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15 May 2026
BUDGET FALLS SHORT FOR THE ILLAWARRA, SOUTH COAST AND HIGHLANDS AS CONFIDENCE DECLINES AND REGIONAL INFRASTRUCTURE NOT COSIDERED A NATIONAL PRIORITY.
Business Illawarra says tonight’s Federal Budget delivers some welcome measures for business, including long sought certainty on the instant asset write off and steps to reduce red tape, but is being overshadowed by a broader confidence crisis and a failure to back the Illawarra, Shoalhaven and Southern Highlands with the infrastructure investment needed to unlock housing and support a sustainable workforce into the future.
Director of Business Illawarra, Coralie McCarthy, said the Budget acknowledges some immediate pressures facing business, but falls short of the decisive reform and targeted regional investment needed to restore confidence and lift productivity.
“There are positives in this Budget, including certainty on the instant asset write off and practical red tape reduction,” Ms McCarthy said.
“But the reality is confidence is falling because the cost of doing business keeps climbing. Fuel, energy, insurance and red tape are squeezing margins and making it harder for businesses to invest, take on staff and grow.”
Ms McCarthy said early indicators across the business conditions survey, now open, point to confidence falling to its lowest levels in years, as cost pressures continue to bite and uncertainty remains around longer term policy settings.
“When you are trying to rebuild confidence, you need policies that support investment, not settings that add uncertainty,” Ms McCarthy said.
Housing and key workers: targets mean nothing without enabling infrastructure
Business Illawarra welcomed the Government’s $2 billion Local Infrastructure Fund to support essential enabling works such as water, power, sewer and roads, noting this reflects long standing advocacy.
However, concerns remain that the national scale of the fund does not match the size of the housing delivery challenge, particularly in high growth regions like the Illawarra, Shoalhaven and Southern Highlands.
“There are positive elements here, particularly the recognition that infrastructure is key to housing delivery,” Ms McCarthy said.
“But a $2 billion national fund to support 65,000 homes does not even touch the edges of the problem, especially when our region alone can deliver more than 50,000 homes on land already zoned, but falls short because enabling infrastructure is not funded. We know more than $1.6 billion is required in our region to make that happen.”
Ms McCarthy said the housing conversation must shift from targets and tax settings to practical delivery, particularly for key workers being priced out of the region.
“Housing is one of our most pressing workforce issues,” she said.
“If people cannot live near where they work, we cannot sustain economic growth or support our communities.”
Business Illawarra has identified more than 50,000 homes across priority growth areas including Appin, West Dapto, Shellharbour, Nowra Bomaderry, Calderwood, Kiama and Mittagong. These projects are ready, with business willing to invest, but remain constrained by water, sewer and road infrastructure.
“This region is not short of opportunity. It is short of coordinated, long term infrastructure investment,” Ms McCarthy said.
“We need a multi year, cross government commitment that brings together roads, utilities, services and digital connectivity to unlock zoned land and deliver housing at scale.”
Transport infrastructure: growth depends on connectivity
Business Illawarra said the Budget also fails the region by not recognising critical transport infrastructure as nationally significant, despite the scale of the South Coast and Highlands economy.
“We are home to one of the largest concentrations of businesses in New South Wales, with close to 40,000 businesses within a three hour catchment, neighbouring three major population centres, yet our most critical infrastructure is still not being recognised as nationally significant,” Ms McCarthy said.
“40,000 businesses, zero recognition. It is hard to understand how a region of this scale and economic importance continues to be overlooked.”
“If we are serious about business growth and investment, we must be serious about transport links” she said.
“Business is being asked do carry all the heavy lifting and risk, but it is not being supported with the infrastructure. That disconnect is holding the region back.”
Business Illawarra continues to advocate for investment in key projects such as stage one of Picton Road, including a $600 million upgrade to improve transport times, freight efficiency, safety and connectivity between the Illawarra and Western Sydney, as well as long term planning for rail connectivity for freight and passengers.
Key positives for business:
- Permanent extension of the instant asset write-off for small businesses with turnover under $10m, with the threshold set at $20,000.
- Smaller business will benefit from broadening access to the R&D tax incentive offset from $20m to $50m. Larger businesses will benefit from a lift in the expenditure threshold from $150m to $200m.
- Permanently introducing two-year loss carry back for all companies up to $1b in turnover from 2026-27.
- Expanding tax incentives for venture capital by increasing some asset caps.
- Mandatory standards in Commonwealth, state and territory legislation will now be free ($1600 saving for small businesses).
- $250 Working Australians Tax Offset (from 2027/28) and a $1000 instant deduction for work-related expenses from 2026-27.
- Introducing loss refundability for start-ups from 1 July 2028, applicable to businesses in their first two years.
- Introduction of concessional and government-backed loan programs to support businesses facing high fuel, freight and energy costs.
Concerns:
- Minimum 30 per cent tax rate on discretionary trusts from 2028-29.
- Minimum 30 per cent tax to capital gains accrued from 1 July 2027, after indexation has been applied. These changes will apply to all assets except new builds, where both new and old arrangements will be available to be chosen from 1 July 2027.
- Changes to electric vehicle tax concessions, tightening eligibility and increasing costs for some novated lease and fleet arrangements.
- Tourism businesses will be affected by the outbound passenger movement charge increase from $70 to $80 in January 1 next year.
- No significant for major transport investment, despite close to 40,000 businesses in the catchment.
- $2b in funding for the sewage and water infrastructure necessary to deliver 65,000 new homes demonstrates Housing ambition is not matched by enabling infrastructure and transport investment required to unlock more than 50,000 homes in the region and support key workers.
Media Contact
Coralie McCarthy
Director, Business Illawarra
M: 0417 431 564
E Coralie.McCarthy@businessnsw.com
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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.
Business Conditions Survey now open
How is your business tracking right now? Across NSW, rising costs, supply chain disruptions, and global uncertainty are putting pressure on businesses like yours. We need to hear from you. The Business NSW Business Conditions Survey captures what businesses are facing right now – whether you’re dealing with challenges or performing strongly.
Every response counts. It strengthens our advocacy and makes sure your voice is heard where it matters most. Take the survey now (link to: BUSINESS CONDITIONS SURVEY 2026 Q2 )
Read the regional results of the last survey here.