“I think what's happened is that there's been a gradual recognition that inflation is probably going to be a little bit higher than what we saw in the decade from 2010 to 2020,” he said, adding that businesses need to consider both how much they can adjust prices and how they can manage costs through productivity gains.
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Productivity was at the forefront of politics last year. Finance Minister Jim Chalmers convened an economic reform roundtable in August aimed at finding ways to restore lagging growth in the country's living standards, and the Productivity Commission made 47 reform recommendations last year aimed at boosting this measure.
Finding ways to drive productivity gains is also one of the top challenges cited by business leaders in 2026, with more than two-thirds (35%) ranking it in their top five.
Yates said that despite the challenges, businesses are more optimistic than they were 12 to 18 months ago, and concerns such as staff shortages have waned.
“If you go back three or four years, especially coming out of COVID-19, the biggest challenge was talent acquisition and retention,” he says. “It really disappeared right down the list.”
The unemployment rate, which hit a historic low of 3.5% in 2022, is now hovering above 4% and stabilized at 4.3% in November, according to the latest figures from the Australian Bureau of Statistics.
Yates also said business leaders have a more positive outlook on issues such as investment and company expansion.
“While CEOs are reporting challenges this year, including continuing to seek growth, it's more of a positive thing,” he says. “It's the opposite of if you're in the middle of a recession and you have to furlough staff, for example. That's a much harder and more negative issue to deal with, but the survey doesn't show that at all.”
The percentage of business leaders concerned about cyber risk remained constant at 42% over two years.
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Housing affordability remains among the top social issues cited by CEOs, with nearly half (the same share as last year) citing it as a concern. But the top spot in 2026 was determined by a new option for research: the social impact of new disruptive technologies such as AI.
Yates, who believes the use cases for AI will become more obvious to many companies this year, says the rise of AI as a concern among business leaders is likely being driven by the emergence of generative technologies such as ChatGPT and the boom in investment in those technologies.
“There is a huge amount of investment going into AI,” he says. “I feel like if you’re not investing, if you’re not riding the wave, you’re very likely to be left behind.”
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