Small businesses in Australia are not feeling so sunny these days, driven by diminishing government confidence and a gloomy economic outlook. According to a recent nationwide survey by Australian cloud accounting software provider Reckon, a whopping three in four (75 per cent) respondents do not feel optimistic about 2017 following the December Budget update.
The survey of more than 600 small business owners across the country revealed that one in two (50 per cent) respondents are not satisfied with the government’s management of the Australian economy. This is despite a clear majority (77 per cent) believing the Coalition is better at running the nation in comparison to the Labor party, suggesting a potential demand for fresh economic leadership.
This lack of certainty over local governance is creating a direct knock-on effect on small business confidence, with many owners not anticipating a great deal of growth this year. More than half (53 per cent) of respondents are not planning any new investment in the next 12 months, while 28 per cent remain unsure. Projected headcount was dismal as well, with 66 per cent not looking to hire any new staff this year – only 19 per cent of respondents are forecasting an expansion of their team in 2017.
What do these Reckon survey findings mean?
These findings are in line with the government’s Mid-Year Economic and Fiscal Outlooki released last year, which estimates that business investment will fall by six per cent through to June 2017. Employment is also expected to see subdued growth at 1.25 per cent to the same period.
“As the engine room of the Australian economy, small businesses play a critical role in the progress of our country by creating jobs and driving growth. So it’s imperative that business confidence remains healthy amongst them,” said Dan Rabie, Chief Operating Officer of Reckon. “While the Coalition has made a commitment to deliver for small businesses now and into the future, more needs to be done to instil faith and importantly, encourage investment and expansion.”
The findings show that the key to renewed small business confidence could lie in making changes to public sector initiatives. The top three policies respondents would like the government to prioritise over the next 12 months to help them succeed are:
- Simplify tax and GST compliance
- Boost infrastructure spending
- Reduce overall Commonwealth debt
Further to that, more than one in three small business owners also believe the continued rollout of the National Broadband Network is essential, while one in four (25 per cent) agree there is a need to focus on delivering the National Innovation and Science Agenda launched late-2015.
“The results are consistent with what we are seeing in the market. High company tax rates and the red tape associated with GST compliance continue to be major roadblocks impeding small business growth and the main issues keeping small business owners up at night,” said Rabie.
“While there’s been incremental progress since the launch of Turnbull’s National Innovation and Science Agenda, how much have we really advanced over the past year? The desired results on innovation are just not there and business owners are starting to take notice,” he added. “There is a need for the government to focus on establishing a longer-term strategy for change, as opposed to a plan that only lasts four years.”
Such growing business pressures are taking a toll on the personal lives of small business owners. One in five of those surveyed say they have less than an hour of leisure time each day, hinting that they could be working themselves to the bone for survival.
Looking ahead, the top five business challenges small business owners expect to face in the next 12 months are unsurprisingly related to growth are:
- Attracting new customers
- Current economic climate
- Increasing operating costs
- Achieving and/or managing growth
- Red tape and/or compliance burden