In the December 2025 quarter Survey of Business Expectations, business confidence has fallen, with a steeper dip for the national economic outlook. General business conditions have improved slightly, however the cost of doing business and profitability remains the biggest concern, closely followed by compliance burdens and concerns around the wider economic environment.
Perceptions of the national economy may be coloured by conditions across the border. Many South Australian businesses operate in or trade with Victoria, and negative experiences around costs, regulation and barriers to doing business, influence their national outlook.
A couple of years ago, many businesses were in recruitment mode. Today the focus is firmly on retention, and keeping the right people, with the resilience, engagement and motivation of the team being crucial. The survey backs that up, with retention now rated as a more important HR focus than recruitment, especially while more than half of businesses struggle to find suitably qualified and experienced candidates.
Engagement matters in a tight labour market. The businesses that seem most confident are those investing time with their teams, explaining the plan, listening to concerns and making sure people can see how their role contributes to the bigger picture. “Skilled labour” now means more than tickets and qualifications; business owners talk as much about reliability, resilience and staying power. The open question is whether enough is being invested in upskilling, career paths and workplace culture to build that capability and commitment from within to retain the right team for the long-term.
In the face of staff shortages, artificial intelligence as an efficiency tool is part of the conversation. Many businesses use AI tools to assist with personal productivity such as to generate ideas, draft documents or speed up research. However for now, most owners still see AI as “useful support” rather than a fundamental shift in how their business works.
New compliance regimes and additional red tape are continually created to address small pockets of non-compliance, imposing an added burden on everyone. We must remember that compliance comes with a cost. At the same time, businesses are concerned about the scale of government spending, and the inflationary pressures this creates in terms of competition for labour and the impact on interest rates. On that note, it is disappointing for businesses that both state and federal governments will not address the high level of wastage and conduct a logical process to simplify and reform business taxation.
As we near the end of the first quarter of 2026, there has been a clear shift in tone. Conversations are now more about making the most of the year ahead, focusing on not just developing strategic plans but putting them into action. The businesses that keep moving forward will be those that stick to a clear strategy, invest in and support their people and stay deliberate about technology and compliance. After all, it’s important to remember that people are the foundation of every successful business.
