Cost of doing business pushes SA confidence down
Business confidence in South Australia has declined after three quarters of growth, with the state expected to lose its recent status as the nation’s leading economy.
South Australia’s Business confidence declined by 8.1 points over the June quarter, one point more than the national decline, according to the South Australian Business Chamber and William Buck quarterly Survey of Business Expectations released today.
Of respondents to the survey, 17.5 per cent expected South Australia’s economy to be weaker in the upcoming three months, an increase from 10.2 per cent in the March survey.
The Business Chamber said South Australia was expected to lose its position as the nation’s best-performing economy, which it has held for the last three quarters according to CommSec’s State of the States reports.
General business conditions saw a decline to 82.7 points, with a score of 100 indicating a neutral position. This was the lowest score recorded since March 2023 and is 3.9 points lower than 12 months ago.
Expected total sales and revenue have been higher than the actual sales in every survey since December 2022, which the Chamber said indicates “conditions have consistently been worse than respondents have estimated”.
The cost of doing business was again listed as the top issue impacting businesses, with 75.4 per cent of respondents saying it was their most pressing issue.
Graph: South Australian Business Chamber
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The Chamber said costs were the main issue in every survey conducted.
Government policies made its way to the top three for the first time, bumping staff/skills shortages with 51.6 per cent of respondents saying policies, legislation and compliance were a big issue.
“Increasing overreach of government crippling small businesses is a major concern,” said one business owner.
“We just keep throwing money at the government just to gain their permission to stay in business and do the same business we were doing before.”
Another business owner said downturn was “as hard as I have seen, including going back to the 1980s when interest rates were 17 per cent and my overdraft was 29 per cent”.
The top policies respondents felt the government needed to address were payroll tax reform (50 per cent of respondents), streamlined employment and industrial relations laws (45.8 per cent), and streamlined regulation and compliance framework (45.6 per cent).
“The government always expects businesses to pick up the bill – payroll tax, higher wages,” said one business owner.
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“My job is no longer exciting. I am bogged down in compliance, regulations, WHS and HR,” said another.
“Payroll Tax reform would be a game changer for our business. It impacts our ability as owners to earn an income, also our desire to further invest in the industry,” said a hospitality business owner.
Graph: South Australian Business Chamber
Payroll tax is an ongoing issue of concern for the business chamber, with CEO Andrew Kay saying in a statement to InDaily early this month that it was “no longer just an issue for big business”.
“Others are monitoring the situation to keep wages below $1.5 million, because once they are exposed to payroll tax, the cost to the business escalates quickly with every additional employee.”
Productivity was another big issue recorded in the survey, with 27.7 per cent of respondents reporting a decrease in productivity, and 57.3 per cent reporting productivity at their business had not changed in the previous 12 months.
“Of the businesses reporting a decline in productivity, struggling to stay profitable was the main issue,” Kay said.
“For businesses whose productivity was stagnant, the cost of doing business and economic factors were the key concerns.”
The South Australian Business Chamber CEO Andrew Kay called for reform to the payroll tax in the 2024 state budget. Photo: supplied
Kay said the results of the survey aligned with what the chamber had been hearing from businesses across the state.
“While operators understand there are areas they should be investing in such as productivity gains, cybersecurity or net zero programs, when times are tough the focus can become quite narrow and survival instinct kicks in,” he said.
The average wages index for the June quarter reached 141.2 points, the highest recorded figure since the September quarter of 2005.
William Buck managing partner Adrian Chugg said businesses should not “shy away from passing increased costs onto customers”.
“In many cases passing on price increases can be challenging, but without productivity gains, it is the only way to ensure that business profitability is sustained,” he said.
