australian Industry Group national survey has found.
The annual Australian Industry Group Outlook Survey, now in its 13th year, shows industry leaders have identified three pressures that will define 2026:
- The return of inflation, with input and energy costs continuing to rise while market conditions remain weak, putting pressure on margins and constraining investment opportunities
- Mounting regulatory burden, with imposts from both the taxation and broader regulatory regimes emerging as a leading negative factor for business growth
- Persistent workforce pressures, with wages costs rising rapidly while workforce shortages persist for higher skilled roles
"Industry leaders are clear that without meaningful regulatory reform, our current higher-cost, lower-growth business conditions are likely to become entrenched," said Innes Willox, Chief Executive of Australian Industry Group.
"Persistent cost pressures – whether from inflation, workforce shortages or energy prices – continue to strain balance sheets. Industry plans to raise technology investments in 2026 to deliver productivity uplifts that can manage rising costs.
"Government is also a major source of cost pressures on industry – 37% of leaders cite tax burden, and 33% compliance burden, as a leading negative impact on their business.
"Mounting regulatory burdens are adding to cost pressures at a time when business can least afford it. No amount of tech investment can compensate for poorly designed regulation or uncompetitive tax settings.
"The message from industry leaders is clear: regulatory reform is essential if we are to deliver the higher investment levels needed to drive a return to productivity and robust growth.
"The Treasurer's Economic Reform Roundtable last August canvassed a wide range of potential reforms, across issues as diverse as planning, licensing, skills, federalism, tax and more. Now is the time to get on with the job and deliver these reforms," Mr Willox said.
A full copy of the Australian Industry Group survey report is available here
Key findings of the 2026 survey:
- Australian industry expects another year of challenging conditions. While there is modest optimism for revenue and employment, overall sentiment remains weak, with 40% of leaders expecting business conditions to deteriorate in 2026.
- Cost pressures driven by inflation, energy and wages are at their highest levels in years, dragging on business margins and capacity to invest.
- Tax burden, particularly payroll and company tax, is now a leading inhibitor to business investment and employment.
- Overly complex and burdensome regulatory regimes are adding to cost pressures at a time when businesses can least afford it.
- Workforce shortages persist, especially for higher-skilled roles, shaping business strategies and investment priorities for the year ahead.
- Technology is the only area of investment showing solid growth, as businesses seek to improve efficiency and manage costs.
The 2026 Industry Leaders Outlook Survey was conducted in October and November 2025, with responses from 225 private-sector businesses across Australia.
