Federal Budget must tackle regulation, say mid-market CEOs

28 April 2026

• Cutting red tape, retaining the instant asset write off and supporting critical manufacturing are top priorities for mid-market businesses in the Federal Budget
• Major tax reform is also key – negative gearing shown some support, GST increase the most popular revenue raiser, although changes to CGT broadly rejected

Without reform, and amid the world conflict and rising fuel costs, close to half (47%) of mid-market business leaders forecast no real growth for their organisations for the remainder of 2026.

This year’s KPMG Mid-Market Pre-Budget Pulse Check surveyed over 150 mid-market businesses and found only 6 percent of respondents were optimistic about their growth prospects, predicting more than 10% growth over the near-medium term.

Following the most recent two rate rises by the RBA in February and March almost half of business leaders surveyed expected no change to their investment activity while 14 percent expected a small reduction and 24% expected a moderate to notable reduction in investment.

The mid-market overwhelmingly believes (64%) cutting red tape in next month’s Federal Budget will be key to turning around the suppressed growth forecasts, while 50 percent want to see the government tackle major tax reform and 44 percent want to see the instant asset write-off permanently retained. Measures to re-establish critical manufacturing in Australia were also popular with 41 percent of respondents seeing this as a way for government to boost growth in the mid-market sector.

“Mid-market businesses are the beating heart of the Australian economy, and they understand that we can’t regulate our way to growth,” said KPMG Mid-Market & Private Tax Partner, Kaylene Hubbard.

“Geopolitical instability and rising costs may be largely out of their hands, but what mid-market businesses need now is a clear signal from policymakers that they will cut through the regulatory clutter to enable the mid-market to innovate, expand, and adapt in an increasingly volatile economy,” said Kaylene Hubbard.

Tax Reform

Australia’s mid-market sector has largely rejected calls for changes to CGT in next month’s Federal Budget with only 17 percent supporting it if revenue was to be raised through taxation. However, over a quarter (28%) would accept a wind back of negative gearing. Despite some acceptance of housing taxation reform, respondents largely believed (60%) an increase to the GST would be the most beneficial way to raise revenue followed by more targeted anti-avoidance (50%).

Top 3 Challenges

One-third (34%) of business leaders saw cost and margin pressure as their biggest challenge over the next three years followed by dealing with regulation (32%) and geopolitical uncertainty (27%). Margin pressures did not include the direct cost of fuel and energy which only 18 percent of respondents believed was a primary concern.

Housing impacting skilled labour

Meanwhile a quarter of business leaders (24%) say their biggest concern was recruiting and retaining skilled staff which highlights the drag housing affordability is having on economic growth and the pressure it is putting on the labour market.

“You can’t attract the skilled workers you need to grow your business if they can’t afford to live nearby. It is a factor in recruiting and retaining skilled workers which is why we are seeing the mid-market becoming more receptive to policy that could affect housing affordability in our larger cities,” said Kaylene Hubbard.

Top 3 Opportunities

Half of respondents believed the biggest opportunities for their businesses were improved digitisation of operations (46%), integrating AI into their business (45%) and diversifying into new markets, products and services (43%).

“The mid-market understands that integrating AI is not just about efficiency but about securing a competitive edge right here in Australia,” says Kaylene Hubbard.