Inside Australia’s 2026 Industry Outlook: costs, tech investment and regulatory pressure

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 TakeawaysBusiness 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: Australian Industry Outlook for 2026 - 13th Annual Australian Industry Group Leaders Survey - Australian Industry Outlook for 2026Pre-Budget Submission: Federal Budget 2026-27 Pre-Budget Submission: Federal Budget 2026-27 | Australian Industry GroupContact the Industry Development & Policy team here.