Australian small business sales growth slowed to 5.2% year-on-year in the September quarter, according to new Xero Small Business Insights (XSBI) data drawn from around 520,000 small businesses nationally, well below the long-term average of 7.8%. Western Australia was the clear exception, posting sales growth of 7.7%, more than double Victoria’s 3.8% and the Northern Territory’s 3.7%.
“The September quarter tells us small business conditions haven’t worsened, but they also haven’t improved,” said Xero Economist Louise Southall. “Rate rises typically take time to filter through to household spending, and that delayed effect is continuing to weigh on sales.”
WA’s lead isn’t confined to sales. Separate ABS Wage Price Index data for the most recent quarter shows WA also recorded the fastest wage growth of any state, at 4.11% year-on-year, compared with 3.23% in Victoria. Stronger demand and faster wage growth together point to the same underlying story: WA’s economy is simply running hotter than the rest of the country right now, and mining royalties are only part of why.
More People, More Customers
The simplest driver is population. WA’s population grew 2.2% in the year to September 2025, reaching just over 3.06 million people. Local councils have recorded the flow-through directly: the City of Swan alone saw more than 3,000 new businesses established between 2020 and 2025, and five local government areas together accounted for almost half of all new small business growth in the state over that period.
WA Small Business Commissioner Saj Abdoolakhan has pointed to the link directly, noting the close relationship between population growth and business creation. More people moving to an area means more demand for everything from cafes to trades to professional services, demand that doesn’t require a mining boom, just population growth other states aren’t matching at the same pace.
The State Is Writing Cheques
WA’s state government has also been more directly hands-on in backing small business than most. The 2026-27 state budget included a $1.4 million Small Business Growth Grants Program aimed at clean energy and advanced manufacturing subcontracting opportunities, on top of $124 million committed to fee-free and lower-fee TAFE places, which directly cuts the cost of training apprentices and new staff.
Separately, the Small Business Development Corporation has offered matched-funding vouchers of up to $10,000 to help small businesses invest in growth, advice and specialist support. Since 2020, that backing has coincided with WA adding more than 30,000 new small businesses and sole traders, now sitting at close to 258,000, which account for 97% of all businesses in the state.
Meanwhile Victoria has been ranked dead last in the country for overall cost and regulatory burden by the Business Council of Australia’s Regulation Rumble report, for two years running, a gap in business conditions that lines up closely with the gap in sales growth.
Wages Are Rising Fastest Where Sales Are Too
The Xero data shows jobs grew 3.9% year-on-year nationally in the September quarter, led by mining (+8.9%), utilities (+8.3%), public administration (+8.1%) and construction (+6.7%), sectors where WA has an outsized presence. Nationally, wage growth has slowed to just 1.2% on the Xero measure, with Southall noting that record labour participation means workers are staying in jobs rather than switching for a pay rise.
But that national wage slowdown clearly isn’t playing out evenly. WA’s faster wage growth, per the ABS, suggests that in a tighter local labour market, strong demand is forcing employers to pay more to secure staff, even as wage growth nationally has cooled. For WA business owners, that’s a double-edged outcome: more customers and more trade, but also higher labour costs than businesses elsewhere are currently facing.
What Owners Elsewhere Can Take From This
WA’s advantages aren’t something a Victorian retailer or NT tradesperson can conjure up overnight, population growth and mining royalties aren’t a strategy. But the underlying lessons are transferable:
Check what your state or local council is actually offering. Small business grants, matched funding and fee-free training exist in most states, not just WA, and are frequently underused simply because owners don’t know to look.
Price for your actual cost base, not the national average. If you’re trading in a higher-cost, higher-tax state, absorbing that silently rather than reflecting it in pricing is a slow way to erode margin.
If you’re hiring into a hot local market, budget for it honestly. WA’s wage data is a reminder that strong demand pulls wages up with it. A business plan based on national wage averages can understate what it actually costs to hire where demand is strongest.
Watch population and infrastructure trends in your own region, not just state headlines. Growth is patchy even within strong states, and within weak ones.