The upcoming Australian Federal Budget on the 12 May could prove a decisive turning point for Australia’s small and mid-sized enterprises (SMEs), with new MYOB research revealing business behaviour in the year ahead will be highly contingent on the measures delivered.
According to the latest MYOB Bi-Annual Business Monitor, which surveys more than 1,000 SMEs, around one in four SMEs (26%) say they would expand operations if meaningful new measures are introduced while half (50%) said the Budget will directly influence their investment and expansion plans, reinforcing its role as a key decision-making milestone for the sector.
However, if the Federal Budget fails to address key concerns, around 65% of SMEs say they are likely to delay investment or hiring decisions. This response is more pronounced among younger operators, medium-sized businesses and exporters - segments currently driving much of the sector’s growth.
MYOB CEO Paul Robson said the results underscore the importance of the Budget as a key moment to shape near-term economic momentum for the 2.65m SME community.
“The Federal Budget is a critical enabler of SME confidence and activity,” Paul said.
“Businesses are ready to act, but the direction they take will heavily depend on the policy environment.”
SMEs are clear about the measures that would make the biggest difference, with priorities centred on support to reduce cost-of-living pressures (53%), lower company tax rates (36%) and cutting red tape (35%). When pushed, respondents named tax relief as the single measure that would make the biggest difference right now.
Paul said the findings point to a clear opportunity for policy to accelerate growth and unlock investment.
“SMEs are adaptable and forward-looking, but easing cost-of-living pressures is critical to lift consumer spending and support a sector that is significantly impacted by discretionary spending," he said.
“The right settings can make a meaningful difference. The MYOB Bi-Annual Business Monitor points to a sector that is ready to move, be that to invest and grow or to consolidate, depending on what is delivered in the Federal Budget.”
More broadly, the May 2026 report - based on a survey of more than 1,000 SMEs - shows a sector that remains resilient and adaptable as it navigates a more complex economic landscape.
This measured and forward-looking mindset reflects the sentiments of the 67% of SMEs who expect economic conditions to soften over the next 12 months, with businesses actively recalibrating strategies and planning for stability.
Revenue and profitability are down on previous years, with 19% of SMEs reporting revenue growth over the past year. Looking ahead, 20% expect revenue to increase, while most anticipate stable conditions.
At the same time, cost pressures remain elevated. Fuel (51%), utilities (44%) and interest rates (37%) are the leading concerns, with businesses reporting average cost increases of around 18% over the past 12 months.
“These markers make this Budget all the more important, with SMEs operating in a softer revenue environment and limited profitability growth underscoring the need for measures that support confidence, investment and recovery,” Paul said.
However, many SMEs continue to report steady performance, supported by ongoing demand and relatively stable sales pipelines. Stronger confidence persists among younger operators with 34% anticipating economic improvement. Start-ups, exporters and medium-sized businesses also demonstrate ongoing optimism (20%, 25% and 27% respectively).
The report also highlights varied conditions across industries and regions. Manufacturing, wholesale, finance and insurance sectors show stronger growth potential, while retail, hospitality and agribusiness continue to face more challenging conditions. Regional SMEs remain under greater pressure compared to metropolitan businesses.
The full Bi-Annual Business Report can be viewed here
About MYOB
MYOB is a leading provider of cloud-based business management solutions with a core purpose of helping more businesses in Australia and New Zealand to start, survive and succeed. MYOB’s next-generation technology platforms deliver end-to end solutions for people and finance through to tax, supply chain, projects, employees and customers, empowering businesses with 0 to 1000 employees alongside a network of accountants, bookkeepers and consultants. For more information visit myob.com or follow MYOB on LinkedIn.
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