A new ranking of business investment competitiveness has placed Australia near the bottom for tax and regulation, which businesses say must be addressed to boost productivity growth and living standards.
The findings of the Business Council’s Global Investment and Competitiveness Index, launched on Tuesday, amplify calls for Treasurer Jim Chalmers to undertake ambitious tax reform and bold action on red tape ahead of the May budget.
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Despite placing near the top for trade settings, rule of law and energy, Australia came in 37th for regulation and 38th for business taxation and investment restrictions, dragging it down to 21st out of 42 countries on total investment competitiveness.
Business Council chief executive Bran Black hoped the index would shine a light on changes Australia could make to become a top-10 destination for productivity-boosting business investment.
The outbreak of renewed conflict in the Middle East, which threatens global oil supplies and the economy, only made the task more urgent, he said.
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“Ultimately, all of the settings that are the subject of assessment within this index are settings that are totally within Australia’s control,” Black told AAP.
“At times of uncertainty, when global conflict is in front of us, the best thing that we can do is control the things that are within our scope to control so that we can be as resilient as possible.”
Since his economic roundtable in August 2025, Dr Chalmers has made moves to streamline red tape, including ordering regulators to cut regulatory clutter and setting up a single front door to make it easier for trusted foreign investors to gain approvals.
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Black said businesses were already starting to feel the benefits but employer groups wanted the government to go further by setting a target of reducing the regulatory burden by 25% by 2030.
According to a report released by the Australian Institute of Company Directors in November, the explosion in red tape in recent decades was costing Australian businesses and the economy $160 billion, or 5.8% of GDP, up from 4.2% of GDP in 2013.
Black also called for holistic tax reform to encourage businesses to invest more.
Australia’s corporate income tax rate of 30% for big businesses was becoming increasingly uncompetitive compared to peer economies and made it harder to attract increasingly mobile global capital, he said.
Allowing businesses to more easily deduct capital costs, through investment allowances, immediate expensing, or reforming research and development incentives, would encourage greater investment and boost GDP growth long term, Black argued.
That would serve a similar purpose as the Productivity Commission’s proposed net cashflow tax, without raising the statutory tax rate for big businesses and further reducing Australia’s competitiveness, he said.
This article was first published by AAP.