Rate Rises Are Back. Small Business Is Paying for a Mess It Didn’t Make

Labor MPs are rattled. Reports this week say Jim Chalmers has been fielding uneasy questions from his own backbench, and several major banks now expect the Reserve Bank to hike rates again this month. Inflation is still running hot, and the government’s line is that everything’s under control.

It isn’t. And small business owners are the ones footing the bill.

The government keeps dodging the obvious question

Chalmers’ go-to move is to point to private-sector job growth and say the budget isn’t the problem. Meanwhile, the government has lifted its own debt ceiling multiple times, spending keeps coming in above forecast, and interest on that debt is now one of the fastest-growing costs in the federal budget.

You cannot claim credit for job numbers while dodging accountability for the inflation that’s driving your customers to breaking point. Either spending matters or it doesn’t. The government wants it both ways, and business owners are stuck holding the difference.

Let’s fact check the spin, because someone should

You’ll hear the claim that Australia has the least government debt of any democracy. It’s not true, and it’s worth calling out.

Australia’s net debt sits at roughly 20 to 35 per cent of GDP. That is low next to the advanced-economy average of over 100 per cent, and it’s in the same range as New Zealand and South Korea. So “one of the lowest” is fair. “The least” is not, and it’s the kind of line that only survives if nobody checks it.

If the government’s headline claim doesn’t hold up, treat the rest of the messaging the same way. This is a government that talks confidence and delivers cost pressure.

What this actually costs you

This isn’t a Canberra problem. It’s a Monday morning problem.

• Wage pressure. Your staff are squeezed by the cost of living and coming to you for pay rises your margins may not carry.
• Hiring freeze by stealth. Higher borrowing costs make owners pull back on headcount, right when the government is bragging about private sector job growth it didn’t create.
• Cash flow getting smashed. Higher rates on business loans and overdrafts eat into the buffer you need for everything else, including handling your people properly.

None of that shows up in a press conference. It shows up in your bank balance and your ability to keep good people.

The counterpoint, briefly

Global inflation, supply chains and a tight labour market have made this hard for any government, and the Reserve Bank, not Treasury, sets the cash rate. Worth holding in mind, even if it doesn’t let anyone off the hook for the spending and messaging choices that are entirely on them.

Let’s also talk about the two cost pressures the government has thrown your way this year…

Credit card surcharges

From 1 October 2026, card surcharges are banned outright. Visa, Mastercard, EFTPOS, and now Amex are all moving to “no surcharge” rules, and the government is calling it a win for consumers. What it actually means for you is that a cost you used to pass on now has to be absorbed into your pricing or your margin, full stop. Yes, interchange caps are dropping too, which softens it slightly, but for cafes, tradies and anyone taking a lot of card payments, this is another cost the business swallows while the government takes the credit for “simplifying” things.

Payday Super

From 1 July 2026, superannuation has to be paid at the same time as wages, not quarterly. You now have seven business days to get it into your employee’s fund, every pay cycle, or you’re into Super Guarantee Charge territory, on top of a Fair Work breach since super sits in the National Employment Standards. Good for employees, no argument there. But it’s another compliance deadline landing on business owners with no extra breathing room, at the exact moment cash flow is already tight from rates and rising costs. The government keeps adding obligations and calling it reform. For a small business running payroll manually or on tight margins, it’s just less room to move.

Frequently Asked Questions

What to do instead of waiting for Canberra to fix it

You can’t control the cash rate. You can control your business.

• Plan on rates and costs staying elevated longer than the optimistic forecasts say.
• Get ahead of pay conversations before your team brings them to you.
• Stress test your staffing plan against realistic cash flow, not best case.
• Get advice before you touch pay, headcount or restructuring. A wrong call here costs a lot more than the wage bill.

We’re not waiting for Canberra to sort this out, and neither should you. If you want a straight read on what this means for your team and your budget, get in touch. We’ll help you cut through the BS and get to a plan that actually works.