Results of the South Australian Business Chamber, William Buck Survey of Business Expectations were released this week, identifying an optimistic trajectory in business confidence despite economic headwinds.
South Australia’s Business Confidence index has increased to 91.2 points in the December quarter, 4.5 points above the September 2022 quarter and 10.4 points above the December 2021 quarter.
Business Conditions experienced a slight decline to 100.9 points, 1.7 points down from the September 2022 quarter.
These cautiously optimistic survey results are interesting considering three interest rate increases in the December quarter, and Federal Treasury’s Budget last year forecasting a 56 per cent increase in energy prices over the next two years.
It’s been more than one year since mandatory isolation periods ended in South Australia and this has provided more certainty for businesses.
For many businesses, supply chain disruptions are easing, and freight costs are slowly returning to pre-COVID levels, which would contribute to steady business conditions and confidence during the last period.
Looking ahead, there is a clear shift from worrying about supply to focusing on demand as the economy tightens. For the first time in a long while, Sales, or revenue coming in, was the number one concern for businesses. This reflects an expectation that continual interest rate hikes will start to bite.
The Survey of Business Expectations also highlighted a continued struggle with labour shortages. The survey, which has been tracking labour issues since December 2020 identified the gaping hole in Australia’s workforce availability remains, with 58.3 per cent of respondents experiencing shortages in the December quarter.
While previous survey results showed ‘lack of applicants’ as the primary reason for unfulfilled vacancies, the most frequent response for the December quarter was ‘lack of suitably skilled workers.
This week’s findings also found that business lacks confidence in the government’s energy transition. 78.5 per cent of South Australian businesses believe the Federal Government has not adequately planned for Australia’s transition to renewable energy, with the State Government not far behind at 67 per cent.
These results demonstrate the business community is concerned about the impact of the transition on supply and prices.
In June 2022 a cold snap across south-eastern Australia contributed to less renewable energy – wind and solar – being generated than expected. Further, outages of coal-powered generators and wet coal, plus increased demand from gas generators, meant the Australian Energy Market Operator could not ensure a reliable electricity supply.
For a few days, there was a risk of load-shedding, or rolling blackouts, being required across South Australia. These occurrences, although rare, contributed to a decline in business confidence in the government’s ability to manage the energy transition.
We look forward to sharing this information with governments so we can constructively contribute on behalf of our members in the reduction of energy prices and improve the ongoing transition to renewable energy across South Australia.
