- SMEs need stable, meaningful investment incentives, not short-term fixes. With over 97% of Australian businesses being SMEs, the Budget should reward long-term investment in capability, systems and equipment rather than temporary, politically driven initiatives that are too complex to plan around.
- Red tape is a hidden productivity killer for small business. Compliance burdens, duplicated processes and administrative delays disproportionately impact SMEs that lack the resources to absorb them. Reducing this friction is one of the most practical ways to unlock growth.
- Tech adoption among SMEs is lagging and they need practical support to catch up. A CreditorWatch survey found 49% of sole traders and 40% of SMEs hadn’t adopted newer technologies like AI or big-data analytics, with cost, ROI uncertainty and lack of knowledge as the main barriers. Government support needs to be accessible and tied to real productivity outcomes.
More than 97 per cent of Australian businesses are SMEs. They are the core of the economy. When they are under pressure, the consequences are not abstract – they show up in household budgets, job losses, delayed investment and communities feeling the strain. Right now, many of them are crying out for relief.
That is why next week’s Budget should be judged not by how many announcements it contains, but by whether it makes life more manageable for the businesses doing so much of the heavy lifting across the country.
Ahead of the May Budget, the Treasurer has made it clear that the government is trying to balance near-term pressures with productivity, resilience and long-term growth, while responding to a more volatile and fragmented global environment.
With that in mind, small businesses need a Budget designed around confidence – making it easier to invest, easier to hire and easier to plan.
Back investment in a meaningful way
If the government wants a more productive economy, it should start by making it easier for small businesses to invest.
That does not just mean tax settings, although they matter. It also means recognising that many smaller firms are making decisions in an environment of higher costs, tighter margins and weaker confidence. For small business, the principle is straightforward: businesses invest when the policy environment feels stable enough to plan around. They hold back when settings feel temporary, overly complex or politically uncertain.
A good SME Budget should reward investment in capability, systems, equipment and growth, not offer short-term initiatives.
Cut the friction that slows down small business activity
One of the most underappreciated costs facing SMEs is friction, commonly called ‘red tape’. The day-to-day friction of compliance burdens, duplicated processes, policy complexity and administrative delays. Large organisations can absorb that more easily. Small businesses typically cannot.
That is why would like to see a Budget that reduces the practical barriers that make it harder to run and grow a business. Productivity is not only about big reforms or new industries. It is also about whether a business owner can spend more time building the business and less time navigating avoidable complexity.
Treat housing as a business issue too
Housing should also be part of the small business conversation. If workers cannot afford to live near where jobs are, businesses cannot recruit or retain staff as easily as they should. That makes housing a labour market issue and, by extension, a productivity issue for SMEs.
At the same time, the government should be realistic about what will and will not move the dial. Commonwealth Bank’s pre-Budget analysis says potential changes to capital gains tax and negative gearing may only have a modest impact on house prices, with the largest benefit likely to be a stronger budget rather than a major affordability improvement.
Boosting supply, and doing it more quickly, remains the key. For small business, that matters because access to workers is one of the real constraints on growth. Housing policy should not be treated as a separate social issue when it is clearly affecting business conditions on the ground.
Support for digitisation and AI adoption
For SMEs, better systems can mean faster decisions, better visibility, lower admin burden and stronger control over cash flow. A September 2025 CreditorWatch survey of more than 1,000 business decision makers found 49% of sole traders and 40% of SMEs businesses had not implemented any ‘newer’ technologies such as AI, big-data analytics or robotics in the previous 12 months, compared with just 4% of large businesses.
Barriers to tech adoption included cost, uncertainty around ROI and lack of tech knowledge. That tells us many businesses are ready to modernise, but they need support that is practical, accessible and tied to real productivity gains.
A simple test for this Budget
So, my test for the May Budget is a simple one. Will it make life more manageable for small businesses trying to invest, hire and grow in a more uncertain economy? Will it reduce friction? Will it improve confidence? Will it support innovation? Will it focus on practical conditions for growth rather than simply new announcements?
Small businesses are not asking for special treatment. They are asking for a business environment that is more predictable, less cumbersome and more supportive of long-term investment. In a year when the Budget is being framed around productivity and resilience, that should be the most straightforward place to start.
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Frequently Asked Questions
Why is the Federal Budget so important for small businesses?
Small businesses make up more than 97% of Australian businesses and are the backbone of the economy. Budget decisions around tax settings, compliance, housing and technology directly affect their ability to invest, hire and grow, which in turn impacts jobs, households and communities.
How does housing policy affect small businesses?
When workers can’t afford to live near where jobs are, businesses struggle to recruit and retain staff. This makes housing a labour market and productivity issue for SMEs — not just a social one. Boosting housing supply faster is key to easing this constraint on business growth.
What barriers are preventing SMEs from adopting AI and new technology?
According to a September 2025 CreditorWatch survey of over 1,000 business decision makers, the main barriers include cost, uncertainty around return on investment (ROI) and a lack of technical knowledge. SMEs need practical, accessible support to bridge the gap with larger businesses that are already adopting these tools.
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