AUSTRALIAN CHAMBER REACTIONS
The Australian Chamber of Commerce and Industry (ACCI) says action on budget repair is critical to deal with inflation.
The chamber says the decision will hurt businesses who are already struggling with higher inflation.
ACCI Chief of Policy and Advocacy David Alexander says a key problem is high levels of government spending.
“The extraordinary growth in government spending has been contributing to three serious problems for business — higher inflation, higher interest rates and pressure for future tax increases,” he says.
“It is imperative that the May Budget addresses this serious overspending problem.
“The government should commit to introducing a fiscal strategy, with the aim of achieving an underlying budget balance on average over the economic cycle.
“This should include setting a target to reduce government expenditure levels to less than 25% of GDP.”
In addition to fiscal repair, Alexander says taxes on business should be eased, workplace law reformed to increase productivity and red tape cut to avoid over-regulation to free up business owners.
BUSINESS NSW’S DISMAY
Business NSW, the state’s peak business body, says the decision will potentially wipe $17.5 million a month from small business balance sheets and force owners to shelve investment, dismiss staff and trim budgets.
CEO Daniel Hunter says the rate rise, the first since November 2025, will intensify pressure on businesses.
“We need a wholesale, system-wide look at the cost of doing business in NSW and Australia,” he says.
“Governments at all levels must urgently address the structural pressures – industrial relations settings, energy costs, insurance premiums, payroll tax and red tape – that are compounding the challenges businesses face.”
He says small businesses in NSW are carrying close to $200 billion in outstanding fixed and variable rate loans.
“Every rate rise makes cashflow a little tighter,” Hunter says.
According to Business NSW, in the last financial year, a record 5692 businesses went into administration, with inadequate cash flow or high cash use cited in 2318 cases. Formerly the NSW Business Chamber, Business NSW says it now represents almost 50,000 businesses.
“If we don’t act now, more businesses will fail, more jobs will be lost and the economic recovery will stall,” Hunter says.
Nationally, small businesses took on $54.4bn in new loans in 2024-25 with $15bn of that in NSW, the business body says.
“Assuming a loan interest rate increases from 10% to 10.25% per annum, over five years small businesses are paying an extra $17.5m each month and $1 billion.”
EARLIER RATES NEWS: Another rate cut needed, says ACOSS
