Victoria, once a leader in economic innovation and business growth, is now facing significant challenges that threaten its position as a hub for commerce.
The latest report from the Business Council of Australia (BCA) has ranked the state “worst for business” in the nation, highlighting escalating taxes, excessive red tape, and a complex regulatory environment that are making it harder for businesses to thrive.
A key issue driving this decline is Victoria’s heavy tax burden. Payroll and land taxes in the state are among the highest in Australia, and recent reports reveal that taxes on businesses have nearly doubled since the Labor government came to power in 2014. Payroll and land taxes alone have increased by 94%, adding an extra $6 billion to the state’s coffers, while property taxes have surged by an alarming 157%. These rising costs are becoming a significant deterrent to businesses, which are already grappling with tight margins and increasing competition.
In addition to the tax burden, the state’s regulatory environment is another major hurdle. Many small businesses, including cafes and childcare providers, face a labyrinth of red tape that slows down operations and stifles growth. Licensing requirements are onerous, and approval processes are slow, creating delays and frustration for entrepreneurs. This contrasts sharply with states like South Australia, which has embraced a more business-friendly approach, with lower taxes, streamlined regulations, and fewer licensing requirements.
Despite these challenges, Premier Jacinta Allan has repeatedly claimed that “Victoria is open for business,” pointing to a surge in business investment and record employment numbers as evidence of the state’s economic strength. The government claims that business investment has increased by 30% in the past three years, and the state’s economy has experienced impressive growth. However, these figures fail to account for the mounting frustrations within the business community, which feels that high taxes and regulatory barriers are holding back their potential.
The BCA has urged the government to reform its tax and regulatory systems, warning that Victoria’s uncompetitive environment is hindering its economic potential. Opposition finance spokeswoman Jess Wilson has also raised concerns about the state’s growing debt, projected to reach $187.8 billion by 2027-28, arguing that increasing taxes to cover this debt is driving businesses out of the state.
While some argue that Victoria still performs well in certain areas, such as retail trading hours and housing policies, these gains will be overshadowed if the state continues to neglect its business environment. For Victoria to regain its competitive edge, significant reform is needed to address the tax burden and regulatory complexities that are holding back its business sector.
