Business is becoming increasingly concerned this week's Australian Federal Police raids on the ABC and News Corp risk eroding confidence in Australia's reputation as a free and open democracy.

Key points: Australian Industry Group chief says the AFP raids "set back Australia's reputation internationally"

He is concerned the precedent set by the raids could extend to business

He says the AFP's reputation has also been damaged

Innes Willox — a former political adviser, diplomat and now chief executive of the Australian Industry Group — said he was worried about the perceived politicisation of supposedly independent government departments and agencies.

Mr Willox told AM that investors would become nervous if confidential negotiations, tenders and contracts ended up in the hands of public servants.

"This has set back Australia's reputation internationally when you have reports of this going around the world and The New York Times saying that Australia is now perhaps the most secretive country in the Western democracies," he said.

"That raises alarm bells for business as well about the sort of country that Australia is to do business with and what could happen here," Mr Willox said.

"The Government seems to be saying that ministers have had no control over what's gone on here and this is essentially a decision by public servants to take this course of action … whether it is about embarrassment or ideas about what is in the national interest and what isn't."

Space to play or pause, M to mute, left and right arrows to seek, up and down arrows for volume. Watch Duration: 37 seconds 37 s Australian Federal Police raids ABC offices in Sydney

Mr Willox added he was concerned the precedent of the AFP raids could extend beyond the media and into business.

"There is nothing really at the moment to stop it from doing that and that is of concern," he said.

"Businesses have interaction with government all the time on tenders, as part of ongoing discussions about implementation of policy and the like, and a lot of those conversations and discussions are very sensitive.

"They are commercially in-confidence and there is nothing which would stop government officials being able to call in police over some aspect of those negotiations."

Concerns from business come after the AFP executed a search warrant on the Ultimo premises of the ABC on Wednesday in relation to allegations the national broadcaster published classified material, contrary to Crimes Act of 1914.

However, Mr Willox said he was surprised that government departments or agencies are not about to track down leakers or whistleblowers via their own internal systems monitoring.

"This seems to be a case of shooting the messenger. To have Federal Police officers — and it is not their fault — combing through people's books and sock drawers is a pretty dim image for Australia to have in the 21st century," he said.

"You would hope that government is much more sophisticated than that."

Mr Willox said the AFP's reputation had been damaged and that international observers would see Australia developing a reputation as a secretive state.