Budget 2026: mid-market CEOs want tax reform, regulation reduction

New KPMG research reveals that mid-market business leaders believed that regulation reduction (64 per cent), retention of the instant asset write-off (44 per cent), and support of critical manufacturing (41 per cent) for this year’s budget would boost the mid-market sector.

Additionally, major tax reform (50 per cent), including changes to negative gearing, GST, and CGT, is among the key contributors to a sector boost for these respondents.

KPMG mid-market and private tax partner Kaylene Hubbard (pictured) said mid-market businesses are the beating heart of the Australian economy, and they understand “that we can’t regulate our way to growth".

Surveying over 150 mid-market businesses for its report, Mid-Market Pre-Budget Pulse Check, KPMG found that only six per cent of respondents were optimistic about their growth prospects, with these leaders predicting more than 10 per cent growth over the near to medium term.

Following the nation’s two consecutive rate rises, KPMG research found that one in two mid-market business leaders (47 per cent) predicted that no reforms in this year’s budget would lead to no growth this year. One in two businesses also projected no change in investment activity, with 14 per cent expecting a small drop, and 24 per cent expecting a moderate to notable reduction.

Support for changes to CGT remained low, with 17 per cent wanting reform if revenue was to be raised through taxation. While more than one in four (28 per cent) said that they would accept a wind-back of negative gearing, 60 per cent believed that GST would be the best way to raise revenue, followed by more targeted anti-avoidance (50 per cent).

In addition, 24 per cent were highly concerned about the impact of housing affordability on recruitment and retention of skilled staff, the report found.

Despite these risks and challenges, respondents viewed the digitisation of operations (46 per cent), integration of AI into businesses (45 per cent), and diversification into new markets, products and services (43 per cent) as the biggest opportunities for mid-market companies.

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

“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.”

“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.”