The Council of Small Business Organisations Australia (COSBOA) says recent economic data from the Australian Bureau of Statistics (ABS) should sound the alarm for policymakers: Australia’s economy is slowing, investment is stalling, and small business needs urgent, targeted support.
The ABS figures show the Australian economy grew by just 0.2 per cent in the March quarter of 2025, with the Bureau describing the quarter’s growth as “soft.”
Key indicators show significant concern and over-reliance on government spending:
- Public spending recorded the largest detraction from growth since the September quarter 2017
- GDP per capita fell 0.2 per cent this quarter, following a 0.1 per cent rise in the December quarter
COSBOA CEO Luke Achterstraat said the figures are a wake-up call for policymakers, highlighting the urgent need to boost private sector investment and support the businesses that drive Australia’s economy.
“The data paints a clear picture of an economy under pressure; with business owners bearing the brunt of rising costs, policy uncertainty and falling consumer demand,” he said.
“It’s confirmation of what we’ve been hearing on the ground. Private sector investment is stalling. Productivity is stagnant. Small businesses are doing everything they can, but the settings are not helping them to grow.”
COSBOA is urging the government to act decisively to support small businesses as the core drivers of employment, competition and innovation in Australia.
Through its Fair Go for Small Business campaign, COSBOA is calling for bold yet practical reforms to unlock small business potential and restore national productivity. These include:
- Reducing the small business company tax rate from 25% to 20%
- Making the instant asset write-off permanent
- Smarter, not heavier, regulation
- Flexible and fit-for-purpose training pathways
- Balanced, supportive digital and privacy reform
- Recognition of small health businesses in health system reform
- Tangible support for the energy transition and net zero goals
Economic modelling commissioned by COSBOA revealed that reducing the small business tax rate could boost the Australian economy by up to $11.4 billion and create up to 3,370 permanent jobs.
“The modelling confirms what we’ve heard from countless small businesses: tax relief boosts cashflow, reignites investment, and increases output, wages, jobs and growth,” Achterstraat said.
“This is policy that delivers a clear net benefit to the whole Australian community.”
Australia’s 2.5 million small businesses make up 97.7 per cent of all Australian businesses, employ more than 5.1 million people, and contribute $500 billion to the national economy each year. In regional and remote communities, they are often the backbone of local economic activity.
However, small businesses are facing growing cost pressures from every direction, including rising energy prices, rent, insurance premiums and input costs, while managing increased regulatory complexity.
“Employers are also facing higher workers compensation premiums, increased payroll tax, and another legislated rise in the superannuation guarantee from 1 July,” Achterstraat said.
“These are businesses already operating on razor-thin margins. Many are struggling just to breakeven.”
COSBOA is calling on the government to prioritise productivity above all else in its economic agenda.
“Less complexity. More certainty. A user-friendly approach that encourages small businesses to hire, grow and reward staff,” Achterstraat said.
“Small businesses drive innovation, create jobs, and keep money circulating in local economies. Supporting their productivity is supporting Australia’s prosperity.
“A small business-led recovery is the only way to build a resilient, future-ready economy and ensure Australia remains globally competitive.”
More information on COSBOA’s Fair Go for Small Business campaign can be found on its website.