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In this episode, Louise McGrath and Dr Jeffrey Wilson unpack Australian Industry Group's Australian Industry Outlook for 2026, revealing a landscape where businesses are juggling rising costs, mixed demand expectations, and rapidly evolving technologies. While the extreme uncertainty of recent years has eased, companies remain cautious as they face tighter margins, persistent skills shortages, and escalating compliance obligations.

The discussion explores how current pressures are reshaping business decision‑making - from “survival spending” on automation, AI and cyber security, to the difficult trade‑offs between short‑term cost control and long‑term productivity investment. It also examines the growing frustration with tax and regulatory complexity, and the need for more consistent rules across jurisdictions to support a more efficient national economy.

The conversation then turns to several expected and unexpected features of Australian Industry Group's 2026-27 pre-budget submission, including tackling the illicit tobacco trade, scrapping nuisance tariffs, designing a fair and enduring road-user charging system, and modernising the National Construction Code to boost housing supply and improve compliance clarity.

Key Takeaways

  • Business expectations for 2026 are split, with similar numbers predicting weaker and stronger conditions.
  • Cost pressures continue to rise, but passing those costs through to customers is becoming harder.
  • Technology investment - especially automation, AI and cyber security - is one of the few spending areas still growing.
  • Compliance and tax complexity remain major concerns, with businesses calling for simplified and more consistent systems.
  • Illicit tobacco is costing Australia billions in lost revenue, with implications for public health, crime and the budget.
  • Removing nuisance tariffs would reduce paperwork without affecting revenue or harming local industry.
  • A national approach to road‑user charging is now essential as EV adoption accelerates.
  • Modernising the National Construction Code could help ease Australia’s housing constraints and improve industry productivity.

Links:

Contact the Industry Development & Policy team here.

 

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Louise McGrath

In her role as Australian Industry Group’s Head of Industry Development and Policy Louise provides strategic leadership and guidance for Australian Industry Group’s policy agenda in building competitive industries through global integration, infrastructure development and innovation. She ensures that through policy leadership members have a voice at all levels of government, by representing and promoting their interests on current and emerging issues.

Louise represents Australian Industry in several multilateral forums, such as the B20 Taskforces, Global Business Coalition, and the East Asia Business Council working group on RCEP. She advocates for the interests of Australian Industry Group members during Free Trade Negotiations and translates those agreements to support the strategic aims of members. She is a member of CSIRO’s Responsible Use of Artificial Intelligence Think Tank and the Manufacturing Advisory Group, the NESP Sustainable Communities and Waste Hub and the Advisory Group of The Australian Consortium for ‘In-Country’ Indonesian Studies (ACICIS).

Louise has studied a Bachelor of Arts (Arabic Language and Culture) at Deakin University and an Advanced Diploma in International Trade at RMIT. She has also studied Arabic at universities in Jordan and Egypt.

    Dr Jeffrey Wilson

    Jeffrey Wilson is Head of Research and Economics at the Australian Industry Group.

    He leads our economics team and provides strategic direction in developing the research program to support our advocacy, service delivery and policy activities.

    Dr Wilson specialises in international economic policy, with a focus on how trade and investment shape the Australian business environment.

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