The Australian Retail Council (ARC) has welcomed practical measures for retailers in the 2026 Federal Budget, including the permanent instant asset write-off, red tape reduction commitments and action to address unfair competition from ultra-cheap offshore platforms, while warning a challenging outlook remains for retailers.
As retail’s peak body, representing a sector that employs more than 1.4 million Australians and contributes $444 billion to the economy, ARC has consistently called for meaningful red tape reduction, permanent investment incentives for small businesses, and action to ensure Australian retailers can fairly compete with offshore digital sellers such as Temu and Shein.
ARC Chief Economist and Chief Policy Officer Glenn Fahey said Australia faces a challenging economic and fiscal environment.
“It’s clear Australia’s budget and debt position will remain under pressure for some time, which makes the task of bringing inflation under control more challenging and creates ongoing pressure for businesses and households,” said Mr Fahey.
“Retailers continue to face intense pressure from a weak consumer outlook, rising operating costs and persistent uncertainty, most recently from the supply chain impacts of the Middle East conflict. Consumer confidence has slipped to record lows, below even the weakest readings seen during the recession of the early 1990s.”
Australia also continues to grapple with low productivity growth, which is one of the most significant long-term challenges facing the economy, despite the Government’s efforts introduced in the budget.
The Budget includes new product safety rules for ultra-cheap offshore platforms like Temu and Shein, temporary tax loss carry-back provisions to improve business cash flow, a $20,000 permanent instant asset write-off for eligible businesses, and investment aimed at strengthening Australia’s fuel and energy resilience.
Mr Fahey said measures that ease the payroll tax administrative burden are welcome, and the Government has committed to further red tape reduction measures, including harmonising state retail tenancy frameworks, waste and recycling and expanding heavy vehicle reforms.
“It’s clear there are steps in the right direction but there is a long way to go to meaningfully improve competitiveness, reduce business costs and lift productivity. It is critical the Government elaborates on its plan for incentivising states and territories to seize the moment for national harmonisation.”
ARC has consistently called for action to address the unfair advantage enjoyed by ultra-cheap offshore platforms.
“The Budget’s introduction of new product safety obligations for digital platforms selling into Australia is a good place to start and a recognition this Government is taking the issue seriously,” said Mr Fahey.
Mr Fahey said measures that improve cash flow and support investment would be welcomed by retailers.
“The temporary tax loss carry-back provisions will provide practical support for businesses navigating difficult trading conditions, while a permanent instant asset write-off gives retailers greater confidence to invest in equipment, technology and operational improvements that can lift productivity,” he said.
“Measures that strengthen business resilience are constructive, particularly at a time when many retailers are absorbing higher costs across freight, logistics, energy, wages, insurance and compliance.”
Mr Fahey said there remains a long road ahead to tackle the regulatory burden weighing on Australian businesses.
“Our research with Mandala has shown inconsistent and fragmented regulation across Australia is acting as a fragmentation tax on the economy, costing billions in lost productivity, higher business costs and ultimately higher prices for consumers and households,” he said.
“Australia has a productivity problem, and the Treasurer acknowledged that in the lead-up to the election. While this Budget contains some practical support measures and has signaled a more ambitious reform agenda.
“Backing retailers means backing jobs, investment and affordability for Australian households,” Mr Fahey said.
Measures of most interest to retailers in the 2026 Federal Budget:
- State and territory harmonisation on retail tenancy frameworks, waste and recycling
- New product safety obligations to apply to ultra-cheap offshore platforms
- Accelerating and expanding heavy vehicle reforms
- Temporary tax loss carry-back provisions to improve cash flow for struggling businesses
- Reducing red tape burden through simplified administrative payroll tax processes
- Permanent $20,000 instant asset write-off for eligible businesses to support investment
- Fuel and energy resilience measures to strengthen supply chain reliability
- $14 million to go towards increased illicit tobacco compliance, enforcement and penalties