The 2026-27 NSW budget focuses on cost relief and advisory service enhancements for small and medium enterprises, while limiting new grant initiatives and broad tax cuts due to fiscal constraints.
- New $37M advisory program replaces Business Connect from 2025
- Two-year freeze on workers’ compensation insurance premium hikes
- Cost relief prioritized amid $2.3 billion deficit forecast
What happened
The NSW 2026-27 budget unveils a $37 million allocation to establish a new advisory program succeeding the Business Connect service, which was discontinued in 2025. This move came following criticism from industry groups and political opposition, prompting the government to review and redesign the program to better serve SMEs. The budget also confirms reforms in workers’ compensation, including a two-year freeze on the Nominal Insurer’s premium target, helping around 340,000 employers avoid substantial premium increases.
Besides targeted small business measures, the budget maintains an investment-first approach centered on energy, transport, and low-carbon manufacturing, with indirect benefits for related industries. However, it refrains from introducing significant grant programs or broad tax cuts for startups or small businesses, partly reflecting fiscal constraints amid a projected $2.3 billion deficit for the year.
Why it matters
This budget reflects NSW's cautious fiscal stance as it balances supporting SMEs with broader economic responsibilities. By focusing on cost relief and advisory services rather than large-scale grants or tax cuts, the government aims to provide practical support to businesses facing ongoing inflationary pressures and cost-of-living challenges. The freeze on worker compensation premiums is a particularly notable measure expected to mitigate overhead costs for many small businesses.
For startups and entrepreneurs, the absence of new dedicated grant schemes contrasts with initiatives in other states like Victoria and South Australia, signaling a more restrained support environment. However, with a firm focus on longer-term structural investments and updated frameworks for emerging technologies such as AI, NSW continues to position itself for future industry growth despite immediate budget limitations.
What to watch next
Stakeholders should monitor how the redesigned advisory program will be implemented based on the ongoing review and feedback from the entrepreneurial community. Its effectiveness in replacing Business Connect will be critical for SMEs reliant on tailored support during economic uncertainty. Attention will also turn to how individual workers’ compensation premiums evolve within the framework of the freeze, impacting employer costs over the next two years.
Longer term, observers will be interested in NSW’s next budget cycles for potential shifts toward more substantial startup funding or tax reforms once fiscal conditions improve. Additionally, as NSW rolls out updated AI governance frameworks without new direct AI funding, the actual uptake and regulatory impact on tech startups and innovators will be an important development to track.