NSW is the worst state in the country when it comes to business insolvencies, prompting calls to give small and medium enterprises a break.

Since the pandemic NSW is the only state which has seen average yearly insolvencies increase, according to Business NSW analysis of ASIC data.

In 2023-24 NSW had 42% of Australia’s insolvencies yet only 31% of the country’s population. There were 4634 insolvencies in total.     

“The federal government likes to say that it is on the side of small business, yet all we see is more and more businesses go to the wall,” Business NSW CEO Daniel Hunter said.

“We should be proud of the fact that we are the private enterprise state, which allows for innovation and expansion when economic conditions are favourable. It also creates serious pain when things are tough.

“Once these small businesses disappear, the delicate web of skills, capital and innovation they create is seriously compromised. And if tax, cost and regulatory settings remain the same or worsen, large corporate players will simply scoop up more of the market from medium and small businesses.

“According to Business NSW data captured in the past month, 38% of businesses say taxes and government charges are the biggest barriers to business expansion. This should ring alarm bells for both state and federal governments.

“To keep good businesses thriving, the NSW Government needs to take a serious look at lowering payroll tax levels, bed down proper reform of the Emergency Services Levy to reduce the pressure on insurance premiums and establish a new energy advice and support program targeting the SME sector.

“Federally, we need both a rethink of the recent industrial relations changes and a permanent increase to the size and scope of the instant asset write-off.

“The increase in insolvencies reflects a combination of a slowing business environment, the post-pandemic catch-up effect of unviable businesses being kept alive thanks to government support and the ATO’s recent crackdown on unpaid debt. Anecdotally, members talk of business owner fatigue and a lack of succession planning (as baby boomers retire).”

BNSW analysis of ASIC data includes the average number of insolvencies since the pandemic. NSW is the only state with an increase compared to FY18-19.