Australia overdue for productivity reform: CPA

Gavan Ord, business and investment lead at CPA Australia, said that for more than a decade, the survey has told the same story: Australia’s small businesses consistently lag behind their Asia-Pacific counterparts, and the gap is not closing.

The results, Ord noted, pointed to something larger than a sector issue.

In 2025, less than half of small businesses in Australia reported growth, and optimism levels ranked lowest across the APAC region. With more businesses expecting the economy to contract rather than expand in 2026, the issue is quickly becoming a national one.

“This isn’t a short-term dip, it’s a persistent pattern of underperformance,” Ord said.

“Other economies in our region are adapting, investing and lifting productivity. Australia is standing still.”

In its survey of over 4000 businesses across the Asia-Pacific, CPA found that those in Australia remain among the weakest adopters of technolog.

“Technology should be lifting productivity, but many Australian small businesses are struggling to realise its benefits," Ord said.

Of those that have, only 30 per cent said their technology investment improved profitability.

And this wasn’t the only result: Australia ranked towards the bottom of regional rankings: only 44 per cent of Australian small businesses earned more than 10 per cent of revenue from online sales, 19 percentage points lower than the regional average. Australia also saw a 10 per cent lower proportion of small businesses that sought advice from IT consultants or specialists than its neighbours.

In addition, the proportion of Australian businesses that reported AI as the number one technological investment was half that of the APAC region, and 68 per cent reported utilising social media for business, 20 per cent lower than the Asia-Pacific average.

These poor results, Ord said, must be viewed against the current backdrop of global and domestic uncertainty, which was significantly impacting already fragile business confidence.

“In light of the Treasurer’s warning about the economic fallout from the war in the Middle East, it’s critical that small businesses seek advice from their accountant as a first step. There may be practical options available that don’t involve taking on more tax debt or locking into lender arrangements, which can have long-term consequences.”

“At the same time, persistent inflationary pressures at home, combined with recent interest rate rises, are driving up costs and squeezing cash flow. For many small businesses, this leaves little capacity to invest, innovate or plan for growth.”

Another structural challenge for Australian small businesses is the age of its owners, with more than half over 50 years old – a population statistically less likely to adopt new technologies or pursue ambitious growth.

These compounding pressures, he said, offered an explanation for the sustained, low-level confidence exhibited by Australian small businesses that was only getting worse.

According to CPA, the findings emphasised the urgent need for decisive government action, and it called for the prioritisation of several reforms: the reduction of regulatory complexity and adjusting compliance costs that disproportionately affect smaller businesses, incentivisation of the adoption of technology and greater digital fluency, encouragement for younger Australians to take an interest in small business, and ensuring policy supported small business growth.

Without stronger incentives for innovation, skills development, and for younger Australians to become business owners, Ord said, productivity would continue to suffer.