Soaring costs and global turmoil test business resilience
June 2025
Read More
CONFIDENCE REBOUNDS, BUT TRIPLE THREAT CHOKES PRODUCTIVITY
15 Sep 2025
Rising costs, skills shortages and compliance demands are choking business productivity, according to the state’s peak business body, Business NSW.
The latest Business NSW Business Conditions Survey reveals a staggering 97 per cent of businesses are struggling to improve productivity. Rising costs top the list at 65 per cent, followed by access to skilled labour (42%) and regulatory burdens (41%).
CEO Daniel Hunter said: "Productivity was front and centre at the Government’s Economic Reform Roundtable in August but talk alone won’t cut it. Businesses need real, tangible reforms that tackle the triple threat of costs, skills shortages, and red tape.”
Despite the challenges, clear signs of recovery are emerging. NSW business confidence has hit a three-year high, with expectations for next quarter higher still.
The Business Confidence Index jumped to -40.0 in Q3 2025, up from -50.8 last quarter. Although still negative, this signals a turnaround, with next quarter’s outlook rising sharply to -12.0, the highest since September 2021.
Mr Hunter said the figures were encouraging.
“Confidence is returning, but to sustain this momentum, we must remove the barriers holding businesses back,” he said.
“That means urgent reforms like overhauling workers’ compensation and cutting payroll tax to ease cost pressures and support growth.”
The survey revealed confidence is improving across nearly all industries and regions, driven by a modest reduction in interest rates and improved domestic economic growth. Australia's economy grew 0.6% in the June quarter, with annual growth reaching 1.8%, and GDP per capita ticking up 0.2%.
Business prospects for FY25-26 also improved, with an average rating of 5.8 out of 10, up from 5.1 the previous year and 4.9 in FY23-24.
However, key challenges remain. Rising insurance premiums continue to be the number one cost concern, having topped the list in every survey since early 2023. Businesses also cite taxes, energy prices, and a complex regulatory environment as persistent pressures.
“A major driver of insurance costs is the Emergency Services Levy, which adds about 25% to the average business insurance premium,” Mr Hunter said.
“Removing this levy would be a clear, practical step to reduce expenses and give businesses much-needed relief.
“Energy costs have also remained high for the second-straight quarter, making it clear that state and federal governments must take action to lower the cost of gas and electricity.”
Other survey findings include:
About Business NSW
Formerly the NSW Business Chamber, Business NSW is the peak policy and advocacy body which has been representing businesses in NSW since 1826. We represent almost 50,000 businesses.
FOR INTERVIEWS WITH BUSINESS NSW CEO DANIEL HUNTER: 0429 993 822
The latest Business NSW Business Conditions Survey reveals a staggering 97 per cent of businesses are struggling to improve productivity. Rising costs top the list at 65 per cent, followed by access to skilled labour (42%) and regulatory burdens (41%).
CEO Daniel Hunter said: "Productivity was front and centre at the Government’s Economic Reform Roundtable in August but talk alone won’t cut it. Businesses need real, tangible reforms that tackle the triple threat of costs, skills shortages, and red tape.”
Despite the challenges, clear signs of recovery are emerging. NSW business confidence has hit a three-year high, with expectations for next quarter higher still.
The Business Confidence Index jumped to -40.0 in Q3 2025, up from -50.8 last quarter. Although still negative, this signals a turnaround, with next quarter’s outlook rising sharply to -12.0, the highest since September 2021.
Mr Hunter said the figures were encouraging.
“Confidence is returning, but to sustain this momentum, we must remove the barriers holding businesses back,” he said.
“That means urgent reforms like overhauling workers’ compensation and cutting payroll tax to ease cost pressures and support growth.”
The survey revealed confidence is improving across nearly all industries and regions, driven by a modest reduction in interest rates and improved domestic economic growth. Australia's economy grew 0.6% in the June quarter, with annual growth reaching 1.8%, and GDP per capita ticking up 0.2%.
Business prospects for FY25-26 also improved, with an average rating of 5.8 out of 10, up from 5.1 the previous year and 4.9 in FY23-24.
However, key challenges remain. Rising insurance premiums continue to be the number one cost concern, having topped the list in every survey since early 2023. Businesses also cite taxes, energy prices, and a complex regulatory environment as persistent pressures.
“A major driver of insurance costs is the Emergency Services Levy, which adds about 25% to the average business insurance premium,” Mr Hunter said.
“Removing this levy would be a clear, practical step to reduce expenses and give businesses much-needed relief.
“Energy costs have also remained high for the second-straight quarter, making it clear that state and federal governments must take action to lower the cost of gas and electricity.”
Other survey findings include:
- 25% of businesses reduced staff in the past three months but 84% plan to maintain or grow their workforce next quarter.
- The employment outlook is weakest in the Accommodation and Food Services sector, where 28% of businesses expect to reduce headcount in the next quarter, the highest rate across all industries surveyed.
- 57% of businesses can now cover a month’s expenses through credit, loans, or overdrafts, up from 40% a year ago. Only 9% say they couldn’t raise this amount, down from 15% in 2023.
About Business NSW
Formerly the NSW Business Chamber, Business NSW is the peak policy and advocacy body which has been representing businesses in NSW since 1826. We represent almost 50,000 businesses.
FOR INTERVIEWS WITH BUSINESS NSW CEO DANIEL HUNTER: 0429 993 822
Related Media Releases
