Peter Dutton says 29,000 businesses have gone bust under the Albanese government, and he claims “Labor’s excessive regulation and interference in the economy” is to blame.
While the figure is accurate, the insolvency rate is not dissimilar to what occurred under the pre-pandemic Coalition government, according to Guardian Australia analysis of public data.
In the post-pandemic years, businesses have also had to grapple with inflationary pressures and rapid changes in customer behaviour caused by work-from-home arrangements.
From June 2022 to March 2025, 29,521 businesses have gone under, according to filings with the corporate regulator, the Australian Securities and Investments Commission. A quarter of those were construction companies, and hospitality made up more than a sixth of collapsed firms.
That’s an average of nearly 10,000 businesses falling over each year. Under the previous Morrison government, only about 5,500 firms went under every year, with pandemic-era subsidies and tax breaks keeping a temporary lid on collapses.
But under the Coalition from 2016 to 2019, there were almost 8,000 insolvencies a year.
If you account for the higher number of businesses now operating, and the rise in economic activity, the rate of insolvencies that occurred between 2016-19 and 2022-25 is almost identical: an average of just under 0.08%, or close to one in every 1,300 businesses went under every year.
So what is really behind the recent insolvency rise?
Covid lid blown off
Experts say the jump in insolvencies in recent years is exaggerated because many businesses were kept afloat by government support early in the pandemic.
Programs such as jobkeeper and investment incentives created a “huge dip” in shutdowns, said John Winter, the chief executive at Australian Restructuring Insolvency & Turnaround Association.
“We were running at half the normal level of insolvencies,” he said.
“While the raw number of insolvencies is starting to get higher and, indeed, is at record levels, that really tells less than half the story.”
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Some firms hit the wall as government support ended in 2022 but did not have to formally shut down because the Australian Taxation Office gave the private sector a break to recover from lockdowns, Winter said.
“Those businesses that were already going to go broke still went broke,” he said. “But because the ATO had stopped all enforcement, lots of them sat as empty shells.”
The ATO then warned those slumped companies to wind up properly, before cracking down on old tax debts from still-living businesses.
Wes Lambert, the chief executive of the Australian Restaurant and Cafe Association, said the relaunched debt collection forced many food and accommodation businesses to shut up shop.
“We’re being taxed to death,” he said. “Goods and services tax, payroll tax, fringe benefits tax, all of these things, they really, really do put a lot of stress and strain on a hospitality business.”
Inflation surge
The last three years have also seen surging inflation followed by a sharp hike in interest rates, making running a small business more difficult.
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Households have had less money to spend, and what is left in the wallet buys less, thanks to higher prices. That squeezes business from both sides, cutting the amount customers will spend while forcing them to pay more for their goods and equipment.
Rising interest rates and prices have been the biggest pain point for the construction industry, which has borne the bulk of business shutdowns, according to the economist Maurice Tapang.
“It’s not just hurting building businesses – it’s also, from a consumer perspective, kept them out of the market,” he said.
Tapang, who works with the Housing Industry Association, said falling interest rates and stable prices should help construction businesses stay afloat.
“We’ve just been going through that cycle [and] we do expect things to be a lot better this year,” he said.
Falling interest rates have historically coincided with a decline in insolvency rates, with Winter attributing the slide in shutdowns from 2016 to easing rates at the time.
Some of the struggles small businesses face have little to do with government policies.
Many cafes, especially those located near businesses and transport networks, have been caught out by the pandemic-era trend towards home brewing, which has escalated in the inflationary period as customers cut back on cafe purchases and work more hours from home.
The Sydney cafe owner Prakash Pun Magar said his profits had reduced significantly, which he attributed partly to a slow return to the office.
“There’s not much traffic because people work from home, they start to drink their own coffee,” he said.
Magar’s cafe in Sydney’s inner west had grappled with rising costs, including wages, prompting him to cut employees’ shifts and take on more hours himself.
But, at least for now, he will not be adding to the 29,000 businesses that have gone under. He will just keep working 85-hour weeks instead.
“There are so many sacrifices,” Magar said. “But hopefully, who knows, maybe everything will be alright and the business will go up.”
