Victoria Remains Australia’s Least Competitive State, Dragging National Growth

Victoria has again ranked as the least competitive state for doing business, extending a three-year run at the bottom of the national table.

The Business Council of Australia’s (BCA) 2025 Regulation Rumble report, released on Nov. 11, places Victoria last out of the eight jurisdictions for the third year in a row, showing the state has made no progress in lifting its business environment despite repeated warnings and policy commitments.

The state’s persistent shortcomings include some of the highest payroll taxes in the country, heavy property taxes, and rigid licensing rules that add compliance layers for small and medium-sized businesses.

The report says Victoria does fine in planning approvals, but that one strength isn’t enough to offset its bigger problems.

It has created what the report describes as a “significant drag” on Australia’s overall economic performance.

As Victoria is responsible for nearly a quarter of the nation’s GDP, the report warns its weak competitiveness has an “outsized impact” on national productivity and investment flows.

BCA Chief Executive Bran Black was blunt about Victoria’s continuing slide.

“Disappointingly, Victoria continues to have the most work to do, with some of the nation’s highest tax rates and regulatory requirements making it the least attractive state in which to do business,” he said.

He argued that reforms to payroll tax, property taxes, and business licensing would provide an immediate boost to investment confidence.

Allan’s Plan Underperforms

The BCA acknowledged the recent planning reforms announced earlier this year by the Victoria government, calling them “a step in the right direction,” even if it will take time for their impact to be felt.

After last year’s report, Premier Jacinta Allan launched an ambitious economic recovery plan.

The plan outlined five “future-defining” growth sectors: advanced manufacturing and defence, health technologies and medical research, the circular economy, digital technologies, and agribusiness.

The strategy was built on four pillars: cutting red tape, opening doors for investment, building new skills and expanding economic opportunity into every community.

To kickstart the shift, the government launched a $20 million Victorian Industry Development Fund and promised grants, loans, and a mentoring program for 1,000 small businesses across the priority sectors.

But 11 months on, the promised turnaround has not materialised. The state’s ranking has not budged, investor confidence has not lifted, and the latest report flags no measurable improvement in the burdens business owners face.

South Australia Leads Again

By contrast, South Australia has cemented itself as the nation’s strongest performer, topping the rankings for the third consecutive year.

The state scores highly across payroll tax, planning performance, property tax arrangements, and licensing processes.

While it still has weaknesses—particularly restrictive retail trading hours and the lowest ranking for insurance duties—its overall settings remain the most competitive.

“South Australia is leading the nation and shows us that cutting unnecessary red tape and designing efficient regulations is not just good for business—it’s good for workers and communities,” Black said, praising its approach.

Ranking Changes

The Northern Territory surged to third place, driven by notable improvements in planning performance and strong tax and regulatory structures.

The ACT sits fourth, while New South Wales (NSW) ranked fifth—its solid planning transparency offset by weaker cost settings.

NSW is expected to improve next year after recent reforms, but the new changes were too recent to be included in the 2025 analysis.

In September, the Minns Labor Government introduced the Planning System Reforms Bill 2025—NSW’s biggest planning shake-up in nearly 50 years.

The bill aims to cut red tape, speed up housing approvals, and boost supply. It creates a single planning gateway through a new Development Coordination Authority, cements the Housing Delivery Authority in law, and forces councils to decide minor development changes within 10 days or face automatic approval.

Black said NSW could rise quickly if its new planning and housing-supply reforms took effect in time.

Queensland and Western Australia (WA) remain stuck in the lower half.

WA has slipped further, falling into seventh place, while Tasmania rests in second place thanks to highly predictable planning systems, despite weaker transparency.

Black also highlighted retail-trading restrictions across Queensland and South Australia, saying the states could unlock economic value by liberalising opening hours.

“Christmas is approaching and states like Queensland and South Australia could get more bang for buck from their retail sectors if they allowed businesses to open for longer and when it suits them,” he said.

What the Scorecard Measures

The report draws on a comprehensive assessment of business conditions using six key criteria: payroll taxes, property charges, trading-hour restrictions, workers’ compensation costs, business-licensing requirements, and insurance duties.

Each factor is assessed independently and consolidated into a master ranking that reflects the real-world burden placed on businesses—from start-up through expansion.

“States and territories should be in a race to the top to have the best settings, as a strong business sector will drive investment and productivity, and raise living standards,” Black said.