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29 JANUARY 2026
RISING COSTS AND INFLATION HITTING REGIONAL BUSINESSES HARDER BUSINESS ILLAWARRA WARNS
Business Illawarra Director Coralie McCarthy says today’s inflation figures confirm what regional businesses have been experiencing for months — rising costs are eroding confidence, delaying investment and putting longestablished businesses at risk.
“Today’s inflation data is a wakeup call for government,” Ms McCarthy said.
“Stubborn inflation, high interest rates and escalating business costs are hitting regional businesses harder and for longer, with little room left to absorb more pressure.”
Business NSW today warned that an annualised inflation rate of 3.8 per cent — well above the Reserve Bank’s target band — is undermining confidence and reducing the likelihood of nearterm rate relief.
Business Illawarra says the impact is being felt acutely across the Illawarra, Shoalhaven and Southern Highlands, where small and mediumsized businesses dominate the local economy.
“Insurance, tax and energy are the three biggest pressure points for our members — exactly as Business NSW has identified,” Ms McCarthy said.
“In our region, we’re seeing insurance premiums doubling or tripling, energy costs becoming unmanageable, and payroll tax and compliance costs eating directly into already thin margins.”
Feedback from Illawarra, Shoalhaven and Southern Highlands businesses shows consumer demand is volatile, bookings are increasingly lastminute, and customers are spending less.
Many businesses report steady workloads but shrinking profitability, forcing tough decisions about staffing, pricing and future investment.
“Businesses are working harder than ever, but confidence is fragile,” Ms McCarthy said.
“Some are holding back on hiring, some are shelving expansion plans, and others are questioning whether they can keep operating at all.”
Business Illawarra strongly supports Business NSW’s call for governments to rein in spending, reduce red tape and focus on productivityenhancing reform.
“Reducing the cost of doing business must now be the priority,” Ms McCarthy said.
“That means cutting red tape in housing construction, speeding up planning approvals, reforming inefficient taxes like payroll tax and stamp duty, and delivering infrastructure that supports workforce participation.”
In regional communities, these reforms are critical to addressing workforce shortages, housing affordability and transport constraints that directly affect business viability.
“Small business is the backbone of the economy throughout our regions economy,” Ms McCarthy said.
“If inflation and costs remain unchecked, the risk is not just slower growth — it’s the loss of businesses, jobs and essential services our communities rely on.”
Media Contact
Coralie McCarthy
Director, Business Illawarra
M: 0417 431 564
E Coralie.McCarthy@businessnsw.com
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About the BNSW Business Conditions Survey
The Business Conditions Survey conducted by Business NSW, runs quarterly and aims to gather feedback from businesses across various sectors to understand their challenges, confidence levels, and operational conditions. This survey plays a crucial role in shaping advocacy efforts and informing government policy to support the business community in NSW.
Business Illawarra is provided feedback direct from Businesses for the Illawarra, Shoalhaven Southern Highlands & Far South Coast (Capital Region) every quarter. Businesses directly contribute to key advocacy throughout the region through this process.
Business Conditions Survey provides valuable regional insights into the current state of businesses in New South Wales, influencing policy decisions and advocating for business interests. You can see past NSW reports here Business NSW Surveys | Business NSW
BNSW quarterly Business Conditions Survey is now open – and we want to hear from business.
Tell us what’s working, what’s holding you back, and where support would make the biggest difference.
Your responses help us drive action on business costs, red tape, workforce challenges, and energy bills.
It’s how we fight for a better deal for businesses like yours.
Business throughout the region can take the survey now Business Conditions Survey | Business Illawarra, (Survey will close on 16 Feb)
About Business Illawarra
Business Illawarra is the region’s peak business organisation; a not-for-profit advocacy group dedicated to the economic development of the Illawarra, Shoalhaven and Southern Highlands. On behalf of our members, we develop policy and are the leading voice representing business across the region.
Business Illawarra is owned and supported by Business NSW, the state's leading advocacy voice for business across NSW. Of the few enduring, independent, not-for-profit organisations in Australia, Business NSW is the only one focused on the wellbeing of the business community. Our purpose has always been to provide a strong advocate to all levels of government on issues affecting businesses, undertake research to guide greater public and private sector investment in economic infrastructure, and support the development of workforce capacity and skills in our region.