Concerns about business costs skyrocket in South Australia

21 August 2017

More than two thirds of South Australian businesses are facing higher overhead costs and more than half are spending more on materials than in the first quarter of this year, as escalating power prices punish the state’s small to medium-sized  organisations.

Business SA’s Survey of Business Expectations for the June quarter, which was taken within weeks of the South Australian Budget, shows 46.7 per cent of businesses paid higher average wages than anticipated.

Business SA Chief Executive Nigel McBride said the Survey of Business Expectations shows owners are struggling as costs escalate, with higher electricity prices recently coming into force and as the increase to the minimum wage took effect on July 1.

The pre-eminent South Australian business survey found 52.8 per cent of owners surveyed expected the state’s economy to have a weaker performance over the next 12 months. Only 12.8 per cent expected it to strengthen.

Mr McBride said it is no surprise that confidence since the June State Budget has also taken a dive, with businesses recording a 5.4 point decrease compared to the March quarter.

“The slump in confidence falls even more markedly over the year to the June quarter, given it is down 23.3 points, and it is worrying to see it has nose-dived by 34.4 points over the decade,” he says.

“The survey results reflect concern about things like the Weatherill Government’s proposed bank tax, and small business owners strongly feel that they cannot afford to take another hit.

“Overheads are escalating because business conditions are worsening, profits are falling and there are genuine fears that conditions may well worsen.”

General business conditions were down 6.6 per cent compared to the first quarter, falling 13.4 points compared to the June quarter last year, and dropping 23.3 points over the decade.

Mr McBride said businesses saw little economic joy over the coming quarter, with 56.7 per cent expecting the unemployment rate to rise, and 64.5 per cent expected total real labour costs to increase even further. A further 44.5 per cent also expected profitability to fall.

However, while businesses were pessimistic about the South Australian economy, their confidence about the national economy has rebound, rising 5.9 points since the last quarter.

“We need to grow confidence and improve economic conditions in this state, giving business owners a break,” Mr McBride said. “That means cutting payroll tax, getting rid of the bank levy and ensuring State and Federal Governments collaborate on an energy plan which genuinely helps business owners to cut costs, so they can face their bills without fearing financial failure.”

Further comment will be made at a press conference with Mr McBride at 11am on Monday 21 August in front of 400 King William St.

Check out the results here.

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