Manufacturing businesses in Victoria are facing rising financial pressure from increasing land tax obligations, with the South East Melbourne Manufacturers Alliance (SEMMA) saying the changes are redirecting funds that could otherwise be used for investment and productivity across the state’s manufacturing sector.
In a media release, SEMMA – which represents around 3,800 manufacturers in Melbourne’s south east, employing 75,000 people and contributing $89 billion to the economy – called on the Victorian government to cap land tax for manufacturers for five years to support growth and competitiveness.
SEMMA said a January 2026 member survey found land tax bills had increased by an average of 80 per cent between 2024 and 2026. The highest reported increases were 185 per cent, 201 per cent and 221 per cent over the same period.
Chief executive Honi Walker said the current land tax regime, which is based on land value and size, was having unintended consequences for manufacturers.
“There has been no economic modelling on sector-specific impacts – only on possible revenue. There has been no consultation with industries like manufacturing, where land is a tool for production, employment and economic growth,” Walker said.
According to SEMMA, manufacturers are being forced to redirect revenue towards tax payments instead of reinvesting in advanced machinery, apprenticeships and process innovation. The organisation argues that this could slow productivity growth and weaken what it describes as Australia’s sovereign capability.
SEMMA’s Australian Manufacturing BLUEPRINT aims to lift manufacturing’s contribution to GDP from 5.9 per cent to 10 per cent by 2030. Walker said rising land taxes could undermine that goal.
“Smart policy would be to cap land tax for manufacturers. This policy is tied to land use, not just land size. It recognises manufacturers use land to build, produce and employ – not to profit from asset appreciation,” she said.
Under SEMMA’s proposal, manufacturers would receive five years of tax certainty, with land tax exempted for businesses investing in capital equipment between 2025 and 2030. From 2030, increases would be indexed to the Consumer Price Index to provide what the organisation describes as a predictable growth path.
Survey respondents reported a range of operational impacts. One member cited land tax increases of 165 per cent, 30 per cent and 40 per cent across consecutive years, stating the business would need to increase prices, reduce staff and reassess future plans. Another described the business as “now marginal,” with staffing reductions necessary due to rising costs.
Other members pointed to increasing electricity, payroll tax, WorkCover premiums and council rates, with one saying cash flow had been stretched to “an all-time” level. Several respondents indicated they had already raised prices or extended working hours to manage costs.
SEMMA also reported that local council rates increased by an average of 31 per cent between 2024 and 2026, with the highest increase recorded at 73 per cent in Casey. Land valuations rose by an average of 15 per cent over the same period, although SEMMA said land tax increases were proportionally higher.
In one example cited, a manufacturer in Dandenong experienced a 43 per cent rise in land value alongside a 221 per cent increase in land tax.
“SEMMA has been calling for a cap to this unsustainable, unjustified and un-Australian land tax grab for the past four years,” Walker said. “You can’t keep going back to the same well each time – eventually it dries up.”
The proposed cap forms part of SEMMA’s Manufacturing BLUEPRINT policy platform, which includes five pillars of growth: economic, energy, expand, educate and evolve.
Walker said the organisation would present the framework during its 2026 Manufacturing BLUEPRINT Election Forum Series.
“Our Manufacturing BLUEPRINT has policy offerings that can increase productivity, employment, investment, efficiency and improve our standard of living while increasing the GDP,” she said. “More taxes, more unpredictable operational expenses and red tape do the opposite.”
