Article by Alex White, courtesy of Herald Sun
10.11.2025
Victoria has been rated the worst state to do business in Australia with high taxes and excessive red tape continuing to hamper businesses across the state, according to a new report.
Despite efforts by Premier Jacinta Allan to improve business conditions in Victoria in recent months, the annual Business Council of Australia (BCA) scorecard revealed the state still lags behind other jurisdictions including South Australia, New South Wales and Queensland.
Victoria came in second last for uncompetitive payroll tax rates and thresholds, ranking seventh despite the Allan government’s July move to raise the payroll tax-free threshold from $900,000 to $1 million, expected to exempt 6,000 businesses from tax.
The state also rated dead last for uncompetitive land tax and stamp duty rates for local and foreign landowners, as well as for licensing and regulatory requirements for starting a new business.
BCA Chief Executive Bran Black said: “Businesses in Victoria are crying out for policy commitments to cut regulation and tax that support private sector-led economic growth”.
“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.
“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.”
The state also performed poorly in licensing and regulatory obligations, particularly for café operations, ranking last in ease of setting up and running a business.
The latest bad report card comes as business confidence in Victoria was marginally up by 1.9 points to 91.5 in October year-on-year, according to the Roy Morgan monthly monitor.
However, it remained the only state where business confidence was below the neutral level of 100.
Victorians are also faceing more pain on the job front with the unemployment rate rising to 4.7 per cent in September 2025 – the highest in four years, up from 4.4 per cent in August 2025 according to the Department of Jobs, Skills, Industry and Regions.
The BCA did, however, highlight that Victoria had gained some ground when it came to housing and development, after the Allan government announced changes to turbocharge the planning process, including reducing approval times for some dwellings to just 10 days and streamlining housing approvals on lots under 300 sqm.
According to the BCA’s Regulation Rumble 2025 scorecard, Victoria’s planning system ranked in the top half nationally for transparency and efficiency, yet remains low in efficiency of rezoning processes and certainty for planning proponents.
A Victorian government spokesman clapped back saying the state had a strong economy.
“Over the past decade, business investment in Victoria increased by 53 per cent — the strongest among all states and more work was being done.
“Victoria continues to be number one in home approvals and number one in home completions, and we’ve cut or abolished taxes 65 times — including slashing payroll tax for small businesses and abolishing business insurance duty.”
“We know there’s more to do which is why our Economic Growth Statement is slashing unnecessary red tape by halving the number of business regulators, and building the workforce industry needs.”
Shadow Treasurer, Jess Wilson, said: “This report confirms what every small, medium and large business already knows — under Labor, Victoria is the worst place in the nation to do business”.
“The Allan Labor government’s dependence on new and higher taxes to pay for their reckless and wasteful spending continues to drive business and economic opportunity interstate.”
Victorian Executive Director of the Property Council Cath Evans said the report results were not surprising.
“We know that international capital increases access to credit, investment, and jobs – unfortunately, the Victorian government’s harsh approach of taxing global institutional investment is directing much-needed capital to our state neighbours,” she said.
“Without a shift in policy settings in next year’s May budget, Victoria risks continuing to deter investment, constraining our capacity to deliver the homes and economic growth we need.”