CANBERRA: Australia’s biggest business lobby is urging the federal government to cut red tape and recalibrate tax settings after a new competitiveness index placed the country mid-pack for attracting investment, with weak scores on regulation and business taxation. The Business Council of Australia said Australia ranked 21st out of 42 countries in 2025 on its Global Investment Competitiveness Index and called for a 25% reduction in regulatory costs by 2030 and measures to lower the effective tax burden on new investment.
The index draws on 17 international measures across trade, regulation, energy, business taxation, investment restrictions, rule of law and labour market settings. Australia ranked strongly on trade (second), rule of law (10th) and energy (11th), but near the bottom on regulation (37th), business taxation (38th) and investment restrictions (38th). The council’s leaderboard shows Australia has slipped since 2019, when it ranked 17th. The report also says Australia relies heavily on foreign capital for large, capital-intensive projects.
The council’s policy agenda centres on reducing duplication across governments, strengthening oversight of regulatory quality and speeding approvals for investment it describes as low risk and non-sensitive. It also calls for changes to foreign investment screening that focus scrutiny on higher-risk transactions and reduce approval delays and compliance costs. Separately, research published by the Australian Institute of Company Directors in late 2025 estimated Commonwealth regulatory compliance costs at about A$160 billion a year in 2024, up from A$65 billion in 2013.
Tax settings in focus
On company taxation, the Business Council said Australia’s 30% headline corporate tax rate for larger businesses has not been reduced since 2001 and has become less competitive against peer economies in its comparison set. The council called for policies that lower the effective tax burden on new investment and add certainty and simplicity to the tax system, while ruling out increases in the overall corporate tax take. Its report lists options including an investment allowance, immediate expensing, and reforms to the Research and Development Tax Incentive.
The tax debate is running alongside competing reform proposals. The Productivity Commission said in January it had refined and provided the government with a hybrid corporate tax proposal that retains a net cashflow tax and lowers the statutory company tax rate to 20% for companies with revenue below A$1 billion and 28% for companies above that threshold. The Australian Chamber of Commerce and Industry has also called for a 25% company tax rate for all businesses and for the instant asset write-off to be made permanent with a higher threshold.
Unions push different revenue changes
Unions have pressed for a different approach, arguing for higher taxes on large companies and changes to concessions that affect investment returns. In a February 2026 release tied to a Senate inquiry, the Australian Council of Trade Unions called for the capital gains tax discount to be scaled back from 50% to 25% and for negative gearing and the capital gains tax discount to be limited to one investment property for new investments, with a five-year grandfathering period for existing holdings. The ACTU said revenue from its proposed changes should be directed to expanding public and social housing.
The renewed push from business groups comes ahead of the federal budget expected in May, as Treasurer Jim Chalmers faces demands to lift productivity and investment while managing pressures on the budget. The Business Council pointed to recent trade-policy changes, including the abolition of nearly 500 tariffs from July 2024 and a further removal of about 500 tariffs proposed from July 2026, as examples of policy settings it says can improve competitiveness. The government has not announced specific budget measures in response to the latest calls. – By Content Syndication Services.