The Productivity Commission says Australia’s economy has become less dynamic, with fewer businesses starting up and closing down, and has put forward reforms to make it easier for businesses to start, grow and exit, including changes aimed at improving access to finance.
The diagnosis
The interim report, released on 5 November and titled Unlocking business dynamism: removing barriers to entry, growth and exit, finds that the rates of businesses starting and closing, and of people moving jobs, have declined in recent decades. It says parts of the economy have become more dominated by established players and that the share of people working in young firms has fallen.
“A productive economy is constantly renewing itself through businesses starting, growing, adapting and closing where necessary – by these measures Australia’s economy has become increasingly stagnant,” said Commissioner Alison Roberts.
“Making it easier to start and grow businesses is critical to job creation. In Australia, firms less than 5 years old account for 62% of new jobs,” said Commissioner Stephen King.
The government’s terms of reference exclude tax settings, workplace relations and merger frameworks.
Regulation
The commission wants regulation to be easier to find and follow, and supports “tell-us-once” approaches so businesses are not repeatedly asked for information governments already hold. “We know that the burden of regulation is growing. In 2025, boards spent 55% of their time on compliance – up from 24% 10 years ago,” Commissioner Roberts said.
Finance
The report finds some commercially viable businesses struggle to obtain funding, particularly young firms, those with limited collateral, and businesses led by women or Aboriginal and Torres Strait Islander people. “Current lending processes are too ‘one-size-fits-all’ and are holding back a lot of businesses that could otherwise be successful,” Commissioner King said.
It recommends changes to the Consumer Data Right that would let consenting businesses share data more easily with lenders, speeding up credit assessments, and says the government should investigate a credit guarantee scheme. The report also includes a section on amending unfair preference provisions to support the flow of credit to businesses in temporary financial distress.
Insolvency
The report proposes setting out the purpose, objectives and principles of the insolvency system in legislation, a minimal asset procedure to give people with simple financial affairs a faster fresh start, and an Official Liquidator as a last-resort pathway for insolvent companies that cannot fund an orderly exit. It also canvasses making small business restructuring more efficient and illegal phoenixing laws more effective.
“Earlier information and more accessible restructuring pathways can give viable businesses a better chance to recover and help ensure resources are redeployed more quickly when a business cannot continue,” Commissioner Roberts said.
A separate signal to the insolvency regulator
On the same day, Assistant Minister Andrew Leigh released a new Statement of Expectations for the Australian Financial Security Authority, which administers the personal insolvency and personal property securities systems, asking it to reduce unnecessary administrative barriers, particularly for small businesses and new entrants. “Good regulation protects Australians and gives businesses confidence to invest,” Dr Leigh said.
What’s next
Submissions on the interim report are due by Friday 11 December 2026, public hearings will be held from 8 to 12 February 2027, and the final report is due in May 2027.
Sources: Productivity Commission, interim report and media release, “Reducing barriers to business dynamism” (5 November 2026); Assistant Minister Andrew Leigh media release (5 November 2026).