This report, based upon responses from 225 senior leaders from across Australian industry, provides critical insights into how leaders anticipate the coming year. These sectors include manufacturing, construction, technology and supply chain and technical services. Industry leaders have identified three pressures that will define 2026:

1. the return of inflation, with input and energy costs continuing to rise while market conditions remain weak, putting pressure on margins and constraining investment opportunities
2. mounting regulatory burden, with imposts from both the taxation and broader regulatory regimes emerging as a leading negative factor for business growth
3. persistent workforce pressures, with wages costs rising rapidly while workforce shortages persist for higher skilled roles.

Key findings

• Australian industry leaders expect another another year of challenging conditions.
• Cost pressures driven by inflation, energy and wages are at their highest levels in years, dragging on business margins and capacity to invest.
• Tax burden, particularly payroll and company tax, is now a leading inhibitor to business investment and employment.
• Overly complex and burdensome regulatory regimes are adding to cost pressures at a time when businesses can least afford it.
• Workforce shortages persist, especially for higher-skilled roles, shaping business strategies and investment priorities for the year ahead.
• Technology is the only area of investment showing solid growth, as businesses seek to improve efficiency and manage costs.