Key findings:
- Xero’s research indicates that small business confidence in the Federal Budget has waned since the early months of the year. Xero’s February survey of small businesses with employees showed 94% had confidence that the Budget would address the challenges they faced. However, Xero’s April survey of all small businesses (including sole traders) showed only 74% had such confidence.
- Only 35% of small businesses are “highly confident” in the Federal Budget when it comes to addressing their business challenges, according to the April results.
- Small businesses are calling for practical, forward-looking support, with incentives to invest in AI the most requested form of support chosen by respondents. When asked what the number one thing they wanted from the government was, the top three choices were:
- Incentives to invest in AI (23%)
- Support on late payments to small businesses (19%)
- Reduction in red tape (18%)
- Businesses say they need more support to unlock productivity gains and ROI, especially through:
o trusted marketplaces of recommended tools (20%)
o tax incentives for digital investment (19%)
o free training and education (16%)
- If the Australian government is looking to accelerate AI adoption and productivity, the data points to a clear opportunity to better support small businesses
About the survey
Xero commissioned One Picture to survey 500 Australian small businesses in April 2026. The research includes businesses beyond Xero customers, capturing a broad cross-section of the small business community. Responses were collected from a mixture of job roles across a range of sectors. Some survey options have been edited throughout for readability.
We hope this data is helpful for any articles you’re writing ahead of the Federal Budget.
Also sharing a quote from Angad Soin, Managing Director ANZ & Global Chief Strategy Officer, Xero.
“Small businesses’ confidence in the Federal Budget has waned slightly over the past six weeks, but our research shows they are still hopeful the government will provide support. In particular, small businesses are looking to the government to provide incentives to invest in AI, support on late payments, and to reduce red tape. This Budget is an opportunity to deliver by making it easier to invest in their business.
“We recommend that the government focus on:
- Supporting the uptake of embedded AI in the software small businesses already use, so they can get more out of the technology. For example, Canada provides funding of up to CAD$15,000 to small and medium-sized enterprises that want to adopt new digital technologies as part of its Boost Your Business Technology program
- Modernising frameworks like the Tax Agent Services Act to clearly allow low‑risk, rules‑based automation that reduces admin without undermining consumer protection.
Implementing stronger late payment rules, such as mandatory payment times and late payment penalties. Xero research from February found that 84% of small businesses say late payments could prevent Payday Super compliance. Stronger regulations will help small businesses get money in faster and stay compliant with new Payday Super deadlines”
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