New data released by the Australian Securities and Investments Commission has found insolvencies have increased by 200 per cent since 2022.
Shadow small business minister Jacinta Nampijinpa Price has called the snowballing number of insolvencies between FY22 and FY25 “yet another sign” of the Albanese government’s economic mismanagement.
The recent ASIC data shows the Albanese government has presided over the highest level of corporate insolvencies since Covid, with first-time insolvencies increasing from 7,362 in FY20 to 14,722 in FY25.
While insolvencies dipped during Covid, plunging to about 4,200 in FY21 and 4,912 in FY22, the rate of businesses going bust ramped up again in recent years.
The number of businesses going insolvent soared from 3,812 as of April in the 2021-22 financial year to 11,715 at the same point in the 2025-26 financial year.
That amounts to a 207 per cent increase.
More than 45,000 businesses have entered insolvency for the first time in the entire period of the Albanese government.
Since Labor came to power, the construction industry saw the most insolvencies over the four-year period, from 1,639 in 2021-22 to 4,888 in 2024-25.
For four consecutive years, about one quarter of all corporate insolvencies have occurred in the construction sector.
The hospitality industry has also been hammered in recent years, with a 280 per cent increase from 850 insolvencies in 2021-22 to 3,257 in 2024-25.
The transport sector has also suffered, with a 285 per cent increase from 268 in 2021-22 to 1,032 in 2024-25.
“These figures are yet another sign of the pressure small businesses are under after four years of Labor,” Ms Price told SkyNews.com.au.
“Small businesses have been hit by rising costs, higher interest rates, weaker consumer demand and growing pressure from tax debt recovery.
“Many operators who survived COVID are now struggling through a prolonged cost-of-living and cost-of-doing-business crisis that shows no sign of easing.”
Ms Price said a small business is not just a balance sheet, but a family and a livelihood with years of hard work invested in the local community.
“Small business needs policies that restore confidence, encourage investment and reward aspiration,” Ms Price said.
Experts have also pointed to the ATO’s post-pandemic debt recovery efforts as a significant contributor to the rising level of insolvencies.
Speaking to SkyNews.com.au, CreditorWatch Chief Economist Ivan Colhoun said the two biggest drivers of the insolvencies since Covid were interest rates and energy prices.
“From 2015 to 2020 interest rates and energy prices came down, growth was pretty good,” he said.
“Then you had Covid, and obviously there was huge government support, interest rates went to zero and the ATO was very lenient as it wasn’t chasing companies with tax debts.
“Then when we came out Covid, these things started going in the other direction, ATO began its reinforcement activities and interest rates went up a lot.”
However, Mr Colhoun noted that while the rates of insolvency were higher, the change was “not as dramatic” as suggested by ASIC’s data.
“It’s likely not that surprising given higher interest rates, higher energy prices and the much larger number of operating companies,” he said.
While the construction industry grappled with fixed price contracts and availability of raw materials, the number of companies registered in Australia has grew “extremely rapidly”.
“The other thing we see in the data is a lot of the insolvencies are sole traders or businesses with less than five people rather than businesses with lots of people employed,” Mr Colhoun said.
Mr Colhoun’s analysis found between December 2013 and December 2019, the number of registered companies in Australia rose by 700,000 from 2.06 million to 2.74 million.
From December 2019 to May 2026, almost a million new businesses were registered, from 2.74 million to 3.74 million.